#basics of technical analysis

“Rectangle Channels” are continuation patterns. Rectangle channel breakouts in the trend direction are more reliable than breakdowns against the trend. Rectangle channels form more in the beginning stages of longer-term trends. A base building before a clear trend run is a very reliable pattern. “Rectangle” channel tops are rarely formed compared to the channel “bottoms.” Intermediate trend…

Dow theory is a way of projecting the markets trends by way of using line graph for a period of time.

Technical Indicators are simple mathematical formulas derived from price and volume. But a novice trader never looks at them like that. For a beginner, they hold the promise of great riches. A few simple tweaks and the indicators are bound to give them the financial freedom they desired. But we all know how it pans out in the end...

It's not how an indicator is calculated that holds the value, but how a trader uses and interprets it that will decide the ultimate success... But the topic of technical indicators always makes for an interesting read, read my view on them...

Disclaimer: I have spent the better part of my trading career running after these indicators, tweaking parameters, jumping from one indicator to another, basically, searching for the holy grail of trading, luckily I discovered nothing... What are the technical indicators? As stated earlier, they are mathematical formulas applied to the two basic elements of markets, viz, price and volume. The objective is to extract some hidden property of price and volume movements which can give us deeper insights into their behaviour. Once these behaviours and patterns are extracted, it is just a matter of monitoring these indicators and take the profitable trades... The reality is slightly different. The mathematical formula part of the equation is correct but you cannot make money by designing the best indicator, but by using the indicator in the best possible way...

Technical analysis has been a cornerstone of my journey in the markets, which spans over a decade now. I have learnt a lot over the years sometimes by voluntarily by studying books, videos and courses and sometimes involuntarily when markets gave me a slap on the wrists for being complacent. But this journey has been great and technical analysis has now become my life. I am crazy about it and thought it would be nice to share my views on this huge topic... What is technical analysis? In simple words, it is the study of prices, how they behave and what they indicate about what the market is doing right now. Some people boast of having predictive powers and go on giving targets and predicting future market developments. The funny part is they say technical analysis of some sort helps them do this, but I completely disagree with them and warn you to stay away from such charlatans... All technical analysis can do is give you the current market situation, who is winning right now buyers or sellers, that's all. And this also is possible because prices are nothing but traders behaviours reflected in their actions of buying and selling. So technical analysis, notwithstanding all the maths involved in it, at the end of the day is the analysis of human behaviour. Price is just a proxy...

Differences in Fundamental and Technical Analysis. Relationship of Market action vs News. Basics of Technical Analysis. Working Platforms and Theories for Technical Analysis. Understanding about Market Behavior with Price Patterns.