📈 The World of Technical Analysis

By 13 de December de 2023 No Comments

📈 The World of Technical Analysis

Technical analysis is a trading discipline that dives into statistical trends, focusing on price movements and volume. Unlike fundamental analysis, which delves into a company’s financials, technical analysis uses past trading activity to predict future price movements.


🔍 How It Works:

  • Analyzes supply, demand, and implied volatility.
  • Assumes past activity and price changes indicate future movements.
  • Often generates short-term trading signals.


💡 Understanding the Basics:

  • Introduced by Charles Dow in the late 1800s.
  • Evolved with contributions from researchers like William P. Hamilton.
  • Uses various tools, including trendlines, moving averages, and oscillators.


📊 Indicators:

  • Price trends, chart patterns, volume indicators, oscillators, moving averages, and more.
  • Hundreds of patterns and signals developed over years of research.


🌐 Underlying Assumptions:

  1. Market Efficiency: Belief that all factors influencing price are already priced in.
  2. Trend Persistence: Prices are more likely to continue a trend than move erratically.
  3. History Repeats: Patterns in price movements tend to repeat, driven by market psychology.


🤔 Tech Analysis vs. Fundamental Analysis:

  • Fundamental: Evaluates intrinsic value based on financials.
  • Technical: Focuses on price and volume patterns, assuming all known fundamentals are in the price.


🛑 Limitations:

  • Debate on the Efficient Markets Hypothesis (EMH).
  • Criticism of patterns being self-fulfilling prophecies.
  • Some argue that history doesn’t repeat itself exactly.


📜 Certification:

  • Chartered Market Technician (CMT) designation for professional technical analysts.


Whether you’re a seasoned trader or just dipping your toes, understanding technical analysis opens up a world of insights into market movements.


Untill next time,



#TechnicalAnalysis #Trading101

Leave a Reply