Technical Analysis

Technical Analysis

Technical Analysis is a trading discipline used to assess security and determine trading opportunities by analyzing statistical trends of the trading activity, such as volume and price movement. It is used to assess a security with historical trading data to assess the level of strength or weakness.


Basic Concepts

Technical Analysis is used to assess a security with historical trading data. A security is a tradable financial asset. This definition encompasses stocks, commodities, currencies, futures, fixed-income, and other financial assets. 

The basic idea behind technical analysis is that the past trading activity of a security can determine its future price behavior. The analysis is mostly based on the security’s statistical charts. From this, analysts can deduce the trading opportunities for both long and short positions.

The two basic assumptions of technical analysis are: (1) The market is efficient with factors of values represents that influence the price of a security, but (2) The price behavior in the market is not overall random and moves in recognizable patterns and trends that could reoccur in time.


Using Technical Analysis

Technical Analysis predicts price movements of any tradable instrument such as bonds, stocks, futures, and currency pairs, as long as these are dependent on the forces of supply and demand. In fact, some take technical analysis simply as the study of the forces of supply and demand. Technical analysis also applies to trading volume and open interest figures.

There are hundreds of patterns and signals developed by researchers to support technical analysis trading. They have also developed many types of trading systems that can help predict price movement. Some indicators focus on market trends, while other indicators focus on the strength or weakness of a trend and its probability of continuing.

Generally, technical analysis focuses on the following:

  • Price trends
  • Volume and momentum indicators
  • Chart patterns
  • Moving averages
  • Oscillators
  • Support and resistance levels
Risk disclaimer "TS Software Ltd – Trust Company Complex, Ajeltake Road, Majuro, Ajeltake Island, MH 96960, Marshall Islands is a financial services institution outside the European Union Area, which is subject to the supervision of the IFMRRC Certificate 0395 AA V0155 Trading in Forex/ CFDs and Other Derivatives is highly speculative and carries a high level of risk. It is possible to lose all your capital. 70% of trading deals can be unprofitable. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent advice if necessary. Speculate only with funds that you can afford to lose. This Website may contain information in particular regarding financial services and products that could be regarded b a E.U. supervisory authority as an offer of financial services targeted in Europe. ESMA intervention measures do not apply to customers of TS Software Ltd and it is your responsibility to choose a company which is most suitable for your trading needs. By clicking continue you confirm that you have read, understood and agree to the risk disclosures, terms of service, cash policies, privacy policies and this notice and that you are visiting this website on your own initiative, without any encouragement whatsoever from or TS Software Ltd." Cookies notification: We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we assume that you are happy with it. Read more. Continue

Help with deposit?