How To Read Stock Price Charts On Finviz

Finviz.com is a powerful, free tool that provides a wealth of information for stock market investors. One of its most valuable features is its ability to display and analyze stock price charts. However, for beginners, deciphering these charts can seem daunting. This guide will break down how to read stock price charts on Finviz, empowering you to make more informed investment decisions. We'll cover the basics, from understanding candlestick patterns to identifying key indicators, so you can leverage Finviz to its full potential.

Understanding stock price charts is crucial for technical analysis, which is the practice of evaluating investments by analyzing statistics generated by market activity, such as past prices and volume. By learning to interpret these charts on Finviz, you can gain insights into a stock's historical performance, potential future movements, and overall market sentiment. Let's dive in!

1. Accessing Stock Charts on Finviz

The first step is, of course, getting to the chart. Here's how:

  • Go to Finviz.com: Simply type "finviz.com" into your web browser.
  • Enter the Stock Ticker: In the search bar at the top of the page, type the ticker symbol of the stock you want to analyze (e.g., AAPL for Apple).
  • Navigate to the Chart: Once you've entered the ticker, you'll be taken to the stock's quote page. The chart will be prominently displayed. If not, look for a tab or link labeled "Chart."

2. Understanding the Basic Chart Elements

Before we delve into the more complex aspects, let's understand the fundamental components of a stock price chart on Finviz:

  • Candlesticks: These are the primary building blocks of most stock charts. Each candlestick represents the price movement of a stock over a specific period (e.g., one day, one week, one month).
    • Body: The body of the candlestick represents the range between the opening and closing prices. A green or white body indicates that the closing price was higher than the opening price (a bullish candle). A red or black body indicates that the closing price was lower than the opening price (a bearish candle).
    • Wicks (Shadows): The thin lines extending above and below the body are called wicks or shadows. The upper wick represents the highest price reached during the period, and the lower wick represents the lowest price reached.
  • Timeframe: Finviz allows you to adjust the timeframe of the chart. You can view intraday charts (e.g., 1 minute, 5 minutes), daily charts, weekly charts, monthly charts, or even yearly charts. The timeframe you choose depends on your trading style and investment horizon.
  • Volume: Volume represents the number of shares traded during a specific period. It's typically displayed as a bar graph at the bottom of the chart. High volume can indicate strong interest in the stock, while low volume may suggest a lack of conviction.
  • Price Scale: The vertical axis on the right side of the chart represents the price of the stock.
  • Time Scale: The horizontal axis at the bottom of the chart represents the time period.

3. Interpreting Candlestick Patterns

Candlestick patterns can provide valuable clues about potential future price movements. Here are a few common patterns to look for on Finviz charts:

  • Doji: A Doji is a candlestick with a very small body, indicating that the opening and closing prices were nearly the same. It often signals indecision in the market and can be a precursor to a trend reversal.
  • Hammer: A hammer is a bullish reversal pattern that forms after a downtrend. It has a small body, a long lower wick, and a short or nonexistent upper wick.
  • Inverted Hammer: An inverted hammer is a bullish reversal pattern that forms after a downtrend. It has a small body, a long upper wick, and a short or nonexistent lower wick.
  • Engulfing Pattern: An engulfing pattern consists of two candlesticks. A bullish engulfing pattern occurs when a green candlestick completely engulfs the previous red candlestick. A bearish engulfing pattern occurs when a red candlestick completely engulfs the previous green candlestick.
  • Morning Star: A morning star is a bullish reversal pattern that consists of three candlesticks: a long bearish candlestick, a small-bodied candlestick (often a Doji), and a long bullish candlestick.
  • Evening Star: An evening star is a bearish reversal pattern that consists of three candlesticks: a long bullish candlestick, a small-bodied candlestick (often a Doji), and a long bearish candlestick.

Remember that candlestick patterns are not foolproof indicators, and they should be used in conjunction with other forms of analysis.

4. Using Technical Indicators on Finviz

Finviz offers a variety of technical indicators that can help you analyze stock price charts. Here are a few commonly used indicators:

  • Moving Averages (MA): Moving averages smooth out price data by calculating the average price over a specific period. Common moving average periods include 50 days, 100 days, and 200 days. Moving averages can help you identify trends and potential support and resistance levels. On Finviz, you can add different moving averages to the chart.
  • Relative Strength Index (RSI): The RSI is a momentum oscillator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock. RSI values range from 0 to 100. An RSI above 70 is generally considered overbought, while an RSI below 30 is generally considered oversold.
  • Moving Average Convergence Divergence (MACD): The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of a stock's price. It consists of the MACD line, the signal line, and the histogram. Crossovers between the MACD line and the signal line can be used to generate buy or sell signals.
  • Bollinger Bands: Bollinger Bands consist of a moving average and two bands plotted above and below the moving average. The bands are calculated based on the standard deviation of the price. Bollinger Bands can be used to identify periods of high and low volatility, as well as potential overbought and oversold conditions.

To add indicators to a Finviz chart, look for a button or menu labeled "Technicals" or "Indicators." From there, you can select the indicators you want to display.

5. Identifying Support and Resistance Levels

Support and resistance levels are key price levels that can influence a stock's price movement.

  • Support: A support level is a price level where a stock has historically found buying interest, preventing it from falling further.
  • Resistance: A resistance level is a price level where a stock has historically found selling pressure, preventing it from rising further.

You can identify support and resistance levels on Finviz charts by looking for areas where the price has repeatedly bounced off or stalled. These levels can be used to set entry and exit points for your trades.

6. Analyzing Chart Patterns

In addition to candlestick patterns, there are also chart patterns that can provide insights into potential future price movements. Some common chart patterns include:

  • Head and Shoulders: A head and shoulders pattern is a bearish reversal pattern that consists of three peaks: a head (the highest peak) and two shoulders (lower peaks on either side of the head).
  • Inverse Head and Shoulders: An inverse head and shoulders pattern is a bullish reversal pattern that is the opposite of the head and shoulders pattern.
  • Double Top: A double top is a bearish reversal pattern that consists of two peaks at approximately the same price level.
  • Double Bottom: A double bottom is a bullish reversal pattern that consists of two troughs at approximately the same price level.
  • Triangles: Triangles are continuation patterns that can be either bullish or bearish.

7. Combining Chart Analysis with Fundamental Analysis

While technical analysis can be a valuable tool, it's important to remember that it's not a standalone strategy. It's best to combine chart analysis with fundamental analysis, which involves evaluating a company's financial health and business prospects. By considering both technical and fundamental factors, you can make more informed investment decisions.

Conclusion

Learning to read stock price charts on Finviz is a valuable skill for any investor. By understanding the basic chart elements, interpreting candlestick patterns, using technical indicators, identifying support and resistance levels, and analyzing chart patterns, you can gain insights into a stock's potential future movements. Remember to combine chart analysis with fundamental analysis for a more comprehensive approach to investing. Now, go forth and explore the world of stock charts on Finviz! Don't be afraid to experiment and learn from your experiences. The more you practice, the better you'll become at interpreting these charts and making informed investment decisions. Happy trading!