Technical Analysis is the study of historical stock price data in the form of trends, volume, indicators, etc. One uses TA in trying to predict future movement. In many cases, patterns are formed which often tell stories about recent price movement and where future prices are likely to do. Click here to read a quick introduction to what technical analysis is all about.

Many people use candlestick charting when viewing stock charts. For example, if you go to Bigcharts and click on interactive charting, you will be taken to a page where you can alter how you view your stock, what time frame you would like, and compare it to other stocks or indicators. Click here to learn more about candlesticks and how to read them.

When individual candlesticks are placed after each other in their respective time frames we can sometimes begin to see the patterns discussed previously and attempt to time investment decisions based on their confirmations. Some patterns are indicative of consolidation and may take a long time to fully develop, depending again on what time frame you are viewing.

If you are new to Technical Analysis and would like to better understand some of the concepts I discuss in this blog, then it is recommended that you take the following steps:

1. Research Technical Analysis to better understand what it is and how it can be applied
2. Learn how to read basic candlesticks and work with them on different time frames (hourly, daily, weekly, monthly, etc.)
3. Study patterns and be able to pick them out in any stock chart
4. Know how to play breakouts from patterns and be prepared to utilize stop losses in case of a “false breakout”

I will explain TA more in detail as we go forward. I also appreciate comments, so let me know if you would like me to address a question or explain something in a different way. My purpose here is to share my knowledge of TA and ramp you up to speed. Like a foreign language or programming code, technical analysis can be difficult to pick up at first, but it will certaintly assist you in becoming a better investor.