- technical analysis
- Anticipating future price movement using historical prices, trading volume, open interest and other trading data to study price patterns. Chicago Board of Trade glossary————Technical analysis uses charts to examine changes in price patterns, volume of trading, open interest, and rates of change to predict and profit from trends. Someone who follows technical rules (called a technician) believes that prices will anticipate changes in fundamentals. The CENTER ONLINE Futures Glossary————Security analysis that seeks to detect and interpret patterns in past security prices . Bloomberg Financial Dictionary————The study of historical price patterns to help forecast futures prices. Chicago Mercantile Exchange Glossary————The study of past and current price movements in order to be able to predict future price movements, technical analysis focuses on the identification of patterns and trends in the market, often using charts and other statistical techniques. Technical analysis, unlike fundamental analysis, does not look at fundamentals such as macro-economic factors. Whilst the validity of technical analysis is often questioned by those using fundamental analysis, technical analysis is often used by traders for short term trading decisions, as it does allow the trader to take account of the psychology of the markets, in other words, how other market participants are likely to act and react to market conditions. Dresdner Kleinwort Wasserstein financial glossary
* * *technical analysis technical analysis ➔ analysis
* * *is a method of predicting the future direction of prices by studying charts of past market action. Technical analysts, or chartists, try to predict future prices on the basis of how prices move up and down, rather than why they have moved.They pay close attention to recurring patterns in charts of price action and look at trends, and at the speed of change and the momentum.The analysts use four basic types of charts - line, bar, candlestick, and point and figure - and a large number of technical theories and indicators including Elliott wave theory, RSI, moving average convergence/divergence and stochastics.1 A line chart is the simplest form of chart. It is a plain record of a price charted against time with the changes marked as dots and joined together by a line.TECHNICAL ANALYSISTime2 A bar chart represents price information on a vertical bar. The top of the bar is the highest price and the bottom of the bar the lowest. A dash on the left-hand side of the bar denotes the opening price and a dash on the right-hand side the closing price.A candlestick chart captures the same price information as a bar chart: the open, high, low and close. A thick box (known as the body of the candle) joins the open and close values. Thin lines on either end of the body (known as shadows)join the high and low prices. If the opening value is higher than the closing value, the body of the candle is solid or coloured. Conversely, if the close is higher than the open then the body of the candle is clear, white or unshaded.A point and figure price chart captures pure price movements with no regard for time or volume. Rising prices are denoted by a column of Xs and falling prices by a column of Os. Subsequent columns are placed to the right of earlier columns.Chartists make particular use of trendlines, which connect areas of specific price action. Both uptrends and downtrends are defined as trends that can be drawn on a chart by joining a minimum of four points. Chartists also look for peaks and troughs and for patterns in price behaviour, such as head and shoulders, double top and triple bottom.They watch for speedlines, which measure the rate of change, and patterns in price lines which form flags or pennants. They also check for areas of resistance and support in price patterns, signs of corrections or breakouts, and for gaps when prices have jumped or fallen so quickly that there is a gap in the price points on a chart.Channels can be drawn on charts to provide clear guidance when prices have moved outside a trading range. Chartists also look for patterns in the number of rises and falls in a market, using retracements to provide evidence to support Dow theory and Gann, Fibonacci and Elliott wave analyses.Chartists rely heavily on relative strength indices, momentum, moving averages and on MACD or moving average convergence/divergence. The following definitions of technical analysis terms are defined and explained under their own entries.Accumulation/Distribution Analysis Line ChartAlexander's Filter MomentumAlpha Money Flow IndexBar Chart MACD Moving AverageBeta Moving AverageBollinger Bands Moving Average CrossoverBreakout On Balance VolumeBroadening OscillatorCandlestick Chart PatternsCAPM Peaks/TroughsChannel Lines Point and Figure ChartCharting Price ChannelChart Points Quantitative AnalysisChartist RectangleContinuation Relative PerformanceConvergence/Divergence. Relative StrengthCorrection RetracementCorrelation ReversalCounter Clockwise Reversal DayCylinder Relative Strength IndexDouble Top/Bottom Sharpe RatioDowntrend Sortino RatioExponential Moving Average SpeedlineFailure Swing StochasticsFibonacci Numbers SupportFlags/Pennants Three Box ReversalFloor Top ReversalGann TrendlineGap TrianglesGeometric average Triple Top/BottomHead and Shoulders Uptrend/DowntrendHigh Low Open Close, HLOC WedgesKairi Williams Percent R
* * *technical analysis UK US noun [U] STOCK MARKET, FINANCE► a method used to calculate the future value of shares by studying the patterns of their past behaviour rather than the fundamentals (= profits of companies whose shares are traded, the real economy, etc.): »
Are these tools used by most traders or is it just a minority who go in for technical analysis?technical analyst noun [C]► »
Technical analysts say we have not yet seen the top of the current market.
Financial and business terms. 2012.