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Technical analysis of stocks and trends is a study of historical market data. Technical analysis, as the word suggests, may sound a bit complex to many of us. Just like mathematics and statistics are big aspects of the financial market. Technical analysis is trading discipline. If explained right, technical analysis is more sought.
It employs a measured investment as well as determine trading opportunities. Aforementioned is achieved by utilizing a statistical trend. Once you know that you can easily understand how to do technical analysis of stocks and trends. Let’s begin with the basics of technical analysis.
Introduction to Indian Stock Market
Indian Stock Market trading takes place on two primary stock exchange: National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). In fact, two Indian securities exchange are the world’s fastest emerging markets in the world. Emerging market like India are engines for future growth. Contrary, a very low percentage of household income is saved in India.
Fundamental and technical analysis course is two popular approaches of analysing stocks. In this article technical analysis of stocks is explained.
What is Technical Analysis of Stocks?
Technical analysis of stocks is defined as an approach to evaluate price movement – using the study of past market data including price and volume. Moreover, quantitative analysis and behavioural economics use similar technical analysis tool.
Three Pillars of Technical Analysis
Three pillars of technical analysis of stocks in India lays down the foundation.
- Price: The most essential area focused by an analyst to make a successful trade decision. For instance measure of profits and losses, a difference between buy and sell.
- Volume: Volume includes major technical analysis concepts such as market breadth, trade count, open interest, accumulation, and distribution.
- Time: Time includes the relationship between patterns and trends, cycles, seasonality, and duration.
- Sentiment: Sentiment determines the consensus of investors.
Breaking Down Technical Analysis of Stocks
Let’s breakdown the technical analysis of stocks. The technical analysis of stocks has been used for hundreds of years. During an early 17th century, in Europe, Joseph de la Vega adopted technical analysis approach to predict Dutch markets. Similarly, in Asia, Homma Munehisa influences the innovation of candlestick charts. This becomes an incredibly popular technique to identify chart patterns in the West.
The bottom line is that technical analysis is the only method to predict market price. This reflects all the available information that could impact a market. As a result, there’s a need to consider other tools available in the market. For instance economic, fundamental, and new development. Because they are previously priced as a dispose of security.
However, the technical analyst believes that the movement of the price is directly related to trends. As well as the history tends to repeats itself (when it comes to market).
Types of Technical Analysis
There are two types of technical analysis: chart pattern and technical indicators.
1.Chart patterns: technical chart analysis of Indian stock is a subjective form to identify areas of resistance on the chart while looking at the specific patterns on the chart. The patterns help in predicting the price movement following a breakdown from a particular time. While a breakdown from this resistance is subject to a significant movement.
2. Technical indicators: It’s a statistical form of technical analysis where an analyst apply several mathematical formulas to prices and volumes. However, moving averages is the most common type of technical indicator, used for spotting trends via smooth price data.
Download free technical analysis stock trends pdf
How To Do Technical Analysis of Stocks
In this section, we’ll discuss the technical analysis of the stocks on the basis of the indicators. Further, the technical indicators are classified as: qualitative and quantitative. The qualitative indicators aim to find support and resistance levels. Whereas the quantitative indicators aim to study price patterns in order to identify stock movement (upward or downward trend).
An analyst selects whether to buy stocks or not on the basis of the findings. Conversely, they include moving momentum and average indicators.
Qualitative Analysis
- Supports and resistance
- Chart patterns
- Change in polarity
Quantitative Analysis
- Identify market trends
- Momentum indicators
- Moving Averages
Free Tutorial Technical Analysis of Stocks
Technical analysis of stock market tutorials is a great way to improve learning. With Institute of Financial Market Courses (IFMC), become an expert at analyzing both cues. The course will teach you the skills required to capitalize on stock trends like a pro trader. In addition, free technical analysis of Indian stocks analysis software. Fundamental analysis and technical analysis of equity stock is two methods of evaluating securities Also, learn techniques to use complex chart analysis and advanced technical indicators.
Students can view free technical analysis of NSE stocks below:
