Technical Analysis

RECENT NEWS
MarketWatch  Jan 13  Comment 
Shares of J.P. Morgan Chase and Bank of America hit significant highs despite downtrends in a key momentum indicator, warning investors that it may not be safe to keep buying.
Forbes  Jan 12  Comment 
Legendary investor Warren Buffett advises to be fearful when others are greedy, and be greedy when others are fearful. One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative...
SeekingAlpha  Jan 12  Comment 
MarketWatch  Jan 10  Comment 
Technical Indicator: Dow is coming back for another crack at 20,000
MarketWatch  Jan 10  Comment 
Technically speaking, the U.S. benchmarks’ strong bull trend is firmly intact. Consider that the S&P 500 continues to press record territory, after briefly reaching all-time highs last week. Meanwhile, the Nasdaq Composite has broken out,...
Forbes  Jan 9  Comment 
Legendary investor Warren Buffett advises to be fearful when others are greedy, and be greedy when others are fearful. One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative...
The Economic Times  Jan 9  Comment 
"Auto, banking, pharma and fertilizer sectors may show strength in the coming weeks," says Rajesh Palviya, Head, technical analyst, Axis Securities.
Wall Street Journal  Jan 6  Comment 
The divergence between declining foot traffic at physical stores and gains online played out across the retail industry this past holiday season.
MarketWatch  Jan 3  Comment 
Technically speaking, the major U.S. benchmarks have pulled in from record highs, thus far modestly, digesting the massive late-2016 breakout. Still, while a near-term consolidation phase has been long overdue, and remains underway, the U.S....
Benzinga  Dec 30  Comment 
Waiting for “seemingly minor events,” such as a 2 percent share price decline, is extremely important, Brean Capital’s Frank Longman said in a report. He commented that “the magic happens when we find the correct intersection of solid...




 
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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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