Analysis - a definition
interpretation of past share prices
(mostly on share price charts)
to try to
gauge likely future price action."
people might think that this is just as good as reading tea leaves.
But, there is some very uncanny success in what the charts can tell
Take a look at the 2007 market peak
and the warning
signs that Technical Analysis gave us of the impending market
crash. Or the analysis of recent bull markets and bear
markets, and how technical analysis gave us lots of warnings
before they hit.
TA - Why use it?
is a very useful collection of tools to help understand the sentiment
that is driving share prices, in anticipation of having a better feel
for where share prices might move in the future.
is Technical Analysis (TA)?
(I will use the acronym TA
to abbreviate Technical Analysis here only for convenience and to help
with readability and comprehension.)
TA is to do with analysing the various financial markets, to help
anticipate likely financial performance. (But it is not 100%
An alternative way to analyse the markets is to use Fundamental
Analysis. At the one extreme some people will use pure TA for
100% of their analysis, and others will use 100% Fundamental
Analysis. Then there are many people who will utilise a
combination of both. Having said that, I won't refer to Fundamental
Analysis on this page again.
what about just TA?
TA is a very broad field, but is
basically the analysis of past "prices" in the hope of forecasting or
anticipating future price changes.
For a list of various definitions, see the Google search engine.
are we talking about?
The reference to "prices" is a reference to a
whole lot of things to which we can apply the study of TA,
including the following financial instruments:
- stocks, equities,
- foreign currencies
- tradeable share Options and Warrants
- CFDs (Contracts for Difference)
- Commodities (eg. oil, gold, pork bellies, etc.)
How do we do
We implement TA techniques using price charts of
the financial instrument in question.
The best way to do this is to use a quality share price charting tool
(computer software), coupled with a reliable and quality data source.
Robert's charting tool of choice is the Australian BullCharts
The field of
The very broad field of TA comprises
a number of
sub-topics. Some people prefer to follow a limited number of these
sub-topics. To be a competent technical analyst there is no requirement
to be competent in all of the following. Just a couple might
Much of technical analysis is actually based on the teachings and
theories of Dow Theory.
- Various price chart
Point and Figure, Gann Swing, Renko, etc.)
and trend lines
- Chart patterns
(eg. triangles, pennants, flags, wedges, head and shoulders, double
- Candlestick chart basics
- Candle patterns (eg.
doji, hanging man, hammer, engulfing, harami, piercing, etc.)
Various indicator types:-
Trend, Volatility, Momentum, Volume
Note: some of the items listed below are described in more detail in
- Trend indicators:
- Moving Average
- Multiple Moving Average (MMA)
- ADX / DMI
- Volatility indicators:
- Bollinger Bands
- ATR (Average True Range)
- Momentum indicators:
- Twiggs Money Flow
- OBV (On
(Accumulation / Distribution)
- Price Rate
of Change (ROC)
(Relative Strength Index)
- CCI (Commodity Channel Index)
- Volume indicators:
- Volume with MA of volume
- Volume Rate of Change
- Volume Oscillator
- Cycle analysis
number sequence (0, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233....)
- Elliott Wave
- Computational techniques.
How to learn
Technical Analysis - Getting Started
suggested steps on how to make progress with learning about Technical
about technical analysis?
- An investment and trading approach utilising a sensible balance of
both Technical Analysis and Fundamental
3Ways Rule - a smart way to understand
trends, and the importance of spotting trends.
Brainy's extensive list of eBook
on Technical Analysis and other topics.
Brainy's seminars on Technical
Analysis and other topics - click
here for details...
A variety of publications on Technical
Analysis and related topics - click here for details...
ATAA is Australia's pre-eminent not-for-profit organisation regarding
Australian Technical Analysts Association
Some of the experienced ATAA members contribute to regular articles in
and Sydney Morning
Herald newspapers. Scanned copies of these articles
are available for perusal.
Robert is a member
of the Australian
Technical Analysts Association (ATAA).
He is also the
Melbourne Chapter Vice-President, and a director on the national board.
Robert endorses the ATAA as a worthy not-for-profit organisation
looking for help and networking.
information about the ATAA.
And whatever you do,
beware of the sharks in the ocean!