Technical Analysis
 

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Technical analysis is a means by which we can predict the future price of any asset based on historical price movements, volume and open  interest. It is a weapon that helps investors and traders predict what might happen to prices over a period of time. Technical analysis applies to stocks, commodities, futures, indices, or any other trading instrument whose price is influenced by forces...supply and demand, i.e volume.. Technical analysis includes a combination of tools such as chart patterns, indicators, candlestick charts.. and market structure helps an individual predict future price movements.. Price refers to any combination of open, high, low or close for a given security over a specific period of   time..  period. The period of time for a given security can be is any time period, such as 1 minute, 5 minutes, 10 minutes, 15 minutes, hourly, daily, weekly or  monthly.. Fundamentals of Technical Analysis
 

According to Charles Dow, the  The basis of technical analysis is assumptions..
1.. All-Cut Price
 2.. Price movements are not completely random
3.. What is more important is why

All-Cut Price – Technical analysis believes that current prices fully reflect all information.. Since all the information is already reflected in the price, it represents fair value and will form the basis of any analysis. After all, market prices reflect the collective knowledge of all participants, including traders, investors, portfolio managers, buy-side analysts, sell-side, market strategist, technical analysts, fundamentals.. technical analysts, and many others. Technical analysts use information captured by prices to interpret what the market is saying and understand the future.
 

Price movements are completely random course: Most technical analysts agree that prices fluctuate. that there are periods when prices do not follow the trend. If prices were always random, making money from technical analysis would be extremely difficult. A technician believes that it is possible to identify a trend, invest or trade based on that trend, and make money observing it. Because technical analysis can be applied to many different time frames,   short-term and long-term trends can be detected..

What is more important than why – A technical analyst knows the price of everything but the value of nothing?? Technical analysts only care about two things. What is the current price?? What is historical price volatility?? Price is the end result of the battle between the forces of supply and demand for a company's stock.. The purpose of analysis is to predict future price trends.. By focusing only on price, technical analysis represents a simplistic approach. Fundamentalists wonder why the price is what it is. For technicians, the why part of the equation is too broad and the underlying reasons given are often highly suspect. Technicians believe that it is not important to focus on what is best and why. Why did the price increase?? Quite simply, more buyers (demand) than sellers (supply).

After all, the value of an asset is simply the amount a person is willing to pay for it. Who needs to know why?? Fundamentals of Technical Analysis are

Trend Identification
Support and Resistance
Momentum and Volume
 Buying and Selling  Pressure
 Relative Strength Pressure
 

The Importance of Technical Analysis  is Not Just for Stocks – Technical Analysis The algorithm can be used for any action with historical transaction data. This includes stocks, futures, commodities, fixed income, forex, cryptocurrencies, and more.

Focus on price – If the goal is to predict future prices then it makes sense to focus on price movements. Price fluctuations often occur before fundamental developments. By focusing on price action, technicians automatically focus on the future. A technical analyst will view accumulation periods as evidence of an impending increase in price action and distribution periods as evidence of an impending decline.
 

Price Action – Many technicians use open, high, low, and close prices to analyze price action. There is information to be gleaned from every piece of information. Separately, these wouldn't say much.  However, taken together, the opening, high, low and closing prices reflect the forces of supply and demand.

Support and Resistance – Simple chart analysis can help identify support and resistance levels.  These are marked by periods of congestion where price moves within a confirmed range for an extended period of time, telling us that supply and demand forces are at a standstill. When the price moves out of the trading range, it signals that supply or demand has begun to increase or decrease. If the price exceeds the upper band of the trading range then the seller wins and if the opposite happens then the buyer wins..