Introduction to Technical Analysis

For Presentation Notes in PDF format click here.

For better understanding through video tutorial click here.

Technical Analysis is

•       The method of Forecasting the direction of prices.

•       By studying the past market data.

•       Market data comprise of Price and Volume.

•       With the help of charts showing the trading history and statistics.

•       To make buy or sell decisions.

Definition of Technical Analysis

•       Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, past prices, and volume.

•       Technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.

•       Technical analysis is a methodology that makes buy and sell decisions using market statistics. It primarily involves studying charts showing the trading history and statistics for whatever security is being analyzed.

Fundamental Analysis

•       A method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors including macroeconomic factors and company-specific factors

•       The end goal of performing fundamental analysis is to produce a value that an investor can compare with the security's current price, with the aim of figuring out what sort of position to take with that security (under-priced = buy, overpriced = sell or short).

Difference between the two

Assumptions of TA

1.     The market discounts everything.

2.     Price moves in trends.

3.     History tends to repeat itself.

The Importance Of Volume

•       What is Volume?

Volume is simply the number of shares or contracts that trade over a given period of time, usually a day. The higher the volume, the more active the security.

•        Any price movement up or down with relatively high volume is seen as a stronger, more relevant move than a similar move with weak volume.

In the other blogs we will study the Concepts related to TA

•       Trend Analysis

•       Support and Resistance

•       Charts and their types

•       Chart patterns

•       Technical Indicators and so on…