Together with the development of technology, nowadays, we can find stock charts available for free on many financial sites. Reading these charts is really an art and a science and it is important to know how stock charts determine overhead resistance to make money trading. And if you want to succeed as an investor, you should know something about these charts. In order to become a stock chart expert, you will need great determination and dedication.

The first thing you have to know when you watch a stock chart is the direction of the movement. There are three types of directions: moving up, moving down and trading sideways. The simplest method used to determine the trend of a stock is to draw lines between two critical points on the chart.

To get rid of whipsaws and catch the trend at an early stage, you should consider using two moving averages as an indicator of thee movement of the market. One excellent example of the most commonly-used MA combinations is the 20-day and 50-day MA. When the shorter-period MA (the 20-day) moves above the longer-period MA (the 50-day), the stock is trading up. And the reverse is true for a stock trending down.

When you look at the chart, you should be able to discover the support and resistance level of the stock. A support level is a level a stock find enough support that it cease to decrease further and move up. A resistance level is a level a stock can not move higher and has to go down.

You should always buy when the symbol is trending up and sell when it is trending down. There is no alternative. What is hard about investing is that you can not determine exactly what the symbol is doing at the time you decide to jump in the market. Being right in the stock market requires lots of work and dedication.

In order to succeed as a stock investor, you will need great dedication and effort. Whether you focus to be a fundamental or a technical investor, you should know some basic stuff about stock charts in order to achieve what you want.

For more from Mike Swanson go to his free technical analysis course.

categories: stock market,investing,finance