20 - Minute Overview of technical analysis
- Technical analysis is the study of market behaviour
- Price charts are used to show the way that prices evolve in a market over time
- Identifying trends is useful for those who believe that the price will continue to follow its current trend in the future unless something happens to suggest otherwise
- Bar charts and candlestick charts show the price and volume information
- Point and figure charts give analysts a different perspective on the price action to that given by standard charts and indicators
Price Chart Patterns and Candlesticks
The patterns covered in this course are:
- Head and shoulders
- Double and triple tops and bottoms
- Triangle formations
- Bar chart gaps
- Breakouts
- Hammer and hanging man
- Doji
- Engulfing patterns
- Star formations
Technical indicators
- Moving averages give a smoothed version of the price series, making them useful for identifying major trends, In general, when the price is above the moving average line it is in an uptrend and when the price is below the moving average it is in a downtrend
- Moving averages envelopes/bands display support and resistance levels for the price, Bollinger bands are somewhat different to percentage bands, but the trading techniques used with MA envelopes apply to them as well
- Momentum is a measure of the velocity at which prices are changing
- Momentum must be related to some period
- Stochastics work by examining the position of each day's close relative to the price range of the previous n days, where n is a periodicity specified by the user
Click here to view the Inmarkets Finance library