Charts, be it technical charts or stock market charts are extremely useful to identify current trends and trend reversals, and to trigger buy and sell signals. A chart pattern is a distinct formation on a stock chart that creates a trading signal, or a sign of future price movements. Simply put, it graphically represents the series of prices over a set time frame. So you can get a glance of the stock prices for a year if you want with each point representing the closing price for each day the stock is traded.

One of the frequently made assumptions in technical analysis is that history repeats itself. The model of chart patterns is based on this assumption. Overtime,expert analysts have seen that certain patterns repeat multiple times and these patterns suggest high probability stock movements. Based on the historic trend of the respective chart movements, analysts exploit trading opportunities.

Here's a comprehensive list of stock market charts and technical charts and how to read them.

Head and Shoulders

This is one of the most popular and reliable chart patterns in technical analysis.Head and shoulders is a reversal chart pattern. It signals that the security is likely to move against the previous trend. Head and shoulders chart pattern has 2 versions.

1. Head and shoulders top is formed at the high of an upward movement and signals that the upward trend is about to end.

2. Head and shoulders bottom, also known as inverse head and shoulders signals a reversal in a downtrend.

These charts are similar in structure - two shoulders, a head and a neckline. And both of them have a high and a low.

An upward trend is a period of successive rising highs and rising lows. The head and shoulders chart pattern, therefore, illustrates a weakening in a trend by showing the deterioration in the successive movements of the highs and lows.

Daily Bar Chart

This is one of the most commonly used technical charts by traders which gives out four important trading information regarding prices related to stocks: opening price, closing price, the highest point that it touched on that day and subsequently the lowest point.

The vertical line represents the range of a particular day. The horizontal line that is pointing left gives you the opening price of the stock, and the one pointing right signals the closing price. Based on the time frame you want to analyze stocks for, you can adjust the graphs. They need not all be based on time as a rule. They can be based on ticks, volume, price range, and so on.

Candlestick Chart

These charts also reflect the same four price related data but in a different format.Candlestick charts are divided into two parts, each represented by one line. The thin line, called the shadow line, represents price range line from high to low. The second part known as the real body takes a wider area that helps to compute the difference between the opening price and the closing price of the given stock. If the closing price is more than opening price, the real body turns white. Every candlestick on a candlestick chart shows the trading that took place in that time frame.

Line chart

The line chart is a technical chart and stock market charts that keeps a record of each day 's closing price and they are plotted on a graph on a day-to-day basis,which eventually forms a line. Many investors base their trading decisions by just looking at this chart. For them closing price and its trend is all that matters.

The point and figure chart

The point and figure chart is a stock markets chart that graphically represents the price of stock. It does not account for the timing of trade or the volumes in which it is traded. The X line charts the increase in value or price of stock;whereas O informs the trader of the decrease in value of the stock. This charts implifies the process of identifying trends related to price in a particular stock and to identify reversals in the trend.

Each type of stock market charts and technical charts comes with its own strengths and limitations. It 's imperative to analyse a combination of charts to arrive at a trading decision. For example you can use bar charts to identify the slash in stock prices and then refer to point and figure chart to trade long term.However, keeping a fixed eye on the closing prices of each stock is a crucial component for making a trading decision. Some traders are equally confident about the price movements and variation aspect that the chart represents. So based on your understanding of ins and outs related to the various charts you can choose to invest in stocks that best suit your requirement.