Technical Analysis
Reading the Market Through Price Action
Technical analysis studies historical price movements and market behavior to identify trading opportunities.
Support and Resistance
Support is a price level where buying interest may emerge.
Resistance is a price level where selling pressure may increase.
These levels help traders identify potential entry and exit points.
Trend Lines
Trend lines help visualize market direction.
- Uptrend: Higher highs and higher lows.
- Downtrend: Lower highs and lower lows.
- Sideways Trend: Range-bound movement.
Candlestick Patterns
Popular candlestick formations include:
- Doji
- Hammer
- Shooting Star
- Bullish Engulfing
- Bearish Engulfing
These patterns help traders interpret market sentiment.
Chart Patterns
Common chart formations include:
- Head and Shoulders
- Double Top
- Double Bottom
- Ascending Triangle
- Descending Triangle
Chart patterns can signal potential trend continuations or reversals.
Volume Analysis
Volume represents the number of shares or contracts traded.
Increasing volume often confirms the strength of a price move.
Key Takeaways
- Technical analysis focuses on market behavior.
- Support and resistance help identify trading zones.
- Chart patterns and volume provide valuable market signals.
