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- Technical analysis
is the study of price action in a particular
stock, index, futures contract, or commodity. A
technician analyzes this historical price data in
an attempt to predict future price action. Many
skeptics dispute this methodology, stating that
it’s impossible to predict future moves based on
what has happened in the past.
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- Accuinvest has
always approached technical analysis from a
completely different angle. Although the
points plotted on the chart represent historical
prices, they also have a human facet built into
them. When you look at a chart, it is not simply a
bunch of lines on a computer screen or piece of
paper, it is a diary depicting the life of the
stock. There is a ton of emotion that goes into
each and every bar. When a stock drops by 20% to
30% in
a matter of days, the investors who hold that
security in their portfolio will experience extreme fear. This fear
can easily be seen on our chart in the form of
panic selling. It’s this human
factor that makes the future movements in the
security somewhat predictable.
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- One unique aspect of
technical analysis is that it's applicable
regardless of the entity that you're attempting
to trade. Whether you’re trading stocks,
futures, or currencies, the techniques used to
evaluate them on a technical basis will be almost identical.
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- The
Accuinvest
Technical
Analysis
Learning
Center
was designed to give beginner investors and
traders a brief introduction to the basic
principles of technical analysis. For a more in-depth look at this topic we recommend our
two-tape video set on the subject. More
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- Line
Charts
- A line chart
is by far the simplest form of chart. It
is constructed by plotting price points of
a security over a period of time and can
be drawn using either the high, low, open,
or closing price. Once these price points
are plotted, they are connected using
lines that will then form the chart. More
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- Bar
Charts
- Bar charts
are probably one of the most commonly
available charts and can be found on
almost any financial website. The bar
chart is by far the best style of chart to
use in identifying support and resistance
levels, or some of the more complex chart
patterns. You will notice that this style
of chart displays significantly more data
than a line chart. More
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- Candlestick
Charts
- Although we
love candlestick charts and use them on a
daily basis, we think it’s important to
note that candlestick charts
are not the mysterious fortunetellers that
many people think they are. There is no
magic here. These charts are formed using
the exact same data as our bar chart. The
true magic behind these charts is that
they offer a much more visual way of
displaying the data. More
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- Support
And Resistance
- Support and
resistance are key price levels at which a
security has a high probability of
reversing direction. When trying to
visualize support and resistance levels, it
is important think about supply and
demand and human emotion. It’s these
factors that form key price levels. For a stock to reverse directions
in the middle of a drop, there must be
buyers willing to purchase the security. More
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- Technical
Indicators
- Indicators
are formed using mathematical equations
and can be used in a standalone form, or
can be
overlaid on the chart of a given security.
When using indicators it's important to
understand that your chart is by far the most important
factor, additional indicators should only be
used to confirm the price action displayed
on the chart. More
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