Part 8: Introduction to Technical Analysis 📈🔍
Technical Analysis (TA) is the study of past price movements to forecast future market trends. It helps traders make informed decisions by reading charts and patterns.
Price Action:
Uptrend: Higher highs & higher lows — bullish market
Downtrend: Lower highs & lower lows — bearish market
Range: Price moves sideways, no clear direction
Key Elements of TA:
Candlesticks & Chart Patterns: Visual tools showing price movement, e.g., doji, engulfing candles, head & shoulders
Support & Resistance: Levels where price tends to stop and reverse — support is a “floor,” resistance a “ceiling”
Trendlines: Lines connecting price lows or highs to identify trend direction
Fibonacci Retracement & Extension: Tools to find potential reversal or target zones based on natural ratios
Popular Indicators:
Moving Averages (MA): Smooth out price data to identify trends
Relative Strength Index (RSI): Measures momentum, shows overbought or oversold conditions
MACD: Tracks trend direction and momentum using moving averages
Bollinger Bands: Show volatility by placing bands around a moving average
Volume: Confirms strength behind price moves
Mastering these tools helps traders spot entry and exit points, manage risk, and improve their trading edge.
Stay tuned for deeper dives in upcoming parts! 🚀