How to do technical analysis

 Like any other field of study, technical analysis is about certain theories. These concepts serve to guide a technical analyst's approach to financial markets.

Some common concepts are:

* Breakout – whereby prices forcefully penetrate an area of prior support or resistance. If you are interested in trading in only indices, look for breakouts in Nifty technical chart.

* Chart pattern – distinctive pattern created by the movement of security on technical charts.

* Cycles – time targets for potential change in price action

* Elliott wave principle and the golden ratio - are used to calculate successive price movements and retracements

* Fibonacci ratios – used as a guide to determine support and resistance of a security

* Momentum – the rate of price change

* Resistance – a price level that may prompt selling activity

* Support – a price level that may prompt buying activity


Technical analysis is an indicator that helps the investor to know:

* When to enter or exit a trade

* What is price information

     These information go into deciding how good or bad will be your trade. Many believe price data is the key to success in stock market investment. The supply and demand of stocks all depend upon technical analysis. Most of the technical information is updated dynamically when the market is open. Some of the stock charts are updated at the end of the day. Hence, keep an eye on stock market timings i.e. trade open and trade close.


    As you know, a price chart is a sequence of prices, which are plotted over a specific timeframe. Any security with price data over a period of time can be used to form technical charts. There are many different types of technical charts like candlestick chart, line chart, open & high low close chart and point & figure chart.

Read stock and commodity technical reports that come out everyday from brokerages like Nirmal Bang to gain usable information.

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