Technical Analysis Fundamentals
Master chart patterns, indicators, and trading signals
Chart Reading
- • Support and resistance levels
- • Trend lines and channels
- • Reversal and continuation patterns
- • Volume analysis
Technical Indicators
- • Moving averages and crossovers
- • RSI and momentum oscillators
- • MACD and trend indicators
- • Bollinger Bands and volatility
Trading Strategies
- • Entry and exit timing
- • Risk management techniques
- • Position sizing strategies
- • Portfolio optimization
Key price levels where stocks tend to bounce or break through
How to Use:
Buy near support, sell near resistance. Breakouts signal new trends.
Example:
If a stock repeatedly bounces off $50, that's a support level
Key Signals:
Reversal pattern with three peaks, middle one highest
How to Use:
Indicates trend reversal. Sell when neckline breaks.
Example:
Stock peaks at $60, $70, $60 then breaks below $55 neckline
Key Signals:
Two peaks at similar levels (top) or two troughs (bottom)
How to Use:
Double top = sell signal, double bottom = buy signal
Example:
Stock hits $80 twice but can't break higher = double top
Key Signals:
Converging trend lines forming triangle shapes
How to Use:
Trade the breakout direction with volume confirmation
Example:
Ascending triangle: higher lows, same highs = bullish
Key Signals:
Smoothed price lines showing trend direction
How to Use:
Price above MA = uptrend, below = downtrend. Golden cross = bullish.
Example:
50-day MA crossing above 200-day MA = golden cross (bullish)
Key Signals:
Momentum oscillator measuring speed of price changes (0-100)
How to Use:
RSI > 70 = overbought (sell), RSI < 30 = oversold (buy)
Example:
RSI at 25 suggests stock is oversold and due for bounce
Key Signals:
Moving Average Convergence Divergence - trend and momentum
How to Use:
MACD line crossing signal line generates buy/sell signals
Example:
MACD crossing above signal line = bullish momentum building
Key Signals:
Price channels based on standard deviation from moving average
How to Use:
Price touching bands indicates extreme moves, mean reversion likely
Example:
Stock hitting lower band often bounces back toward middle
Key Signals:
Volume should increase in direction of trend
How to Use:
High volume on breakouts confirms validity of move
Example:
Stock breaks resistance on 3x normal volume = strong signal
Key Signals:
Specific volume behaviors that predict price action
How to Use:
Accumulation/distribution patterns show institutional activity
Example:
Rising prices on declining volume = potential reversal
Key Signals:
Running total of volume based on price direction
How to Use:
OBV divergence with price warns of potential reversals
Example:
Price makes new high but OBV doesn't = bearish divergence
Key Signals:
Buy uptrends, sell downtrends using moving averages
Entry Signal:
Price breaks above resistance with volume
Exit Signal:
Price breaks below support or moving average
Risk Management:
Stop loss 2-3% below entry, target 2:1 risk/reward
Buy oversold conditions, sell overbought conditions
Entry Signal:
RSI below 30 with bullish divergence
Exit Signal:
RSI above 70 or price reaches moving average
Risk Management:
Tight stops, quick profits, high win rate strategy
Trade stocks breaking out of consolidation patterns
Entry Signal:
Volume spike on pattern breakout
Exit Signal:
Failed breakout or target reached
Risk Management:
Stop below pattern, target measured move
Golden Rules:
- • The trend is your friend until it ends
- • Volume confirms price action
- • Cut losses short, let profits run
- • Never risk more than 2% per trade
- • Plan your trade, trade your plan
Common Mistakes:
- • Fighting the trend
- • Ignoring volume signals
- • Moving stop losses against you
- • Overtrading and overconfidence
- • Not having a clear exit strategy