Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns and trends that can suggest future activity.
There are several key concepts in technical analysis:
Support and resistance: These are price levels at which a security's price tends to find support (stop falling) or resistance (stop rising).
Trend: This is the overall direction in which a security's price has been moving. An uptrend is characterized by higher highs and higher lows, while a downtrend is characterized by lower highs and lower lows.
Chart patterns: Technical analysts look for specific patterns on a chart that can suggest future activity. These patterns can include head and shoulders, wedges, and triangles, among others.
Indicators: These are mathematical calculations based on the price and/or volume of a security. Technical analysts use indicators to help interpret a security's chart and identify trends and patterns. Some common indicators include moving averages, relative strength index (RSI), and Bollinger bands.
There are many different ways to apply technical analysis, and different analysts may have their own preferred methods and tools. It's important to keep in mind that technical analysis is just one approach to evaluating securities, and it should be used in conjunction with other methods such as fundamental analysis.
0 Comments