Technical Analysis

RECENT NEWS
The Economic Times  Jul 4  Comment 
Technical indicator MACD showed 80 stocks including Jet and RBL Bank are all set to rise.
MarketWatch  Jul 3  Comment 
Though U.S. stocks are starting the third quarter amid recently increased volatility, the S&P 500 is traversing a well-defined range, writes Michael Ashbaugh.
The Economic Times  Jul 3  Comment 
Technical indicator RSI showed as many as 19 stocks have slipped into the oversold territory.
The Economic Times  Jun 27  Comment 
Technical indicator momentum indicator MACD showed bearish crossover for Nifty50 index.
MarketWatch  Jun 26  Comment 
The U.S. benchmarks are approaching the second-quarter conclusion amid increased volatility and potentially consequential price action, writes Michael Ashbaugh.
MarketWatch  Jun 21  Comment 
Small-cap stocks are beating the stuffing out of their large-cap peers in every sector but technology. The charts look great, except for ETF flows, which suggest bulls might want to look for a better entry point, says a prominent technical analyst.
The Hindu Business Line  Jun 21  Comment 
Pound hovers at 7-month low, BoE meeting awaited for cues
MarketWatch  Jun 20  Comment 
Dow futures have a small spring in their step today, hinting at a comeback after the blue-chip gauge’s six-session skid. The charts suggest a rally is nigh for the S&P 500, according to our call of the day from technical analyst Mark Arbeter.




 
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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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