What is Technical Analysis?
Technical Analysis can be defied as the study of market activities and action, mainly using charts for the purpose of forecasting or predicating the future price trends. Here “market activities” refer to the changes in the price and volume of stock.
Technical analysis is mainly used by Trades (i.e people of often buy and sell stocks for Intraday or Swing basis) and not for Investors(i.e people how invest in a company for 3-5 years) to identify what is the next trend that the stock is going to make. It can be tough of a torch that guides a Trader to make profits in dark.
Over the time there have been many types of Technical charts have been developed, the main contributors to Technical analysis have been the Japanese, their major invention was the Candlestick Charts that are mostly used now-days by almost all Traders and Technical Analyst.
Technical Analysis supposes markets have memory. If so, past prices, or the current price momentum, can give an idea of the future price evolution. Technical Analysis is a tool to detect if a trend (and thus the investor’s behavior) will persist or break. It gives some results but can be deceptive as it relies mostly on graphic signals that are often intertwined, unclear or belated. It might become a source of representativeness heuristic (spotting patterns where there are none)
Chart formations tell stories which only technical analysts could read. Examples are double top formations which signal a potential decline in the price of the particular stock. Double bottom is the opposite signal illustrating a stock ready to advance in price. Technical analysts use such chart formations to enter or exit their positions.
Technical analysis is a form of analysis which seeks to make judgments about the performance of a share based solely on its historic and current price behavior and without reference to the underlying business, the sector the company’s in, or the economy as a whole.
There are many instances of investors successfully trading a security using only their knowledge of the security’s chart, without even understanding what the company does. However, although technical analysis is a terrific tool, most agree it is much more effective when used in combination with fundamental analysis.
After the end of this Pathshala you shall be familiar with all the techniques used by various Technical experts to understand charts.
Search Our Archives
- Stocks Trading above their 50 day moving average - DMA In Stock Research
- Download free Ebooks based on Technical Analysis In Personal Training
- TOP 100 Stocks with the Highest P/E as on July 14th, 2013 In Stock Research
- TOP 100 Stocks with the Lowest P/E as on July 14th, 2013 In Stock Research
- Charting Pathsala - Your guide to Techincals In Technical Analysis
- Chacko Sir, Can I invest in BHARATIDIL for...In Intraday calls for 29-03-17
- a2b dear cb tgt for idea andonmobile for t...In Intraday calls for 28-02-17
- Vasavi Hi cb Tfcil short term target ?...In Intraday calls for 29-03-17
- Ram Hi cb sir, What's the growth of solar...In Intraday calls for 29-03-17
- Krishna Hi CB, I bought fedder llyod @70.. can...In Intraday calls for 29-03-17
- devjani Sir hdfc future intra level please.....In Intraday calls for 29-03-17
- Jayant I have spicejet@74 Should I hold or ...In Intraday calls for 29-03-17
- Dish NMDC intraday target pls...In Intraday calls for 29-03-17
- devjani Sir, union bank future intraday level ...In Intraday calls for 29-03-17
- Ron TRITURBINE intraday target ??...In Intraday calls for 29-03-17
- Ron Axis bank intraday upside and downsid...In Intraday calls for 29-03-17
- Rajesh Suggest best stock picks for intraday ...In Intraday calls for 29-03-17
- ninad Hi CB, your view on vedanta for today ...In Intraday calls for 29-03-17