The Charting Path

The Charting Path

Three stages. Selection comes first — reading a chart well doesn't matter until there's a good name to read. No clock on it — worked through at whatever pace fits.

Each item links to a short video where a solid one exists. Where it doesn't, that's stated plainly and a strong written reference stands in instead — no filler links.

Stage One — Picking the Horse: Selection Before Anything Else

For a bullish directional trade, this comes first, not last. A chart read well on the wrong stock is still the wrong stock. This stage carries the deepest research base of the three, by a wide margin.

  1. Momentum / relative strength, as a concept — the academic base: stocks ranked on trailing performance keep outperforming over 3-to-12-month holding periods (Jegadeesh & Titman, 1993), extended by later work tying much of the effect to proximity to the 52-week high (George & Hwang, 2004) and to industry-level momentum (Moskowitz & Grinblatt). How to Use Momentum Indicators — Schwab
  2. IBD's Relative Strength Rating — a percentile rank of a stock's price performance against the market. Reading Stock Charts: Relative Strength — Investor's Business Daily
  3. Point and figure charting — the Dorsey Wright tradition; X's and O's, no time axis. Point and Figure Charts — StockCharts TV
  4. Bullish Percent Index — market-breadth measure built on point-and-figure signals across a universe of stocks. What Is the Bullish Percent Index? — StockCharts TV, David Keller, CMT
  5. Stage analysis — Stan Weinstein's four-stage read on a stock's own market cycle. Stan Weinstein's Guide to Stage Analysis — TraderLion, featuring Weinstein
  6. Volatility contraction pattern — Mark Minervini's base-tightening setup: ranges narrowing into a pivot on falling volume. The VCP Trading Setup — TraderLion, featuring Minervini
  7. DeMark indicators — sequence-based timing tools (TD Sequential and related), laid on top of a name once it's already selected. Sequential — DeMARK Analytics (official) No verified video found — official written explainer.
  8. Williams %R — a fast overbought/oversold read, another timing overlay rather than a selection tool. Williams %R — Fidelity Learning Center No verified video found — written article.

Stage Two — Reading the Chart

Once a name is selected, this is the baseline literacy for what's actually on the chart in front of it.

  1. Candlestick patterns — reversal shapes: doji, engulfing, morning and evening star. Candlestick Basics — Schwab · Candlestick Pattern Dictionary — StockCharts ChartSchool
  2. Support and resistance — where price tends to stall, and why. Support & Resistance — Schwab
  3. Trend and trendlines — an objective definition, not a feeling. Trends & Moving Averages — Schwab · Trend Lines — StockCharts ChartSchool
  4. Heikin Ashi — a smoothed candle for filtering out noise. How to Use Heikin Ashi Charts — Schwab No verified video found — written article.
  5. Volume at Price / Volume Profile — where volume actually traded, by price level rather than by time. Volume Profile Indicator: How Does It Work? — Schwab · What Is Volume Profile and How to Trade It — tastylive No verified video found — written articles.
  6. IV Rank — where today's implied volatility sits against its own 52-week range. Using Implied Volatility Percentages and Rankings — Schwab No verified video found — written article.
  7. MACD — trend and momentum from two moving averages. Trading Stocks with the MACD — Schwab
  8. RSI — the standard overbought/oversold read. How to Use the Relative Strength Index (RSI) — Schwab
  9. Stochastic oscillator — where the close sits within its recent range. Using the Stochastic Indicator to Trade Stocks — Schwab
  10. TTM Squeeze — Bollinger Bands inside Keltner Channels; the tell for compressed volatility about to move. TTM Squeeze Indicator: Technical Signals for Traders — Schwab · TTM Squeeze — StockCharts ChartSchool No verified video found — written articles.
  11. Classic chart patterns — head and shoulders, double and triple tops/bottoms, triangles, wedges, flags and pennants. Price Patterns: Triangles & Pennants — Schwab · Trend Reversal & Continuation Patterns — Schwab
  12. On-Balance Volume — a running volume total, used as confirmation rather than a standalone signal. Choosing Technical Indicators to Analyze Stocks — Schwab · On Balance Volume (OBV) — StockCharts ChartSchool No verified video found — written articles.
  13. Multiple timeframes — weekly sets the bias, daily picks the entry. Multiple Timeframe Analysis at One Glance — CMT Association · Time Travel: Choosing Stock Chart Time Frames — Schwab

Stage Three — The Deeper Toolkit, By What It Actually Measures

A further set of indicators, grouped into seven families by what each one is measuring, not stacked together as a checklist. This is the optional-depth stage, and it's last for a reason: taken individually, most of what's in it is the weakest-evidenced material on this whole page.

The view this stage is built on: taken one at a time, most indicators don't mean much. The evidence behind each one below, laid out honestly, backs that up more often than it flatters it — Fibonacci levels that don't cluster, Bollinger's mean-reversion edge decaying to near zero after costs, Ichimoku barely clearing a coin flip on its own. A single line on a chart is a weak bet. But several different kinds of measurement — trend, momentum, volume — agreeing at the same time is worth something real. Not three tools from one family repeating the same observation in different colors, which is agreement with itself, but genuinely different questions about the stock all coming back with the same answer. That's confluence, and it's the one edge this section actually stands behind. One tool per family on a live chart is the working rule that follows from it.
Trend & Directional Strength
  1. ADX / DMI — is there a trend, and how hard is it pushing. Using ADX to Plan Bull or Bear Trades — Schwab · Trading the Directional Movement Index (DMI) — Schwab
  2. Parabolic SAR — a dot-based trailing stop and reversal marker. 6 Ways Parabolic SAR May Help Stock Chart Traders — Schwab
  3. ATR — average true range, and sizing stops off real volatility rather than a flat percent. Average True Range (ATR) Explained — Schwab · Using Average True Range in Volatile Markets — Schwab
Momentum Oscillators
  1. Awesome Oscillator — momentum against a longer baseline. A Short-Term Trading System Using the Awesome Oscillator — Schwab
  2. Stochastic RSI — the stochastic formula applied to RSI instead of price; faster and noisier than either alone. StochRSI — StockCharts ChartSchool No verified video found — written article.
  3. PPO — MACD's logic, normalized to percent so it compares across price levels. Trading Stock Momentum with the Weekly and Daily PPO — Schwab
Volatility & Channels
  1. Bollinger Bands — a moving average with bands set by standard deviation. How to Use Bollinger Bands — Schwab
  2. Keltner Channels — the same idea, bands set by ATR instead of standard deviation. Keltner Channels: How They're Built and Ways to Use Them — Schwab
  3. Donchian Channels — the highest high and lowest low over a lookback window; the Turtle Traders' breakout tool. Price Channels — StockCharts ChartSchool No verified video found — written article.
Price Structure & Retracement
  1. Fibonacci retracement — where price might react, based on its own prior swing. Trading Up-Close: Fibonacci Retracement Lines — Schwab
  2. Pivot points — mechanically-derived support/resistance levels from the prior session. Pivot Points — StockCharts ChartSchool No verified video found — written article.
All-in-One Systems
  1. Market Forecast — momentum, near-term and intermediate trend read together on one study, via 80/50/20 zones. Planning Short-Term Trades with the Market Forecast Indicator — Schwab · MarketForecast — thinkorswim Learning Center
  2. Ichimoku Cloud — trend, momentum and levels from one set of lines. Ichimoku Cloud — StockCharts ChartSchool No verified video found — written article.
Volume & Money Flow
  1. VWAP / Anchored VWAP — the volume-weighted average price, and the anchored variant tied to a chosen event rather than the session open. Trading with VWAP — Schwab · Anchored VWAP in Action — Schwab
  2. Money Flow Index — RSI's logic, weighted by volume. Building a Trading System with the Money Flow Index — Schwab
  3. Chaikin Money Flow — buying vs. selling pressure from where price closes within its own range. Trading with the Chaikin Money Flow (CMF) Indicator — Schwab
  4. Accumulation/Distribution Line — a running volume total, weighted by where the close lands in the day's range. Two Volume Indicators Every Investor Should Know — StockCharts TV
Wave & Cycle Theory
  1. Elliott Wave — literacy, not a signal: reading the idea, not counting live waves. Introduction to the Elliott Wave Principle — StockCharts TV

Picking the right horse decides more than reading the chart well ever will. Read the chart to time and manage the trade — not to find it.

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