0
0
Stock Chart Analysis-2022
Definition 1
Technical analysis refers to the analyzing of the past data of the price movement and forecasting future price movements.
Technical Analysis is a research technique that is used for identifying trading opportunities in the market which depends on market participants’ actions.
The actions of market participants can be analyzed by the technical charts, indicators and patterns. These chart patterns are formed within these technical charts and convey a certain message.
Traders need to identify these patterns and make trading decisions. The trading decisions should include when to enter, exit the trade or where to put stop-loss.
Definition 2 :
Technical analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends.
The term “market action” includes the three principal sources of information available to the technician-price, volume, and open interest. (Open interest is used only in futures and options.)
The term “price action,” which is often used, seems too narrow because most technicians include volume and open interest as an integral part of their market analysis. With this distinction made, the terms “price action” and “market action” can be used interchangeably.
There are three premises on which the technical approach is based:
- Market action discounts everything.
- Prices move in trends.
- History repeats itself.
Different types of technical stock analysis
-
Candlestick charts
Candlestick charts are very popular among technical analysts. They offer a great deal of information in a very precise manner. As the name suggests, the price movements for each day are represented in the shape of a candlestick.
It is similar to a bar chart because it represents the four data points: high, low, open and close.
While bar charts give volatility information only for a single trading day, candlestick charts can offer this information for a much larger time period. In addition, the candlesticks come in different colours based on the price movements.
A falling candlestick is generally represented by a black or red body while a rising candlestick is represented by a white or clear body.
In the above picture, it is clear how the values are represented in the form of a candlestick.
DOJI CANDLESTICK:
A Doji is a candlestick pattern that looks like a cross as the opening and closing prices are equal or almost the same.
Average Rating