Technical Analysis What is it? Charting? or reading tea leaves?
Technical Analysis - a definition "The interpretation of past share prices on share price charts to try to gauge likely future price action." Reading tea leaves? Some 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 us.  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. Why use it? This 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. What 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% accurate.) 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. So, 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. What "prices" 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, shares foreign currencies tradeable share Options and Warrants CFDs (Contracts for Difference) Commodities (eg. oil, gold, pork bellies, etc.) How do we do this? 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 software package.	The field of Technical Analysis comprises: 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 be enough. Primary Analysis Various price chart types (candlestick, Point and Figure, Gann Swing, Renko, etc.) Trends and trend lines Support and resistance Volume Chart patterns (eg. triangles, pennants, flags, wedges, head and shoulders, double top, etc.) Candlestick chart basics Candle patterns (eg. doji, hanging man, hammer, engulfing, harami, piercing, etc.) Secondary Analysis Various indicator types:- Trend, Volatility, Momentum, Volume Note: some of the items listed below are described in more detail in the eBook (PDF) Articles. Trend indicators: Moving Average Multiple Moving Average (MMA) MACD Parabolic-SAR ADX / DMI Volatility indicators: Bollinger Bands ATR (Average True Range) Envelopes Momentum indicators: Momentum Twiggs Money Flow OBV (On Balance Volume) A/D (Accumulation / Distribution) Price Rate of Change (ROC) RSI (Relative Strength Index) Stochastic CCI (Commodity Channel Index) Coppock Volume indicators: Volume with MA of volume Volume Rate of Change Volume Oscillator Additional Topics: Cycle analysis Fibonacci number sequence (0, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233....) Elliott Wave W.D.Gann Computational techniques.	How to learn more about technical analysis? Technical Analysis - Getting Started - Robert's suggested steps on how to make progress with learning about Technical Analysis. More information Funda-Technical Analysis - An investment and trading approach utilising a sensible balance of both Technical Analysis and Fundamental Analysis. Brainy's 3Ways Rule - a smart way to understand trends, and the importance of spotting trends. Brainy's extensive list of eBook (PDF) Articles 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 Australian Technical Analysts Association The ATAA is Australia's pre-eminent not-for-profit organisation regarding technical analysis. The ATAA has more than 1100 members nationally in 9 locations around Australia (Melbourne, Sydney, Newcastle, Canberra, Brisbane, Sunshine Coast, Toowoomba, Adelaide and Perth).   Robert does endorse the ATAA as a worthy not-for-profit organisation for people looking for help and networking.    Some of the Melbourne ATAA members contribute to regular articles in The (Melbourne) Age newspaper. Scanned copies of these articles are available here 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. The ATAA has more than 1100 members nationally in 9 locations around Australia (Melbourne, Sydney, Newcastle, Canberra, Brisbane, Sunshine Coast, Toowoomba, Adelaide and Perth). Robert does endorse the ATAA as a worthy not-for-profit organisation for people looking for help and networking. Third party information Technical Analysis For more information see the following just for starters (there are many, many more resources). Recommended: ATAA - Australian Technical Analysts Association. CycleTrader - Cycles, Elliot Wave and Gann More useful resources: Colin Twiggs Incredible Charts   Louise Bedford's Trading Secrets  Regina Meani's Chart and Technical Services  Alan Hull Daryl Guppy's Guppy Traders  W.D.Gann information  more W.D.Gann info   Elliott Wave information  Quality charting software - the Australian BullCharts charting software (with a User Group in Melbourne): BullCharts  Free Charting Software You could start off using free online charting tools: Bar Chart.com Big Charts.com  Stock Charts.com  Yahoo.com  Text books Good text books NOTE: Any inclusion of any company, person or web site above is NOT an endorsement or recommendation of any sort.

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Last revised: 28 June, 2011.