Technical Analysis

Technical analysis is the study of the price movement and patterns of a security. By scrutinizing a security's past price action, primarily through charts and indicators, traders can forecast future price direction.
Frequently Asked Questions
  • What is technical analysis?
    Technical analysis is an investing method that is used to evaluate investments and identify trading opportunities in price trends and patterns by using charts. By tracking price and trading volume, investors can recognize patterns that help them guide their trading decisions.
  • What is a line graph?
    A line graph connects various data points to show specific patterns over a defined time horizon of interest for an investor, and can also be known as a line plot or line chart. For investors, the data is used to create a visual representation of a company’s historical stock price moves.
  • What is an average return?
    An average return is a measure or indicator that helps investors and analysts gauge what the returns for a particular stock or security has been over a set period of time. In sum, it is the average return calculated over a time period of interest to the investor.
  • How do you build a trading indicator?
    Trading indicators are tools that an investor can use to help gauge future performance of a stock or security. Two of the most common parts of an indicator are to build a unique indicator to uses patterns and common chart patterns to recognize trends, and to use mathematical functions to predict future support and resistance levels of stock prices.
  • What is relative strength?
    Relative strength involves selecting investments that have been outperforming the market and is used by technical analysts and value investors to inform their investing decisions. Relative strength investors generally believe that the trend of outperformance will continue, which is why they are sometimes referred to as momentum investors.
  • What is a hockey stick chart?
    In trading circles, a hockey stock chart is a price line chart that looks like a hockey stock, which depicts a sharp rise in prices after a short period of stability. As one can guess, this is illustrated by a chart that looks like a hockey stick with a short, curved blade, attached to a long stick that rises at an angle.
Key Terms
Top 7 Books to Learn Technical Analysis
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7 Technical Indicators to Build a Trading Toolkit
The Most Reliable Indicator You've Never Heard Of
Debunking 8 Myths About Technical Analysis
Technical Analysis: Triple Tops and Bottoms
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Average Return: Meaning, Calculations and Examples
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Market Indicators That Reflect Volatility in the Stock Market
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How to Build a Trading Indicator
Technical Indicator: Definition, Analyst Uses, Types and Examples
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Metrics
What Technical Tools Can I Use to Measure Momentum?
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What Is T-Distribution in Probability? How Do You Use It?
ETF Analysis: The iPath S&P 500 VIX Futures
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Advanced Candlestick Patterns
The Rectangle Formation
Relative Strength: Definition in Investing and Stock Analysis
Exponential Moving Average vs. Simple Moving Average: What's the Difference?
Using Technical Indicators to Develop Trading Strategies
Industrial ETFs Bouncing Off Key Support
Divergence vs. Convergence What's the Difference?
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Ulcer Index (UI): What it is, How it Works
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Strategies for Trading Fibonacci Retracements
Value Added Monthly Index (VAMI): What It Is, How It Works
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How to Apply Technical Indicators to Mutual Funds
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How to Analyze Mid-Cap Stocks
What Is Platykurtic? Definition, Examples and Other Distributions
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DUAL Commodity Channel Index (DCCI)
Can the Correlation Coefficient Predict Stock Market Returns?
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Top Technical Indicators for Rookie Traders
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Understanding Trend Analysis and Trend Trading Strategies
The Pioneers of Technical Analysis
Anticipate Trends to Find Profits
Technical Analysis That Indicates Market Psychology
What Is a Bar Graph?
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Commodity Investing: Top Technical Indicators
A Stock Sell-off Vocabulary Guide
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Hockey Stick Chart: Overview and Examples in Investing
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Guide to Technical Analysis
What Is an Offset? Definition, Example, and How It's Used
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Line Graph: Definition, Types, Parts, Uses, and Examples
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Price Channel: Meaning, Overview, Analysis
Horizontal Line: Definition, Uses, Example in Technical Analysis
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McGinley Dynamic Indicator: What it is, How it Works
Strategies & Applications Behind The 50-Day EMA (INTC, AAPL)
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Donchian Channels: Formula, Calculations, and Uses
Average Directional Index (ADX): Definition and Formula
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Bollinger Bands®: What They Are, and What They Tell Investors
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What Is a Paper Trade? Definition, Meaning, and How to Trade
Using Bullish Candlestick Patterns to Buy Stocks
Fibonacci and the Golden Ratio
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Notional Value vs. Market Value: What's the Difference?
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How Is the Exponential Moving Average (EMA) Formula Calculated?
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Arithmetic Mean: Definition, Limitations, and Alternatives
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Average True Range (ATR) Formula, What It Means, and How to Use It
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Bullish Engulfing Pattern: Definition, Example, and What It Means
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Candlestick Chart Definition and Basics Explained
What is EMA? How to Use Exponential Moving Average With Formula
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What Are Fibonacci Retracement Levels, and What Do They Tell You?
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What Is a Head and Shoulders Chart Pattern in Technical Analysis?
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What Is the Ichimoku Cloud Technical Analysis Indicator?