{"id":14078,"date":"2021-11-27T16:02:24","date_gmt":"2021-11-27T16:02:24","guid":{"rendered":"https:\/\/www.5paisa.com\/finschool\/?post_type=finance-dictionary&#038;p=14078"},"modified":"2025-08-07T21:18:54","modified_gmt":"2025-08-07T15:48:54","slug":"what-is-technical-analysis","status":"publish","type":"finance-dictionary","link":"https:\/\/www.5paisa.com\/finschool\/finance-dictionary\/what-is-technical-analysis\/","title":{"rendered":"Technical Analysis Tools"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"14078\" class=\"elementor elementor-14078\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-ba0d774 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"ba0d774\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-cd47082\" data-id=\"cd47082\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-0e95d2f elementor-widget elementor-widget-text-editor\" data-id=\"0e95d2f\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h5><span style=\"color: #000080;\"><strong><span lang=\"EN-US\">What Is Technical Analysis?<\/span><\/strong><\/span><\/h5><p>Technical analysis is a tool used to predict the probable future price movement of a security; such as stocks currency commodities based on market data. In Technical analysis, the price, volume, past trends in price movements, and other statistics are used to predict how the stock would perform in the future. In other words, technical analysis studies the past performance of the stock to predict its future movements.<\/p><p><span style=\"color: #000080;\"><strong>Benefits of TA<\/strong><\/span><\/p><p><strong>Timing the market<\/strong><strong>:<\/strong>\u00a0The primary benefit of technical analysis is helping you find out\u00a0when to invest and when to sell.\u00a0<\/p><p><strong>Fixing of stop<\/strong><strong>: loss targets- <\/strong>Depending on our\u00a0Risk appetite and strategy, we can fix a suitable stop-loss target using technical indicators.<\/p><p><strong>Analysis of market trends<\/strong><strong>:<\/strong>\u00a0Technical analysis charts help us check the market trend, i.e. whether it is a bullish market or a bearish one<\/p><p><strong>A complete picture of the stock price<\/strong><strong>:<\/strong>\u00a0Technical analysis of stocks gives us four main price points of the stock \u2013 the opening price, the closing price, the day\u2019s high, the day\u2019s low.<\/p><h5><strong><span style=\"color: #000080;\">Technical Analysis Tool<\/span><\/strong><\/h5><p><strong>Charts\/ graphs<\/strong><\/p><ul><li><p>line chart<\/p><\/li><li><p>candles<\/p><\/li><\/ul><p><strong>Indicators<\/strong><\/p><ul><li><p>moving average (MA)<\/p><ul><li><p>Simple moving average<\/p><\/li><li><p>Exponential moving average<\/p><\/li><li><p>Linear moving average<\/p><\/li><\/ul><\/li><\/ul><p><strong>Relative Strength Index (RSI)<\/strong><\/p><ul><li><p>Moving average convergence divergence (MACD)<\/p><\/li><\/ul><h5><span style=\"color: #000080;\"><strong>Charts- (candles)<\/strong><\/span><\/h5><p>Candlestick charting is the most commonly used method of showing price movement on chart. A candlestick is formed from price action during a single time period for any time frame.<\/p><p>How candlestick looks like and how to read it? Green candle means more people are buying and red candle means more people are selling.<\/p><p><img fetchpriority=\"high\" decoding=\"async\" src=\"http:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/11\/chart-1.png\" alt=\"\" width=\"733\" height=\"434\" \/><\/p><h5><span style=\"color: #000080;\"><strong>Time Frames<\/strong><\/span><\/h5><p>The TA time frames shown on chart range, from 1 minute to monthly or even yearly time span. The most popular time frames that TA examine;<\/p><ul><li><p>1 minute chart<\/p><\/li><li><p>5 minute chart<\/p><\/li><li><p>Hourly chart<\/p><\/li><li><p>4 hour chart<\/p><\/li><li><p>Daily chart<\/p><\/li><\/ul><p>Intraday traders, who open and close their positions within a single trading day, favour analysing price movement on shorter time frame, such as 1min, 5min or 15min charts. Long term traders who hold positions overnight and for long period of time are more inclined to analyse market using hourly, daily or sometimes weekly charts.<\/p><p>A Price movement that occurs within 1min to 15min time span may very significant for intraday trader whose looking for an opportunity to realize a profit from price fluctuations occurring during one trading day. Or same price movement viewed on daily or weekly time frame may not be significant for long term trading purpose.<\/p><p><img decoding=\"async\" class=\"size-full wp-image-14102 aligncenter\" src=\"http:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/11\/chart-2.png\" alt=\"\" width=\"606\" height=\"272\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/11\/chart-2.png 606w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/11\/chart-2-300x135.png 300w\" sizes=\"(max-width: 606px) 100vw, 606px\" \/><\/p><p>On smaller time frame there is too much volatility which we can see. Intraday trader tries to capture little little trend in shorter time. But here we cannot see actual trend of market.<\/p><p><img decoding=\"async\" class=\"size-full wp-image-14103 aligncenter\" src=\"http:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/11\/chart-3.png\" alt=\"\" width=\"733\" height=\"434\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/11\/chart-3.png 733w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/11\/chart-3-300x178.png 300w\" sizes=\"(max-width: 733px) 100vw, 733px\" \/><\/p><p>On this chart we can see clear cut uptrend in market. That blue line is 21 MA, which show upward direction in market.<\/p><p class=\"MsoNormal\">How we identify trend? Let\u2019s see;<\/p><p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-14104 aligncenter\" src=\"http:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/11\/chart-4.png\" alt=\"\" width=\"466\" height=\"284\" srcset=\"https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/11\/chart-4.png 466w, https:\/\/www.5paisa.com\/finschool\/wp-content\/uploads\/2021\/11\/chart-4-300x183.png 300w\" sizes=\"(max-width: 466px) 100vw, 466px\" \/><\/p><h5><span style=\"color: #000080;\"><strong>To be Conclude<\/strong><\/span><\/h5><p>To be honest, no single indicator gives you accurate result; sometimes it might help you, sometimes it not. Market runs with sentiments. If panic situation comes, then no indicator helps you. Yes it gives you indications. But sometimes panic situation just happened for short time on that time it difficult to get quick indication.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>What Is Technical Analysis? Technical analysis is a tool used to predict the probable future price movement of a security; such as stocks currency commodities based on market data. In Technical analysis, the price, volume, past trends in price movements, and other statistics are used to predict how the stock would perform in the future. &#8230; <a title=\"Technical Analysis Tools\" class=\"read-more\" href=\"https:\/\/www.5paisa.com\/finschool\/finance-dictionary\/what-is-technical-analysis\/\" aria-label=\"Read more about Technical Analysis Tools\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":14089,"parent":0,"menu_order":303,"comment_status":"closed","ping_status":"closed","template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"class_list":["post-14078","finance-dictionary","type-finance-dictionary","status-publish","format-standard","has-post-thumbnail","hentry","finance-dictionary-terms-t"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/finance-dictionary\/14078","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/finance-dictionary"}],"about":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/types\/finance-dictionary"}],"author":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/comments?post=14078"}],"version-history":[{"count":27,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/finance-dictionary\/14078\/revisions"}],"predecessor-version":[{"id":70445,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/finance-dictionary\/14078\/revisions\/70445"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/media\/14089"}],"wp:attachment":[{"href":"https:\/\/www.5paisa.com\/finschool\/wp-json\/wp\/v2\/media?parent=14078"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}