We will commence with a study of bar charts. The basic unit of our chart is the price bar which shows us the open price, the high of the period, the low of the period and the closing price. The open is the horizontal line on the left of the bar and the close is the line on the right. The high and low should be self explanatory. This bar we are examining stores a fair amount of information by itself and an even greater wealth of information when compared to other bars.
Charts can represent different time periods.
Essentially they differ on a factor of five or less. How we describe these changes can vary, but we usually focus on the closing price to relate one bar to its' precedent bar. We can look at the relationship between a bar's opening price and the closing price of its' precedent bar. From this examination, we find that there are little waves in the movement of securities' prices. These little ripples are part of larger and larger waves and these have been named Elliott Waves after Ralph Elliott who studied this material in the 1930's.