Technical Analysis

RECENT NEWS
MarketWatch  Aug 15  Comment 
Technical Indicator: Bullish stock trend intact as S&P absorbs August downturn
MarketWatch  Aug 8  Comment 
Technically speaking, the major U.S. benchmarks’ latest grinding-higher summer breakout attempt is underway. Namely, the S&P 500 is challenging its range top, an area defined by its all-time high of 2,484. A breakout opens the path to...
MarketWatch  Aug 1  Comment 
Technically speaking, the U.S. benchmarks’ 2017 uptrend remains characteristically jagged, but firmly intact, writes Michael Ashbaugh.
Wall Street Journal  Jul 28  Comment 
For more than two decades after the fall of the Berlin Wall, U.S. and German bonds were like soldiers marching in step. That changed a few years ago, but signs are for this important trade to reassert itself.
MarketWatch  Jul 25  Comment 
Technically speaking, the U.S. benchmarks’ slow-motion summer uptrend continues to grind higher. Consider that the S&P 500 has tagged a fractional all-time high early Tuesday, while the Dow Jones Industrial Average has rallied within striking...
Benzinga  Jul 24  Comment 
Hasbro, Inc. (NASDAQ: HAS) shareholders are enduring a rough day of trading on Monday, with shares down 10.3 percent after a disappointing second-quarter earnings report from the toy giant. While Hasbro narrowly topped consensus analyst earnings...




 
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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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