Understanding Technical Analysis Technical analysis is the study of market action, focusing on historical price and volume data to identify trends, patterns, and chart formations. It aims to determine future price direction based on past market behavior.
Basic Premises of Technical Analysis The three basic premises are: 1) Market action discounts everything; 2) Prices move in trends; 3) History tends to repeat itself. These form the foundation of technical analysis guiding traders' approach.
Applicability Across Markets Technical analysis can be used for stocks, futures, commodities, and forex markets by analyzing price and volume movements as well as identifying trends and patterns across different types of securities.
Importance of Charts in Analysis 'Charts provide a visual representation of price and volume data over time,' helping traders identify trend lines support/resistance levels & chart patterns essential for making informed trading decisions.
Market Indicators in Technical Analysis 'Market indicators such as moving averages & oscillators confirm trend directions & potential trade opportunities.' They help analyze market behavior using mathematical calculations based on pricing/volume data.