Technical Analysis

RECENT NEWS
MarketWatch  Jun 27  Comment 
Technically speaking, the big three U.S. benchmarks have asserted a late-June holding pattern, of sorts, against a still bullish bigger-picture backdrop, writes Michael Ashbaugh.
MarketWatch  Jun 22  Comment 
Technical analysis can be lucrative for investors who look beyond daily market fluctuations, says Michael Kahn.
MarketWatch  Jun 22  Comment 
Technical Indicator: Nasdaq putting pressure on its ‘FAANG’ peak
The Economic Times  Jun 21  Comment 
In searches for charts and other stochastic tools, eight of the top 10 cities are Indian.
MarketWatch  Jun 20  Comment 
Technically speaking, two of the big three U.S. benchmarks have extended the persistent 2017 bull trend. On a headline basis, the S&P 500 and Dow industrials have once again tagged all-time highs — reaching uncharted territory — while the...
Forbes  Jun 20  Comment 
Investors should focus on the basic technical analysis tools focusing on weekly charts and the value levels at which to “buy on weakness” and risky levels at which to “sell on strength.”
Agrimoney.com  Jun 15  Comment 
Sure, the region's overall output is seen recovering further. But that is largely down to Honduras. Guatemalan output is to hit a 24-year low
MarketWatch  Jun 15  Comment 
Technical Indicator: S&P maintains support despite new stage of 'FAANG' downturn
MarketWatch  Jun 13  Comment 
Technically speaking, the U.S. benchmarks’ bull trend has weathered a mid-June market whipsaw punctuated by healthy sector rotation. Against this backdrop, the Nasdaq Composite is digesting its FAANG-fueled key reversal — a bearish technical...




 
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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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