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Foundations of Technical Analysis
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Foundations of Technical Analysis

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Definition of Technical Analysis
Technical Analysis is the organized and systematic
study of a pictorial representation (chart) of the past
price actions of a particular item with a view to
ascertaining its expected future behavior .

Three premises on which Technical Analysis
builds up


Market action discounts everything
Prices move in trends
History repeats itself

Concept of SUPPORT: Level at which
demand is expected to be stronger then
supply.

Concept of RESISTANCE: Level at
which supply is expected to be stronger

Functions of SUPPORT:
1. Level around which one can initiate long
positions
2. Used for putting stop loss orders.
3. Levels around one which can look to square short
side trades
4. Violation of important support levels indicate
possibility of further decline in the stock price.
then demand.
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