When looking at stock charts what you see may not mean much to you. On these charts there are patterns. These patterns mean a lot to the investors that analyze such data to make their trades. There are many different indicators and no one indicator out weighs the other. However when taken into consideration relative to one another it begins to make sense. Recognizing these patters helps investors make successful predictions on future investments.
These patterns have names which helps identify their movement. There is a pattern called cup and handle. This particular pattern identifies a stock that starts high and then dips and comes back up again.
Another pattern is called head and shoulders. This identifies a stock that peaks then dips then peaks again higher than the previous peek. Then drops and finally peaks again. This is a pattern liked by bears.
One of the most popular patters is called the moving average. The moving average is a very strong indicator. Basically what it does is identify a stocks movement over a given period of time.
Another pattern is called the Relative Strength Index. This identifies a stock as follows. It compares the number of days a stock finishes up compared how many times it finishes down.
Another pattern is called the Money Flow Index. The money flow index goes beyond the relative strength index in that it takes into account the number of shares traded as well as the price.
Then there is the Bollinger Bands. This is a chart with a grouping of three lines. The middle line is the moving average. The other two lines which are the upper and lower lines are indicating market volatility. The more volatile the market the further apart these lines go. When there is little volatility they come close together.