✤ Market Discounts Everything:

☛ Technical analysts believe that all known and unknown information about a security (e.g., earnings, economic conditions, news) is already reflected in its price. Thus, studying price movement provides all the information needed to make trading decisions.

✤ Prices Move in Trends:

☛ Prices move in observable trends (uptrend, downtrend, sideways). The idea is to follow these trends and trade in their direction until signs of reversal appear.

✤ History Tends to Repeat Itself:

☛ Market psychology is cyclical, meaning traders and investors tend to behave similarly under similar circumstances. This leads to repetitive price patterns that can be identified and acted upon.

1. Price action based TA

• Price breakout- breakdown
• Price rejection
• Trend line
• Channeling
• Support & resistance
• Candlestick pattern
• Chart pattern
• Trend analysis
• Volume analysis

2. Indicators and oscillators based TA indicators

• Oscillators
• RSI

3. Forecasting based TA

• Fibonacci Theory
• Gann Theory
• Elliott Wave Theory
• Dow theory
• Wyckoff theory
• Time Cycle

4. Sentiment based TA

• Greed and fear index
• News

5. Data based TA

• Option chain
• Open interest

✤ Top-Down Approach:

☛ Focuses on analysis the broader market first, then sectors, and finally individual stocks or securities.

✤ Bottom-Up Approach :

☛ Focuses on analyzing specific stocks regardless of broader market conditions.

✤ Short-Term Trading:

☛ Day traders and swing traders use technical analysis extensively to capitalize on short-term price movements.

✤ Risk Management:

☛ By identifying kety levels (support, resistance), traders can set stop-loss and take-profit orders to minimize risks.

✤ Market Timing:

☛ Helps in determining the best time to enter or exit trades.

✤ Visual Insights:

☛ Easy to visualize market trends and patterns.

✤ Versatillity:

☛ Can be applied to any asset class, time frame, or market.

✤ Timeliness:

☛ Provides quick insights into market conditions without requiring in-depth fundamental research.

✤ Subjectivity:

☛ Interpreting patterns and signals can vary between traders.

✤ Lagging Nature:

☛ Indeicators often rely on past data and may not predict future movements accurately.

✤ Ignored Fundamentals:

☛ Ignores macroeconomic and company-specific factors that could influence prices.

✤ False Signals:

☛ Markets are influenced by noise, leading to false breakouts on misleading signals.

✤ Conclusion:

☛ Technical analysis is a powerful tool that provides a structured way to understand market behavior and make trading decisions. While it has limitationms, when combined with proper risk management and other forms of analysis (like fundamental analysis), it can significantly improve a trader's ability to navigate financial markets effectively.