How to Perform Technical Analysis

📑 Table of Contents

1. Introduction
2. Step 1: Read Candlesticks
3. Step 2: Identify Support & Resistance
4. Step 3: Use Trend Lines
5. Step 4: Apply Indicators
6. ❓ FAQ

Introduction

Technical analysis is the art of reading chart patterns to predict future price movements. It relies on the principle that history tends to repeat itself.

Step 1: Read Candlesticks

Japanese Candlesticks provide more info than line charts.

• Body: Open vs Close price.
• Wick (Shadow): High vs Low price.
• Green: Price went up.
• Red: Price went down.

Step 2: Identify Support & Resistance

• Support: A price level where the asset has difficulty falling below. ( Floor).
• Resistance: A price level where the asset has difficulty rising above. (Ceiling).

Step 3: Use Trend Lines

Draw lines connecting the highs or lows.

• Uptrend: Higher highs and higher lows.
• Downtrend: Lower highs and lower lows.
• Sideways: Price moves in a horizontal channel.

Step 4: Apply Indicators

Use tools to confirm your analysis.

• RSI: Detects overbought (>70) or oversold (<30) conditions.
• Moving Averages: Smooth out price action to show the general direction.

❓ FAQ