Technical Analysis

Technical analysis is the art and science of interpreting charts to make buy or sell decisions. In technical analysis, those buy or sell decisions are timed so as to maximise profit from trading. In fact, many option traders use technical analysis to determine their entry and exit points in the market.

Technical analysis can be further classified into:

• Indicator based
• Price patterns

Indicator based technical analysis

Indicators are mathematical algorithms that take all available information from price action, trading volume and other factors of an underlying security, processing the information, and then predicting the future direction of a traded security.

Price patterns

Price patterns are based on chart patterns that are being formed by a financial security. By studying these price patterns, the future direction of the security is predicted.

Read More:
Basics of Price Patterns
Basics of Chart Patterns