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In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. As a type of active management, it stands in contradiction to much of modern portfolio theory. The efficacy of technical analysis is disputed by the efficient-market hypothesis, which states that stock market prices are essentially unpredictable, and research on whether technical analysis offers any benefit has produced mixed results. It is distinguished from fundamental analysis, which considers a company's financial statements, health, and the overall state of the market and economy.
A candlestick chart is a style of financial chart used to describe price movements of a security, derivative, or currency.
MACD, short for moving average convergence/divergence, is a trading indicator used in technical analysis of securities prices, created by Gerald Appel in the late 1970s. It is designed to reveal changes in the strength, direction, momentum, and duration of a trend in a stock's price.
A chart pattern or price pattern is a pattern within a chart when prices are graphed. In stock and commodity markets trading, chart pattern studies play a large role during technical analysis. When data is plotted there is usually a pattern which naturally occurs and repeats over a period. Chart patterns are used as either reversal or continuation signals.
The Donchian channel is an indicator used in market trading developed by Richard Donchian. It is formed by taking the highest high and the lowest low of the last n periods. The area between the high and the low is the channel for the period chosen.
The commodity channel index (CCI) is an oscillator indicator that is used by traders and investors to help identify price reversals, price extremes and trend strength when using technical analysis to analyse financial markets.
In financial markets, a pivot point is a price level that is used by traders as a possible indicator of market movement. A pivot point is calculated as an average of significant prices from the performance of a market in the prior trading period. If the market in the following period trades above the pivot point it is usually evaluated as a bullish sentiment, whereas trading below the pivot point is seen as bearish.
Munehisa Honma was a rice merchant from Sakata, Japan who traded in the Dōjima Rice Exchange in Osaka during the Tokugawa Shogunate. He is sometimes considered to be the father of the candlestick chart, a form of technical analysis used in stock markets.
Three crows is a term used by stock market analysts to describe a market downturn. It appears on a candlestick chart in the financial markets. It unfolds across three trading sessions, and consists of three long candlesticks that trend downward like a staircase. Each candle should open below the previous day's open, ideally in the middle price range of that previous day. Each candlestick should also close progressively downward to establish a new near-term low. The pattern indicates a strong price reversal from a bull market to a bear market.
An open-high-low-close chart is a type of chart typically used in technical analysis to illustrate movements in the price of a financial instrument over time. Each vertical line on the chart shows the price range over one unit of time, e.g., one day or one hour. Tick marks project from each side of the line indicating the opening price on the left, and the closing price for that time period on the right. The bars may be shown in different hues depending on whether prices rose or fell in that period.
On the technical analysis chart, a wedge pattern is a market trend commonly found in traded assets. The pattern is characterized by a contracting range in prices coupled with an upward trend in prices or a downward trend in prices.
The flag and pennant patterns are commonly found patterns in the price charts of financially traded assets. The patterns are characterized by a clear direction of the price trend, followed by a consolidation and rangebound movement, which is then followed by a resumption of the trend. They are continuation patterns and form when the asset prices rally or fall sharply.
The doji is a commonly found pattern in a candlestick chart of financially traded assets in technical analysis. It is characterized by being small in length—meaning a small trading range—with an opening and closing price that are virtually equal. The efficacy of technical analysis is disputed by the efficient-market hypothesis, which states that stock market prices are essentially unpredictable.
The Morning Star is a pattern seen in a candlestick chart, a popular type of a chart used by technical analysts to anticipate or predict price action of a security, derivative, or currency over a short period of time.
The Vortex Indicator is a technical indicator invented by Etienne Botes and Douglas Siepman to identify the start of a new trend or the continuation of an existing trend within financial markets. It was published in the January 2010 edition of Technical Analysis of Stocks & Commodities.
Ichimoku Kinko Hyo (IKH) (Japanese: 一目均衡表, Hepburn: Ichimoku Kinkō Hyō), usually shortened to "Ichimoku", is a technical analysis method that builds on candlestick charting to improve the accuracy of forecast price moves.
Price action is a method of analysis of the basic price movements to generate trade entry and exit signals that is considered reliable while not requiring the use of indicators. It is a form of technical analysis, as it ignores the fundamental factors of a security and looks primarily at the security's price history. However, this method is different from other forms of technical analysis, as it focuses on the relation of the security's current price to its price history, which consists of all price movements, as opposed to values derived from the price history.
Chaikin Analytics is a platform for stock trading ideas. Chaikin Analytics was established in September 2009 by Marc Chaikin. The centerpiece of Chaikin Analytics is the Chaikin Power Gauge stock rating. In 2016, it was named one of "Two Top Websites for Quantitative Analysis" by Barron's.
Volume Analysis is an example of a type of technical analysis that examines the volume of traded securities to confirm and predict price trends. Volume is a measure of the number of shares of an asset that are traded in a given period of time. As one of the oldest market indicators used for analysis, sudden changes in volume are often the result of news-related events. Commonly used by chartists and technical analysts, volume analysis is centered on the following ideas:
Heikin-Ashi is a Japanese trading indicator and financial chart that means "average bar". Heikin-Ashi charts resemble candlestick charts, but have a smoother appearance as they track a range of price movements, rather than tracking every price movement as with candlesticks. Heikin-Ashi was created in the 1700s by Munehisa Homma, who also created the candlestick chart. These charts are used by traders and investors to help determine and predict price movements.
References
- ↑ "The 'Fakey' Entry by Nial Fuller" . Retrieved 2012-03-09.
- ↑ "Trading False Moves with the Hikkake Pattern" (PDF).
- ↑ Daniel L. Chesler, CMT
- ↑ "New IntStream E2 Energy Market Analysis Platform - Product Overview" (PDF). IntStream. 2011-01-07. Retrieved 2012-03-08.
- ↑ "College Level Introduction to Technical Analysis, Lecture No. 4, Pattern recognition" (PDF). Market Technicians Association Educational Foundation. Retrieved 2013-08-05.
- ↑ "L'Hikkake di Dan Chesler by Gianluca Defendi". Milano Finanza Interattivo Class CNBC. Retrieved 2013-10-27.