What Is Technical Analysis?
Technical analysis is the study of historical price and volume data to forecast future price movements. Unlike fundamental analysis — which looks at a company's financials — technical analysis focuses purely on what the market is doing, not why.
The core premise is that all known information is already reflected in the price, and that price moves in trends that can be identified and traded. By studying charts and patterns, traders aim to find high-probability entry and exit points.
Key Principle: Technical analysis works best when combined with sound risk management. No indicator or pattern is 100% reliable — always use stop-losses.
Chart Types
The three most common chart types used in technical analysis:
Line Chart
Connects closing prices over time. Simple and clean — best for identifying overall trends at a glance.
Best for: Long-term trend analysisBar Chart
Shows open, high, low, and close (OHLC) for each period. More detail than a line chart.
Best for: Detailed price actionCandlestick Chart
The most popular chart type. Color-coded candles show OHLC data and make patterns easy to spot.
Best for: Pattern recognitionKey Chart Patterns
Chart patterns are recurring formations that signal potential price movements. They fall into two categories: continuation patterns (trend continues) and reversal patterns (trend changes).
Head and Shoulders
Bearish ReversalReversalThree peaks with the middle being the highest. Signals a trend reversal from bullish to bearish when the neckline breaks.
Double Bottom
Bullish ReversalReversalTwo consecutive troughs at roughly the same level. Signals a bullish reversal after a downtrend.
Bull Flag
Bullish ContinuationContinuationA sharp upward move followed by a brief consolidation in a downward channel. Signals continuation of the uptrend.
Ascending Triangle
Bullish ContinuationContinuationFlat resistance with rising support. Typically breaks out to the upside with strong volume.
Cup and Handle
Bullish ContinuationContinuationA rounded bottom followed by a brief consolidation. One of the most reliable bullish continuation patterns.
Popular Technical Indicators
Indicators are mathematical calculations based on price and/or volume that help traders identify trends, momentum, and potential reversals.
Moving Average (MA)
Smooths price data to identify trend direction. The 50-day and 200-day MAs are the most widely watched.
Use: Trend identificationRSI (Relative Strength Index)
Measures momentum on a 0–100 scale. Above 70 = overbought, below 30 = oversold.
Use: Momentum & reversalsMACD
Shows the relationship between two moving averages. Crossovers signal potential trend changes.
Use: Trend & momentumBollinger Bands
Three bands showing price volatility. Price touching the outer bands can signal overbought/oversold conditions.
Use: Volatility & breakoutsVolume
The number of shares traded. High volume confirms price moves; low volume suggests weak conviction.
Use: ConfirmationStochastic Oscillator
Compares closing price to price range over a period. Useful for identifying overbought/oversold in ranging markets.
Use: Overbought/oversoldSee every one of these indicators on a live chart — free
Moving Average, RSI, MACD, Bollinger Bands, and Stochastic Oscillator are all built into TradingView's free plan. No credit card, no download — open a chart in seconds.
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Support & Resistance
Support and resistance are price levels where buying or selling pressure has historically been strong enough to halt or reverse a price move. Understanding these levels helps you place better limit orders and set appropriate stop-losses.
Support Level
A price floor where buying interest is strong enough to prevent further decline. When price approaches support, traders look for buying opportunities.
Resistance Level
A price ceiling where selling pressure is strong enough to halt an advance. When price approaches resistance, traders look for selling or shorting opportunities.
Role Reversal: When a support level is broken, it often becomes resistance — and vice versa. This is one of the most powerful concepts in technical analysis.
Getting Started with Technical Analysis
Start with one chart type
Master candlestick charts before exploring others. They provide the most information in the most intuitive format.
Learn 2–3 indicators deeply
Don't pile on indicators. Pick RSI, a moving average, and volume — and learn them thoroughly before adding more.
Practice on paper trading
Apply your technical analysis skills in a simulated environment before risking real money.
Keep a trading journal
Record every trade with your reasoning, entry/exit points, and outcome. Review regularly to identify patterns in your decision-making — this is a core part of building a trading plan.
Practice Technical Analysis Risk-Free
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Everything you just learned — candlestick patterns, chart types, moving averages, RSI, MACD, Bollinger Bands, support and resistance — is built into TradingView's free plan. No credit card, no download. Open a live chart in seconds and start seeing it in action.
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