Technical Analysis is the study of prices and volume using charts and mathematics to analyse forces that impact between supply and demand of shares.  Technical analysts use charts for short-term trading, having the advantage of being able to look back over history to see where our stock market as a whole has been over time.  Considering that the market is repetitive, this can be very useful in helping us to develop our view of where we think the market as a whole is going and which shares are best to buy and sell.

When investing in property it is not so easy to get a birds eye view of where the whole market is headed like this, yet strangely many people have much stronger views about where they think property is going than they do about shares.

Technical Analysis involves ltechnical_analysisooking at charts of stocks or indexes over various time frames to discover trends, patterns and indicators for entry and exit levels of buying and selling stocks.

There are many and varied software programs used for technical analysis.

Some people rely on reports from brokers and other providers to send them trade ideas for their consideration.  Some firms have a subscription service you can be added to for a fee to help you identify stocks ready to trade. There are also charting programs which allow you to scan the volume of stocks, looking for particular stocks whose indicators match your entry level criteria.  Of late there appears to be a growing number of online video tutorials that you can subscribe to free of charge (and others paid subscription) which will help you with your analysis.

 

Simple technical analysis encompasses:

  • line, bar or candlestick charts
  • trend - up, down or sideways
  • support and resistance lines
  • moving average
  • bollinger bands
  • stochastic
  • RSI
  • MACD
  • volume
  • fibonacci

 

Candlesticks

Many also use Japanese Candlesticks to assist with their technical analysis, identifying candles that predict stock movement in a particular direction.
Common candlesticks are:

  • doji:  cross, gravestone, dragonfly - top and bottom reversal pattern
  • shooting star - top reversal pattern
  • hanging man - top reversal pattern
  • hammer - bottom reversal pattern

 

Patterns

Patterns can indicator the beginning, the end or the continuation of the price movement of a stock.
Some patterns include:

  • ascending & descending triangles
  • ascending & descending broadening wedges
  • inverted head and shoulders
  • dead cat bounce
  • partial rises and declines
  • rectangle tops and bottoms
  • double tops and bottoms
  • elliott waves
  • three rising valleys
  • three falling peaks
  • exhaustion gaps
  • tails
  • pennants
  • V tops and bottoms
  • wedges
  • gaps

 

For detailed information on these patterns and more visit The Pattern Site