Technical Analysis Term Papers

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What is technical analysis? Technical analysis is a subject of much debate, both in the tighter-knit trading community as well as in the broader finance space. Your average investor’s perception of technical analysis is based on a man on CNBC who is calling doomsday because of an esoteric pattern forming in the NASDAQ. If it’s not that, it’s the 17 year old day trader who bought the latest penny stock seminar with shoddy-at-best technical analysis lessons. In reality, technical analysis isn’t reading tea leaves, picking stocks based on astrological patterns or simply buying the stock with the “best chart.” Technical analysis is the act of using historical market data to form a future view on that market. It doesn’t necessarily have to be what …show more content…

Their sales & marketing, costs, growth, things of that nature. Doing a study of how much J.C. Penney pays for their merchandise, the rent of their stores, appreciation of their real estate, and the cost of their marketing versus how much they charge in their store for the products would be an example of fundamental analysis. Doing a study of how the average price of J.C. Penney’s stock over 3 months has been outperforming it’s 12 month average performance is an example of technical analysis. Fundamental analysis usually consists of looking at a stock’s core financial statements: the balance sheet and income statement. They use these to form a view on the company’s position in their industry, growth metrics, profitability, among other things. Technical analysis usually consists of looking at price charts of stocks to find emerging trends and repeating patterns. The bread and butter is price and volume. A wealth of oscillators and indicators, most often derivative of price and volume, are used in conjunction with price charts to capitalize on these trends and …show more content…

The increase in volume is significant, there is usually a reason. Whether there is an insider accumulating a position based on insider knowledge, or a fund adding more of the stock to its portfolio, that action usually begets more buying, which begets more buying. This is the nature of momentum, and why volume plays a crucial role in technical analysis. The Basics of Technical Analysis Support and Resistance One of the earliest things a beginner at technical analysis will hear about is the concept of support and resistance. In their simplest form, support is the lower level in a price channel that price “bounces” off and stops declining in price. Resistance is the opposite. It is the upper level in a price channel where price stops advancing and falls. These are points where the bulls or bears step in to stop the price from advancing or declining further. Long term price channel in Celgene with strong support and resistance levels As you see on the chart above, a long term price channel in the Celgene stock. It’s resistance was recently broken out of. Shortly after reporting earnings, Celgene reversed and plummeted all the way down to its support level, which it is currently

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