Commodity Marketing Chapter 3 Technical Analysis Bar Charts

Commodity Marketing Chapter #3 Technical Analysis

Bar Charts Important market information: Price: high, low, close for the day Volume: number of contracts traded Open Interest: number of contracts that haven’t been offset n Analyst records past history, but can use this information to help predict n

Charting Prices

Bar Charts

Bar Charts Volume: measure urgency behind price moves n Open Interest: number of contracts at the end of each day that are not offset n - rises: new money flowing in - falls: money is leaving the market Prices & Open interest rise: trend will probably continue n Prices rise & Open Int. falls, uptrend is ending n Prices, Open Int. , & Volume fall, trend is about to change n

Market Nicknames n Bull = one who expects prices to rise - a rising market n Bear = one who expects prices to fall - a falling market n Prices Rising Falling Volume Rising Falling Open Int Rising Falling Market Bullish Bearish Bullish

Price Trends General direction which prices are moving n Prices move: up, down or sideways n Sideways Trend: called a trading range n - Resistance line (upper level) prices turn down - Support line (lower level) prices turn up

Sideways Trend

Trends Uptrend: higher highs, higher lows n Draw a line under rising bottoms n Downtrend: lower highs, lower lows n Draw a line under falling tops n Takes two to define a trend, three to confirm it n

Uptrend

Downtrend