THE HAnDbOOk Of TECHnICAL AnALySISinformation to study market action may also resort to various quantitative and
statistical techniques in an attempt to predict future price direction and volatility.
These quantitative analysts and statisticians employ various forms of time series
and stochastic analysis and conduct back and forward testing on technical data.
They also try to identify price anomalies and arbitrage opportunities using sophis-
ticated software programs and high‐speed data connectivity.
More traditional analysts prefer to work using only a graphical representation
of technical data, which comes in the usual form of a price‐time chart, where the
vertical axis tracks the movement of price and the horizontal axis tracks the mo-
tion of time. The price axis may be scaled in an arithmetic (linear) or logarithmic
(ratio) fashion. On some charts, the time axis may not always be plotted in equal
increments or units of time, but rather acting more as a counter for new blocks of
data rather than an explicit representation of the passing of time. On such charts,
time is regarded as implicit along the x axis.
Traditional analysts study classical chart patterns, trendlines, window oscilla-
tors, overlay indicators, and various other price formations. Analysts who use charts
to study technical data are called chartists. Note that quantitative analysts and stat-
isticians also tend to use charts to display numerical data, although it is optional.
technical Data
Some of the more common technical data or information employed to construct
charts include:
■ (^) Price Data:
■ (^) Open (O)
■ (^) High (H)
■ (^) Low (L)
■ (^) Close (C)
■ (^) Transaction‐Related Data:
■ (^) Volume (V)
■ (^) Open Interest (OI)
■ (^) Market‐Breadth Data:
■ (^) Advances (A)
■ (^) Declines (D)
■ (^) Total Issues (T)
■ (^) Up Volume/Down Volume (UV, DV)
■ (^) New Highs/New Lows (NH, NL)
■ (^) Bullish Percent Data
■ (^) Sentiment Data:
■ (^) Put/Call Ratio
■ (^) Short Interest Ratio
■ (^) Specialist/Public Ratio
■ (^) Cash/Asset Ratio
■ (^) Investor and Advisor Poll Data
■ (^) Margin Debt
■ (^) Implied Volatility (VIX)