Getting Started with Technical Analysis

Technical analysis is the study of price movements and patterns to forecast future price direction. Unlike fundamental analysis, which focuses on company financials, technical analysis is purely focused on what the chart tells us.

Why Technical Analysis?

Markets are driven by human psychology. Fear, greed, hope, and regret create patterns that repeat across time and instruments. Technical analysis helps us identify these patterns and make more informed decisions.

Key Concepts

Support and Resistance

These are price levels where buying or selling pressure has historically been strong enough to reverse the trend:

• Support: A price level where buying interest is strong enough to overcome selling pressure
• Resistance: A price level where selling interest is strong enough to overcome buying pressure

Trend Lines

Drawing trend lines helps identify the overall direction of price movement. An uptrend is characterized by higher highs and higher lows, while a downtrend shows lower highs and lower lows.

Next Steps

In future posts, I’ll dive deeper into specific patterns and indicators that I use in my own trading approach.