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How is a stock chart analyzed?

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For small and medium investors, the investment in the stock markets is composed of many conditions, studies and calculations before proceeding to make the final bet with real money. The different operations that can be executed according to the logical variations of the prices in the shares quoted on the Stock Exchange will be those that in the future more or less distant define if this investment has been positive (capital gains) or negative (handicaps), for their financial interests personal and especially monetary.

So that the investor can elaborate and develop his investment plan or strategy it is necessary that he uses among others the so-called technical analysis and this is conveniently applied to any graph -chart- either of any listed security or reference index. To clarify concepts among aspiring investors and avoid their possible confusion, in this section of Stock Exchange Councils, we will distinguish between what is an analysis of graphs and technical analysis, as a method to define by studying the prices of entry and exit more appropriate according to the financial product (stocks, funds …) within the financial market.


To begin to understand the difference in these two financial technical concepts we must take into account what each one consists of and what is its special utility for investors. Let’s see the differences and also the similarities that can mislead us at the time of our training as future successful investors:

  • GRAPHIC ANALYSIS: In the stock market language is called “Chartism ” and in a summarized and basic way consists of the study of the different figures that are formed in the graphs, due to the increases or decreases in their quotations during a specific period of time.
  • TECHNICAL ANALYSIS: It is more complex than the previous one -the one of graphics- and it uses the analysis of these plus other indicators and oscillators (MACD, RSI, Stochastic, Moving Averages … etc.). As a fundamental tool that will observe mainly (among others), data such as the daily stock market volume, the current price of the quotes , the most active brokers in the market or data on open contracts at the close of each trading session.

As the essential purpose pursued by each investor is to anticipate the future movements of the securities markets to be able to exercise their investment with certain guarantee of success , it is very important to distinguish that, the technical analysis is based solely on data and mathematical calculations using formulas , which limits its effective application and should always be accompanied before investing directly in the market for an integral study of the rest of the indicators and fundamental analyzes on current financial variables of companies, economic-financial situations, political phenomena , wars, currency changes, oil prices, trade wars … etc.

The financial use of our money should be managed properly, responsibly, disciplined and taking advantage of the different techniques that can help us to clearly define if we are the stock markets in bullish, lateral or bearish trends, as well as, if studying a graph applying the techniques learned this marks the levels of support or resistance , the formation of chartist figures or the various speculative movements that will try to distract our attention and even mislead our investment strategy.

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