Equivolume Charts

History
Equivolume Charts are developed by Richard W. Arms, Jr., and explained in his book 'Volume Cycles in the Stock Market'. They presents a highly informative picture of market activity for stocks, futures, and indices. They differ from candlesticks by not considering open and close prices, and they differ from bar charts by not considering time factor.

Construction
In equivolume charts, the more important volume is combined with the price range and depicted as rectangular boxes. The height of the box represents the range of the price movements. The top line of the box is the high for the period and the bottom line is the low for the period. While the width of the box represents the volume.

The resulting charts represent an important deviation from all other analytical methods, in that time becomes less important than volume in analyzing price moves. It suggests that each movement is a function of the number of shares or contracts changing hands rather than the amount of time elapsed.

Perhaps the Equivolume charting method is best summed up by the developer himself as follows: "If the market wore a wristwatch, it would be divided into shares, not hours."

Study the chart given below and compare it with the bar chart.