TECHNICAL ANALYSIS

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Technical Analysis of the Stock Market is a method used to evaluate securities by analyzing statistical trends from trading activity, such as price movement and volume. Unlike fundamental analysis, it focuses on market behavior rather than a company’s financial health.

• Price Discounts Everything: All known information is already reflected in the stock price.
   
• Prices Move in Trends: Stocks tend to move in identifiable directions (uptrend, downtrend, sideways).
   
• History Repeats Itself: Market patterns often recur due to investor psychology.
   

• Candlestick Charts: Most popular; show open, high, low, and close prices.
   
• Line Charts: Useful for identifying overall trends.
   
• Bar Charts: Provide detailed price movement.
   

• Uptrend: Higher highs and higher lows → Buying opportunity.
   
• Downtrend: Lower highs and lower lows → Selling or avoiding.
   
• Sideways Trend: Price moves within a range → Suitable for short-term trades.
   

• Support: Price level where buying interest prevents further decline.
   
• Resistance: Level where selling pressure stops the price from rising.
   
• A breakout above resistance or below support often signals strong movement.
   

• Moving Averages (50-day, 200-day): Identify trend direction.
   
• RSI (Relative Strength Index):
   
  • Above 70 → Overbought
     
  • Below 30 → Oversold
     
• MACD: Helps spot trend reversals and momentum.
   
• Bollinger Bands: Measure volatility and potential breakout zones.
   
• Volume: Confirms the strength of a price move.
   

• Bullish Patterns: Cup & Handle, Double Bottom, Ascending Triangle.
   
• Bearish Patterns: Head & Shoulders, Double Top, Descending Triangle.
   

✔ Helps identify entry and exit points
✔ Useful for short- to medium-term trading
✔ Improves timing compared to fundamentals alone
✔ Works across stocks, forex, commodities, and indices