Description

In technical analysis, you will typically look at a chart of prices to
determine the potential price movements concerning specific time frames
and market cycles. If information is known about these price movements,
then you can use the price action to enhance your trading strategy.
For example, if you are looking for a long-term buy and hold strategy, then
the charting for that period may show that the stock tended to make lower
lows but higher highs. This would tend to have higher probabilities of
success by creating buying pressure across different price points as long as
the stock was not declining further.
Technical analysis simply means analyzing charts or using some other form
of data in the order of wagering on which way a certain stock or commodity
might go next. It is an alternative to fundamental analysis, which focuses on
the market’s economic factors such as income, interest rates, general
economic activity, and stock price movements.
In trading, we can make use of technical analysis techniques as well as
fundamental analysis methodologies. It may be helpful if you know the
basics of technical analysis principles such as price trend, support and
resistance levels, averages, and moving averages. These will help you filter
out stocks that are likely to move in conjunction with the other market
conditions at a point in time. When making trades, you should also consider
your investment strategy so that you can determine which market factors
affect your trade best.