10 Charts and technical analysis
This chapter covers
- Interpreting patterns in charts
- How to use candlesticks
- Which averages help you to assess stocks
- Bollinger Bands, MACDs, and moving average ribbons
- Displaying an Ichimoku Cloud
- Using Streamlit for visualization
Imagine being presented with a captivating product—something you never considered but now find yourself intrigued by. The possibilities are endless, whether it's a stunning piece of art, a luxurious property, or an exquisite car. Now, picture this: the seller turns to you, eyes glinting with opportunity, and asks, "How much would you offer?"
Imagine you have never bought a similar product. No advisor stands next to you, and you cannot ask any search engine or AI chatbot for a reasonable price. Without any historical data or reference, all you can do is guess.
Many potential buyers find this situation distressing. If they overpay, they might regret their purchase for years. However, offering too little can cause issues. A buyer risks offending the seller or showing everyone around them that they are unaware of the market value, which can jeopardize their reputation.
Historical data provide a solid foundation for informed decisions. For instance, if you know the purchase price of neighboring houses, you can at least estimate the price of real estate (though you could still end up with a lousy deal for various reasons). The more data you have, the easier it is to determine if the price is reasonable.