Introduction to Technical Analysis

Technical analysis is the study of price movements and chart patterns to predict future market direction. It's based on the principle that historical price action tends to repeat itself.

Reading Price Charts

Charts display price movements over time. The most common chart types are line charts, bar charts, and candlestick charts. Candlestick charts provide the most information about price action.

Identifying Trends

Trends are the general direction of price movement. An uptrend consists of higher highs and higher lows, while a downtrend shows lower highs and lower lows. Sideways trends occur when prices move within a range.

Support and Resistance

Support levels are price points where buying interest is strong enough to prevent further price declines. Resistance levels are where selling pressure prevents price advances.

Technical Indicators

Popular indicators include Moving Averages, RSI, MACD, and Bollinger Bands. These tools help identify potential entry and exit points based on mathematical calculations.

Chart Patterns

Common patterns include triangles, head and shoulders, double tops and bottoms, and flags. These patterns often signal potential price reversals or continuations.