Technical analysis

Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts believe that market trends, as shown by charts and other technical indicators, can predict future activity.

Technical analysis uses charts and other tools to identify patterns and trends in the market, such as price movements, trends, and levels of support and resistance. Some common technical analysis tools include:

  1. Moving Averages: A moving average is the average price of a security over a set period of time, and is used to smooth out short-term fluctuations in the price data.
  2. Bollinger Bands: Bollinger Bands are a volatility indicator that consists of a moving average and two standard deviation lines. The bands expand when volatility is high and contract when volatility is low.
  3. Relative Strength Index (RSI): The RSI is a momentum indicator that measures whether a security is overbought or oversold.
  4. Candlestick charts: Candlestick charts are a type of financial chart that are used to represent the price movement of a security over a set period of time.
  5. Trend lines: Trend lines are used to identify and track trends in the market. They are typically drawn between two points and are used to determine whether a security is in an uptrend or downtrend.

It is important to note- that technical analysis is not a guarantee of future performance and should be used in conjunction with other forms of analysis, such as fundamental analysis, to make informed investment decisions. Additionally, past performance is not always indicative of future results.

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