Seeing the Big Picture in the Charts

As you may know traders mostly rely on fundamental or technical analysis trying to make their decisions on how to trade a specific security. Those who are technicians by nature will basically try to understand what happened, is happening and is going to happen in the market by studying charts. But what kind of charts one has to study?

It depends on your preferences and the way you process visual information. However, it is recommended to study candle stick charts on higher time frames. Why?

Candle stick charts are best because you can see variety of candle formations on them that may indicate continuation of a trend, reversal, range and etc. The most common candle stick patterns are: Engulfing, Hammer, Harami, Piercing, Doji, Shooting Star and Dark Cloud Cover.

Chart no 1 (Example of Chart patterns)

candle patterns

Daily, weekly and monthly time frames are best for seeing the big picture in the market. You can spot trends, ranges, choppy markets on these higher time frames and having spotted what you expect you can go to smaller time frames: hourly or minute to enter your trades, put stop loss and take profit orders.

Chart no 2 (Big picture on bigger time frames)

Big time frames

Chart no 3 (Traders use smaller time frames to enter trades)

small time frames