Technical analysis includes researching stock price charts and various indicators derived from (basic) prices in order to predict the development of the market.
This graphic extrapolation method is applicable to all types of markets: indices, stocks, interest rates, commodities…, so it is not limited to the stock market (stock market); once the supply and demand meeting determines the price, the same tools and methods can be applied to any Type of underlying asset.
The main tool of the technical analyst is graphics, which can visualize and analyze the underlying assets.
The accepted purpose and reason for existence of technical analysis is to predict trends and signs of trend reversal. This is a question of determining market conditions (significant numbers and/or signals given by mathematical tools) that statistically produce the same results.
Technical analysis does not pretend to be an accurate science. It is closer to human science, because its research object is directly focused on the understanding of market psychology.
Technical analysis was first used by the Japanese around the 17th century for the rice market. They introduced a specific way to draw the price: the Japanese candlesticks. It helped them aggregate the price for a given period.
Technical charting theories are built on a few main assumptions. It partly explains why it is also a very controversial topic.
In October 1987, stock markets were booming and enjoying a bull run of five years. The stock market crash of 1987 was so much catastrophic that it caused Dow Jones’s 1987 chart to fell all of a sudden. The Dow chart 1987 faced the worst fall of history by 22.6%. The S&P 500 fell by […]
Technical analysis is a systematic way of analyzing and studying financial markets to make informed trading decisions. Technical analysis has been in practice for centuries, however, it has become extremely popular in the 21st century. Nowadays, data science and tools have become more advanced. Today, it is the age of the internet and more people […]
Technical analysis is one of the two major analytical techniques to analyze financial markets. The second one is fundamental analysis. Fundamental analysis focuses on figuring out the true value of stocks. On the other hand, technical analysis focuses on identifying patterns on a chart to predict future price movements. Do Professional traders use technical analysis? Professional […]
People offer wonder, is technical analysis useful or is technical analysis useless. They also brood over another question that, “can technical analysis beat the market?”. Does technical analysis work? Can we answer those questions as “yes” or “no?” Let us not make hasty decisions and discuss this in detail. After reading this detailed article, you […]
Charts depict price evolution over a specific period of time. It can be drawn in many ways (line, candlestick, …) It can show different timeframe (price every 1 hour, 1 day, 1 week, …) To succeed in today’s financial world, the right knowledge and right skills are imperative. Similarly, knowledge of stock charts and the […]
The Stoller Average Range Channels (STARC) Bands helps traders know when to buy and sell. When market is in uptrend, the STARC bands suggest to buy near the lower band and selling near the upper band. When market is in downtrend, the STARC bands suggest the opposite. The Stoller Average Range Channels (STARC) Bands is […]
The Rainbow Oscillator is a trend following indicator. It uses multiple moving averages to hint for trend reversal. The Rainbow Oscillator indicator helps to predict the changes in the market trend and to follow trends. It offers only two possible states, the upward and the downward. Mel Widner developed the Rainbow Oscillator and published it […]
The Negative Volume Index (NVI) indicator shows how down volume days impact price. It aims at reflecting the mindset of the smart money professionals. Paul Dysart invented the Negative Volume Index (NVI) indicator. It watches the trade volume and Paul considered trade volume the most important market indicator. The NVI indicator highlights the days and […]
The Detrended Price Oscillator (DPO) helps to eliminate the long-term trends in prices. To do so, it measures distance between extreme highs and lows. Gerald Appel developed the Detrended Price Oscillator (DPO). It is a technical analysis tool that helps to eliminate the long-term trends in prices. The DPO employs a displaced moving average for […]
The Pivot Point (High/Low) indicator is a technical analysis tool that helps to anticipate potential reversals of prices in the market. It charts on the market extreme points (highs and lows). The Pivot Point (High/Low) indicator is a technical analysis tool that helps to anticipate potential reversals of prices in the market. It is also […]
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