Technical Analysis

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Financial Times  11 hrs ago  Comment 
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MarketWatch  Apr 11  Comment 
Technically speaking, major technical tests are taking shape this week across the widely-tracked U.S. benchmarks. Consider that S&P 500 and Dow industrials have ventured under the 50-day moving average early Tuesday — areas that have defined...
MarketWatch  Apr 7  Comment 
Technical Indicator: Dow holds 50-day average, S&P nails down support
MarketWatch  Apr 7  Comment 
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MarketWatch  Apr 4  Comment 
Technically speaking, the major U.S. benchmarks have weathered a modest market whipsaw to start the second quarter. In the process, the S&P 500 and Dow industrials have survived a second test of the 50-day moving average, at least so far, while...
Benzinga  Apr 4  Comment 
Tesla Inc (NASDAQ: TSLA)'s stock traded within $1 per share of the $300 mark for the first time ever on Monday. The stock is also up nearly 40 percent since the start of 2017 and higher by 700 percent over a five-year period. Needless to say,...
MarketWatch  Mar 29  Comment 
In this investing primer, Nigam Arora cautions that basic technical analysis can be dangerous.
MarketWatch  Mar 28  Comment 
Technically speaking, each major U.S. benchmark has just survived this year’s first retest of the 50-day moving average. The successful tests preserve an intermediate-term market uptrend against the backdrop of a near-term consolidation phase...
SeekingAlpha  Mar 26  Comment 




 
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Technical Analysis is the the study of the historical trend in an investment's price in order to predict future price movements.

Care must be taken when using technical analysis to be aware of fundamental events as they can invalidate prior technical analysis and cause large market shifts. In fact, a competing form of analysis is fundamental analysis.

The process of technical analysis can be applied to most markets including markets for commodities, securities, and currencies. Key concepts involved in technical analysis include: charts, support, resistance, trends and indicators.

Charts

Charts are graphical representations of market price and/or volume information in some time frame. For example, published charts generally provide hourly, daily or weekly data. One of the most common types of charts used for technical analysis is the Candlestick Chart. Formations, such as the commonly recognized Head and Shoulders pattern, can often be used to predict future price movement with a relatively high degree of accuracy.

Support Level

Support, within a particular time frame, is defined as a point at which a falling market price finds a bottom and does not fall any further. The price appears to bounce off of support levels and return to higher levels. There is no guarantee that a prior support level will continue to be a support level in the future.

Resistance Level

Resistance is similar to support. However, resistance is the point at which a rising market price finds a top and does not rise any further. Again, resistance may be applied to a time frame and of course a previous resistance level may fail to provide resistance in the future.

Trends

Market prices will often drift higher or lower in a series of waves. If a market is making higher highs and higher lows then it is generally considered to be trending up. If a market makes successively lower lows and lower highs then it is considered to be trending down.

It is often useful to draw a trend line along the levels of support and resistance. In particular, it is common for these trend lines to form a channel which can then be used to make trading decisions. Of course, a market may follow trend lines for a period of time but there is always the risk that it will stop doing so.

Indicators

Technical analysis often relies on the use of indicators. These indicators use mathematical formula to analyze price (and perhaps volume) action. Charts can be made using the indicator values and the information they provide can also be used to make trading decisions.

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