CH2 Methods of Charting

Question 1

The concept of measuring …….., …….., ………, ………. (OHLC) is key to understanding almost all charting techniques.

Answer 1

open, high, low and close

Question 2

a chart is a graphic representation of historical market action

Answer 2

price, volume and open interest

Question 3

They illustrate price history in a concise and readily understood way

Answer 3

Charts

Question 4

h ey act as a leading indicator by providing an early warning signal that fundamental changes may be taking place

Answer 4

charts

Question 5

A ………………. is a price objective or the price level that an asset is expected to achieve based on a chart formation.

Answer 5

measured move

Question 6

For stocks, ……….. represents the total number of shares traded on a given day

Answer 6

the volume

Question 7

……………..is the total number of contracts outstanding (still open, or not closed out) at the end of the trading session

Answer 7

Open interest

Question 8

A line chart differs from a bar chart in that only …….. prices are shown

Answer 8

closing

Question 9

………………are one of the oldest charting techniques, dating back to the 1600s. Originally used by Japanese rice farmers for keeping track of crop prices, they add another, more visual dimension to the Western art of chart analysis

Answer 9

Candlestick charts

Question 10

Both the bar and candlestick chart has four components, open, high, low and close. The main difference between the construction of the two charting methods is that candlestick charts have a …………..

Answer 10

real body

Question 11

……………is a box that visually represents the difference between the trading session’s open and close

Answer 11

real body

Question 12

The upper shadow extends to the …………………price

Answer 12

highest

Question 13

the lower shadow extends to the ……………price

Answer 13

lowest

Question 14

…………………… charts ignore time when plotting price action

Answer 14

point and figure (P&F)

Question 15

One of the main benefits of point and figure charting is the discovery …………….. and ……………..

Answer 15

intraday support and resistance areas

Question 16

it is an excellent method for discovering when new trends are likely to develop and approximately to what price level they may reach …………………..

Answer 16

point and figure (P&F)

Question 17

The “X” records rising prices; the “O” records declining prices. Each time a trend reverses, a new column is started ………..

Answer 17

point and figure (P&F)

Question 18

shows the y-axis in equal price units. Therefore, the vertical distance between $1 and $3 is the same as the distance between $121 and $123, etc. It is a $2 or a 2 point change

Answer 18

arithmetic scale