As you may already know, technical analysis involves study of historical price and volume data for any security. As opposed to fundamental analysis, followers of technical approach believe that the pricing in itself accounts for all factors considered as fundamentals so they need not be studied separately. They seek to study the market directly instead of focusing on the components which go into shaping various aspects of the Indian stock market.
Despite a number of arguments being made against reliability of technical analysis, a number of traders employ it to help identify certain price trends as a means to minimize the risks involved to an extent. Before you can start looking for patterns in a price movement chart, you should know that a trend in technical analysis is essentially the direction in which a certain stock may be headed.
Despite a number of arguments being made against reliability of technical analysis, a number of traders employ it to help identify certain price trends as a means to minimize the risks involved to an extent. Before you can start looking for patterns in a price movement chart, you should know that a trend in technical analysis is essentially the direction in which a certain stock may be headed.
To make it more specific, one can broadly classify them as uptrend, downtrend and sideways or horizontal trend. In online stock trading, usually the prices for any security move in a series of highs and lows which can constitute an uptrend if the movement describes a series of higher highs and higher lows or a downtrend if it describes a series of lower lows and lower highs. In case there is no well-defined up or down movement in prices, it is known as sideways trend.
Next, it is important to understand the concept of support and resistance while defining a trend. Support level can be defined as the lower price level below which the stock has not traded for a while and resistance level is the higher level which has not been breached for some time. With the help of these ideas, trendlines for a particular security can be drawn which indicates the general direction of stock movement to begin with technical analysis.
Next, it is important to understand the concept of support and resistance while defining a trend. Support level can be defined as the lower price level below which the stock has not traded for a while and resistance level is the higher level which has not been breached for some time. With the help of these ideas, trendlines for a particular security can be drawn which indicates the general direction of stock movement to begin with technical analysis.