Technical analysis studies price and volume behaviour to identify market conditions and patterns.
Start simple
Learn trend, price structure, support/resistance and volume before adding indicators.
Indicators
Moving averages and oscillators transform market data; they do not guarantee future outcomes.
Risk plan
Define invalidation and position size before acting on a chart pattern.
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What technical analysis can and cannot tell you
Technical analysis studies price and volume behaviour. It can help describe trend, momentum, volatility and levels of market participation; it cannot by itself establish a company's intrinsic value.
Start with market structure
Identify the timeframe, trend direction, major highs and lows, support/resistance zones and volume behaviour. Avoid mixing a short-term chart signal with a long-term investment conclusion.
Indicators are transformations, not new information
RSI, MACD and moving averages are calculated from price and/or volume. Multiple indicators can therefore be telling you versions of the same underlying information.
Risk management comes first
Before entering a trade, define invalidation, position size and maximum acceptable loss. A technical setup without risk control is incomplete.
Technical-analysis checklist
- ☐ Timeframe defined
- ☐ Trend identified
- ☐ Key levels marked
- ☐ Volume considered
- ☐ Setup has an invalidation point
- ☐ Position size matches risk