How to Read a Energies Trading Chart
When it comes to trading the energies market the energies chart is the basic trading tool used by all traders. The energies chart will show information about a energies instrument - the energies chart will show the general direction of energies prices, the chart will also explain the current price of a energies and the chart will also explain the historical movement of chart energies prices.
Traders will use these charts to determine where to place trades. From the chart the trader will analyze the energies market movements using technical indicators so as to determine the direction of the market and determine the trade to open.
Traders must therefore learn how to use energies charts before they can start transacting in the online energies market.
The following are the various things that a trader will need to know about energies charts.
Types of Charts
There are three types of energies charts
Line Chart - this charting method draws a continuous line that connects the closing energies prices. For example if a trader is using the 5 minutes chart then this line chart will draw a continuous line that connects closing energies price of the energies market after every 5 minutes.
Bar Chart -This chart use bars to represent energies price movements, and plots OHCL -Opening energies price, High, Low, and Closing energies price for that period, for example if the period used is 5 minutes, the bar will represent the energies price data and the OHCL points for the 5 minutes.
Candlestick Charts -The are the most popular chart types as they are the most visually appealing and they represent the energies price movements in an easily identifiable way which clearly show when a market moves up or when it moves down using different colors to differentiate the direction. These candlestick chart look like a candle and they have a body that resembles the wax part of a candle and an upper and a lower poking line that resembles the wick of a candle.
Energies Trading Chart Periods -Chart Time Frames
A energies chart will draw charts based on different time periods - these are 1 minute, 5 minute, 15 minute, 1 hour, 4 hour, 1 day, 1week and 1 month. The period used to draw chart data is also referred to as a energies chart timeframe, for example the 5 minute chart period is commonly referred to as the 5 minute chart by trader. This 5 minute chart timeframe will represent data for the five minutes of trading, after those five minutes another set of data will be used to draw another chart representation. For example if a trader is using candles chart, the data of one candle will draw data of that five minutes, after those five minute another candle will be drawn using energies price data of the next five minutes - when these candlesticks are combined they then make a graph representation that shows the general direction of energies prices commonly known as the trend. Energies traders can then use this information to make trading decisions.
Because the most commonly used charts are candlesticks charts we shall discuss how to read energies charts specifically candlestick charts.
How to Use Candlestick Charts
The candlestick charts uses candlestick that have different colors to represent different energies price moves, blue candlesticks show energies prices closed higher than they opened, red candlesticks show energies prices closed lower than they opened. This color representation is then used by traders to determine when price has moved up or down.
The candles also show OHCL:
O - Opening Energies Price
H - Highest Energies Price
C - Closing Energies Price
L - Lowest Energies Price
These energies price points are represented using a formation which looks like a candle, the distance between the opening energies price & closing energies price is represented by what's referred to as the body, this part resembles the wax part of a candle. The high energies price is represented by a poking line protruding upwards, this line resembles the wick of a candle, the low energies price is represented by a poking line protruding downwards and it also resembles a candle wick facing down.
Candlesticks
A trader can also add a energies indicator on the energies chart so that they can analyze the chart market using these indicators. Traders will need to place indicators on the energies so that they can get additional information about a energies trend and therefore be in a better position to make a more informed trading decision. These technical indicators can be used to predict the likely market direction that the energies market is likely to keep moving in whether up or down.
A trader can use indicators such as the moving averages and Bollinger to determine the trend. Energies traders can also use other indicators such as the RSI and stochastic oscillators to determine when to open trades.
Energies Trend lines are also used to determine the direction of the candlestick charts trends and these lines can drawn on the charts to show this direction. A upward trend will be shown by a energies trend line is moving up while a energies trend that is moving down will b e shown a energies trend line that is moving downwards.
To learn how to draw a energies trend line & how to trade using technical analysis a trader can learn about the trend line lesson under the learn energies lessons section of this website, for indicators a trader can learn about energies indicators and their technical analysis on the energies indicators section of this web site.
