Bar chart analysis is not limited to daily bar charts.Weekly and monthly charts provide a valuable long-term perspective on market history that cannot be obtained by using daily charts alone.The daily bar chart usually shows up to twelve months of price history for each market.Weekly charts show almost five years of data,while the monthly charts go back over 20 years.By studying these charts,the chart list gets a better idea of long-term trends,where historic support and resistance levels are located,and is able to obtain a clearer perspective on the more recent action revealed in the daily charts.These weekly and monthly charts lend themselves quite well to standard chart analysis described in the preceding pages.The view held by some market observers that chart analysis is useful only for short-term analysis and timing is simply not true.The principles of chart analysis can be used in any time dimension.

Intraday Charts:

Daily and weekly charts are useful for intermediate- and long term analysis.For short-term trading,however,intraday charts are extremely valuable.Intraday charts usually show only a few days of trading activity.A 15-minute bar chart,for example,might show only three or four days of trading.A 1-minute or a 5-minute chart usually shows only one or two days of trading respectively,and is generally used for day-trading purposes.Fortunately,all of the chart principles described herein can also be applied to intraday charts.

A demonstration of the importance of long-term perspective achieved by a weekly chartgoing back almost two years. The triple top provides the first clue that a major reversal may have begun. The reversal is later confirmed by a break in the trend begun in early2000, followed by a second break of the longer term up trend.

Going From the Long Term to the Short Term As indispensable as the daily bar charts are to market timing and analysis,a thorough chart analysis should begin with the monthly and weekly charts—and in that order.The purpose of that approach is to provide the analyst with the necessary long-term view as a starting point.Once that is obtained on the 20-year monthly chart,the 5-year weekly chart should be consult-ed.Only then should the daily chart be studied.In other words,the proper order to follow is to begin with a solid overview and then gradually shorten the time horizon.(For even more micro-scopic market analysis,the study of the daily chart can be fol-lowed by the scrutiny of intraday charts.)

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