Technical Analysis & Chart Patterns

Technical analysis focuses on studying historical price movements, volume, and market behavior to identify future trends. It is based on the idea that market prices reflect all available information and that price patterns tend to repeat over time due to investor psychology.

Key concepts include trends, which can be upward, downward, or sideways. Support and resistance levels represent price zones where buying or selling pressure is strong. Chart patterns such as head and shoulders, double tops, triangles, and flags are used to anticipate potential trend reversals or continuations.

Technical indicators enhance analysis by providing mathematical insights into price behavior. Common indicators include moving averages, Relative Strength Index (RSI), and Moving Average Convergence Divergence (MACD).

Example:
A stock trading above its 200-day moving average is often considered to be in a long-term uptrend.

Technical analysis is widely used for timing entry and exit points and managing risk. While it cannot predict markets with certainty, it offers structured tools to assess probabilities and market momentum.