What is Technical Analysis Of The Stock Market

Many people enter in to the stock market without knowing "Technical Analysis" (TA) but if you desire to become an Intraday Trader or daily trading in different stocks you need to get complete knowledge about this.


If you really want to learn about "Technical Analysis" of Stocks you are in the correct place.

This analysis is different from Fundamental Analysis (FA), Fundamental Analysis predicts the stock price for further movements and it explains company debts and profits FA includes the details about Balance sheets, EBIDTA, Topline, Bottom line, and Ratios.

This method is completely depending on charts of price and indicators.

Nevertheless, Technical Analysis is having psychological trading parameters, there is an aggressive trade war between buyers and sellers we need to find who will be going to become the upper hand in that trading.

Price Chart in Technical Analysis

A Price Chart is nothing but, created by the price movement of stock in a day or n a week or whatever we need to calculate the high and low values in a period.

In a day if you want to calculate or determine a stock going to bearish or bullish mark every 5 minutes High and Low values similarly Open and Close values.

These values formed a Candle for 5 minutes and all the day during the market is live every 5 minutes candles together formed the chart of the day, similarly, we can form 10, 15, 30, 1hr, 2hr, 4hr, day candle charts
Candles in technical analysis of stock market

If the candle close price is greater than the open price candle will be in green colour which we can say bullish, similarly close price less than open it will be the red colour which we can say bearish.

Nowadays we need not calculate our own, since all the stockbroker applications provide free data with a chart environment we just change and analyze with a period.

Chart Patterns in Technical Analysis

Chart patterns play a key role in chart analysis if we are doing day trading most people put all their efforts to catch the pattern of the day.

If they recognized the correct pattern on that day they will enter into a trade, otherwise, they will not trade that day with a failure or non-pattern chart.

Patterns are created in form of candles if you pick a duration, it can be 1 or 2 hours in a trading day with 5 minutes candles they will form a pattern into some flags, triangles, cups, and head and shoulders, etc. (we mentioned below).

Chart patterns in  technical analysis

After that pattern has formed, we can see a breakout in price with that pressure of pattern in the time of break out traders entered in to trade in day trading or intraday trading.

What are Indicators? How do they help to trade in Technical Analysis?

Indicators are predicted the next candle price how it going to be bullish or bearish but not 100% accuracy.

Moving Averages

Moving Averages

Indicators are two types, the first types are Leading Indicators and the other types are Lagging Indicators.

Lagging indicators are calculated and formed by the previous candles. Based on previous candles price movements. Example Moving Averages, RSI, MCAD, etc.

Leading indicators based on price action movements like Pivots, CPR, Fibonacci, etcAll the indicators are behaving with what we give input.

Using Technical Analysis in Different types of trading

Traders will trade in different ways and types for example we have three different types of trading methods.

  • Swing Trading
  • Intraday Trading
  • Scalping Trading

Traders are using Technical Analysis in these three methods only, for investing in the stock market they use Fundamental Analysis.

Swing Trading

Swing trading is nothing but, traders enter into trade and they take delivery or take carrying positions for a month to six months maximum time duration of this stock price will move up or down as they expected by Technical Analysis.

If positions or holdings are whether profit or loss they close all the positions in six months or below one year we could not carry the positions for years in “Swing Trading” or “Short Term” trading.

Intraday Trading

When a trade executes and closes on the same day, it is considered as “Intraday Trading”.  In this method of trading, the trader can open short positions in stocks with a leverage amount.

This type of trading method completely depended on Technical Analysis with charts, indicators, and candlestick patterns.

Scalping Trading

Scalping does not need any indicators to trade, they do execute and close trades in fractions of seconds or below a minute.  Scalpers can do trades depending on candlestick patterns.  And they used to trade a huge amount for this trade.

Volume in Technical Analysis

This is the biggest thing in Technical Analysis, volume is inflow, and outflow of the stock (traders enter & trade, traders short & exit) is calculated as volume.

Most of the charting software provides many indicators in volume based analysis like Volume Oscillator, Volume Candles, Net Volume, etc.

The volume makes the stock volatility in a day.

Important of Price Action in Technical Analysis

In this method of analysis, most of the intraday traders prefer Price Action better than indicators.

However, price action is having highly accurate and reliable to traders.

Note: Do not depend on others analysis when you are enter into real trading do your own analysis on stocks.

All the images source from Tradingview.

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