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How To Read A Commodity Price Chart


Learning the basics of reading a bar chart is essential to your commodity trading success


There are two major types of price charts. One is a candlestick chart, which I don't use. There's no major reason for it, just that I have used bar charts and they work for me, so I am sticking with them.

When looking at a bar chart for the first time, it may seem a little confusing, but it is really quite simple.

A price chart measures the price action of the commodity over a period of time. It could be an hourly, daily, weekly or monthly chart. It could even be longer. 

At the bottom of the chart, running diagonally, is the timeline of the chart. An hourly chart runs for one day and will give you the price action for a certain number of minutes or hours. A daily chart can run for several months or more, but will give you the price action for each day. A weekly chart usually runs over a few years and measures the price action for each week. 

On the right side of the chart, running vertically, is the price of the commodity. On a futures contract, each cent or point is valued differently according to the commodity traded. A good set of charts or a broker can advise you of the difference.

The actual price of the commodity is registered on the bar. The "bar" usually consists of a vertical line with two short horizontal lines attached. One on the left and one on the right. 

The horizontal line on the left represents the opening price for the time period selected, the bottom and top of the vertical line represent the low and the high, respectively and the horizontal line on the right represents the closing price.

Now, by learning how to read a commodity price chart, you can start looking for patterns of price on the chart.



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