Technical Analysis

RECENT NEWS
Forbes  Aug 24  Comment 
In trading on Wednesday, shares of Barrick Gold Corp. (NYSE: ABX) entered into oversold territory, changing hands as low as $18.80 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis...
Forbes  Aug 23  Comment 
In trading on Tuesday, shares of Yamana Gold Inc (NYSE: AUY) entered into oversold territory, changing hands as low as $4.99 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator...
MarketWatch  Aug 23  Comment 
Technically speaking, the U.S. markets’ slow-motion mid-summer uptrend remains underway. Consider that the S&P 500 and Nasdaq Composite are currently challenging uncharted territory ahead of Federal Reserve policy remarks scheduled for Friday.
Benzinga  Aug 23  Comment 
Brean Capital’s Frank Longman mentioned that Alibaba Group Holding Ltd (NYSE: BABA) “recently broke out of a low base to suggest a bear to bull reversal and it looks like a name to consider strongly on the long side.” Longman maintains a...
Wall Street Journal  Aug 22  Comment 
The focus on the Fed raising rates masks the global easing in monetary policy.
The Economic Times  Aug 22  Comment 
Sameet Chavan, Technical Analyst at Angel Broking advises investors to stay light on positions, avoid undue risks and keep a note of the key support levels.
Forbes  Aug 17  Comment 
In trading on Wednesday, shares of Turquoise Hill Resources Ltd. (NYSE: TRQ) entered into oversold territory, changing hands as low as $3.01 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical...
Forbes  Aug 17  Comment 
In trading on Wednesday, shares of Exelon Corp (NYSE: EXC) entered into oversold territory, changing hands as low as $33.78 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator...
Benzinga  Aug 17  Comment 
Jim Kelleher, Director of Research at Argus Research is convincingly bullish on the stock market's outlook. Kelleher's short-term technical indicator remains "well above the high end of neutral" despite a slight dip in the market over the past...
MarketWatch  Aug 16  Comment 
Technically speaking, the U.S. benchmarks are persistently grinding out record highs in pulling-teeth form. To be sure, the slight breakouts continue to get low marks for style, though the price action is constructive, and supports a bullish...




 
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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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