Technical Analysis

What is Technical Analysis ?

The Technical analysis is a methodology to assist you in deciding the timing of investments, which is very vital to make wise investment decisions. The technical analysis is based on the assumption that history tends to repeat itself in the stock exchange. If a certain pattern of activity has in the past produced certain results nine out of ten, one can assume a strong likelihood of the same outcome whenever this pattern appears in the future. However technical analysis lacks a strictly logical explanation. Technical Analysis is the study of the internal stock exchange information and not of those external factors which are reflected in the stock market. All the relevant factors, whatever they may be can be reduced to the volume of the stock exchange transactions and the level of share price or more generally, the sum of the statistical information produced by the market. Few of the most commonly used technical analysis methods for share market are Japanese Candlestick (most powerful stock charting method), Price Curves, Trend Lines, High Low Charts and Moving averages. Our Technical Analysis Software StocktechTM will help you to become technical analyst on your own.

Technical Analysis Graph

Charts For The Technical Analysis

Kinds of prices and time units. Charts for the technical analysis are being constructed in coordinates "price (the vertical axis) - time (the horizontal axis)". The following kinds of currency prices represented on charts are being distinguished on Forex:

o open - a price at the beginning of a trade period (year, month, day, week, hour, minute or a certain amount of one from these units);

o close - a price at the end of a trade period;

o high - the highest from prices observed during a trade period;

o low - the lowest from prices observed during a trade period.

Providing the technical analysis one uses charts for different time units - from 1 year or more till 1 minute. The bigger is a time unit applied for the chart plotting the bigger is a time span to analyze price movements and to determine the major trend by means of the chart. For the short trading charts for less time units are more suitable.

Line chart. The line chart is plotted connecting single prices for a selected time period. The most popular line chart is the daily chart. Although any point in the day can be plotted, most traders focus on the closing price, which they perceive as the most important. But an immediate problem with the daily line chart is the fact that it is impossible to see the price activity for the balance of the period as well as gaps - breakups in prices at joints of trade periods. Nevertheless, line charts are easier to visualize. Also, technical analysis goes well beyond chart formation; in order to execute certain models and techniques, line charts are better suited than any of the other charts.

Bar chart. The bar chart consists from separate histograms. To plot a histogram in coordinates price - time the points responding to high, low, open and close prices for a time period analyzed should be marked on the one vertical bar. The opening price usually is marked with a little horizontal line to the left of the bar; and the closing price is marked with a little horizontal line to the right of the bar. Bar charts have the obvious advantage of displaying the currency range for the period selected. An advantage of this chart is that, unlike line charts, the bar chart is able to plot price gaps. Hence, it is impossible to see on a bar chart absolutely all price movements during the period.

Candlestick chart. The candlestick chart is closely related to the bar chart. It also consists of four major prices: high, low, open, and close. In addition to the common readings, the candlestick chart has a set of particular interpretations. The latter is possible thanks to the convenient visual observation of that chart.

The opening and closing prices form the body (jittai) of the candlestick. To indicate that the opening was lower than the closing, the body of the bar is left blank. Current standard electronic displays allow you to keep it blank or select a color of your choice. If the currency closes below its opening, the body is filled.

Stock Technical Analysis

 

Technical Analysis Stock - Learning How to Evaluate the Market
Many people have been paying attention to the way that the recent economic crisis has affected the housing and credit markets, as well as the stock market itself. There were scores of people who thought they had charted a path for long term wealth by investing their money in certain companies that were said to be too big to fail. However, when things began to get tough, and people began to get stingy with their stock market purchases, it became obvious that there is always risk involved when you buy into a public company. If you're interested in getting a fresh start in the market, and only bothering with stocks that have the potential for long term success, you've got to get a firm grasp of technical analysis stock.

The first thing that you must understand is that there are two main methods for evaluating the stock market, and determining whether buying or selling is the right choice at any particular point in time: fundamental analysis and technical analysis stock. Investors should be aware of the different characteristics of both strategies, and plan on implementing some elements of both into what will become their own personal style of investing. Most professional analysts will tell you that these two approaches are each other's polar opposites, because they are based on very different assumptions about what drives the daily market fluctuations.

If you're interested in technical analysis stock, you'll need to be committed to constant tracking and monitoring of stock charts using specialized software programs and online tools. These tools will be connected electronically to the stock index of your choice, and will register trade prices as well as opening and closing prices for the day. Technical analysts look at these charts over time and inspect them for trends and patterns that can provide clues about whether a stock is likely to increase or decrease in price.

The basic assumptions of technical analysis stock are simple: First, market prices have been discounted to reflect, relevant information like natural disasters, political pressure, or public psychology about a company, so extra research isn't needed to account for them. Second, prices like to move in trends, which will continue a change in the market interrupts them. Third, technical analysts firmly believe that history repeats itself, meaning that past occurrences can be used to predict market action in the future. Although nothing can allow you to predict the future absolutely, technical analysis will allow you to make educated guesses.

Technical Analysis Software