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In this module, we’ll explore technical analysis in depth, examining its two primary types and their applications. Each chapter concludes with practical exercises using our interactive charts and real-world companies.

Technical analysis should not be viewed as a shortcut to financial gain, nor should it be used for long-term investment choices. For such decisions, turn to fundamental analysis. Contrary to some beliefs, technical analysis is not a simple path to profit; it requires significant effort to learn and apply effectively.

Approaching technical analysis as an easy way to make money can lead to disastrous trading outcomes. Often, when trades fail, the fault is attributed to technical analysis rather than the trader’s misuse of it. Therefore, it’s crucial to understand what technical analysis can and cannot accomplish before diving in.

Trades – Technical analysis is most effective for identifying short-term trades, not for long-term investment strategies, which are better served by fundamental analysis. Fundamental analysts can also use technical analysis to fine-tune entry and exit points.

Return per trade – Expectations for returns from technical analysis should be modest, as it typically identifies short-term trades rather than large, quick profits. The goal is to find frequent opportunities that yield small, consistent returns.

Holding Period – The duration of trades informed by technical analysis ranges from a few minutes to several weeks.

Risk – Traders often hold onto losing trades in the hope of recouping losses, especially when market movements are unfavorable. It’s important to remember that technical analysis trades are short-term; if a trade turns sour, it’s essential to cut losses and seek the next opportunity.

Basics of Technical Analysis

Think of technical analysis as a way to understand the stock market’s own special language. It’s like looking at past prices and how much was traded to spot repeating patterns. These patterns can give us clues about where prices might go next. It’s a bit like trying to predict the next move in a game by watching how it’s been played before.

One of the best things about technical analysis is that you can use it for all kinds of investments, like stocks, gold, or even currencies, as long as you have their past trading data. This is super handy because it means you don’t have to learn a whole new set of rules for each type of investment.

For example, if you’re looking at stocks, you usually check out the company’s financial health through its financial reports. But if you’re looking at something like wheat or soybeans, you’d think about things like the weather and how much people want to buy and sell. And for metals or oil, it’s a whole different story.

But with technical analysis, no matter what you’re studying, you use the same tools. So whether you’re looking at stocks, wheat, or dollars, you can use methods like the ‘Exponential Moving Average’ or ‘Stochastic Oscillator’ in the same way. It’s like having a universal key that works on many different locks.

Remember the below as we go along:

Open Price:

When the market opens, the first price that gets set for the day is the open price.

High Price: This is the top score for the day. It’s the highest price that anyone paid for the stock during the day.

Low Price: Think of this as the day’s low point. It’s the cheapest price that the stock was sold for.

Close Price: This is like the finish line. It’s the last price of the day when the market closes. If the close price is higher than the open price, it means the stock did well that day. If it’s lower, it didn’t do so great.

Quick Look at Charts

When we trade, we keep track of four key prices: the opening price (O), the highest price (H), the lowest price (L), and the closing price (C). We call these the OHLC. To make sense of all this info, we use special charts. Imagine trying to picture a whole year’s worth of trading with just numbers - that’s a lot! Regular charts like pie or column charts aren’t much help for trading because they only show one price at a time, but we need to see all four.

Types of Charts:

• Line Chart

• Bar Chart

• Japanese Candlestick

We’re going to focus on Japanese Candlesticks, but let’s first talk about why we don’t usually use line or bar charts for trading.

Line and Bar Charts

A line chart is super simple. It just connects dots that represent the closing prices over time. It’s good for seeing the overall trend but doesn’t tell us much else. Below is sample line chart

A bar chart is a bit better. It shows the open, high, low, and close prices all at once. The top of the bar is the highest price, and the bottom is the lowest. There’s a little mark on the left for the opening price and one on the right for the closing price. If the closing price is higher than the opening, it’s been a good day for the stock, and we might color the bar blue. If it’s lower, it’s been a bad day, and we might color the bar red.

But bar charts can be hard to read, especially when you’re looking at lots of them. That’s why many traders prefer candlesticks.

Candlesticks

Candlesticks come from Japan, where they’ve been used since the 18th century. The rest of the world didn’t know about them until the 1980s when a guy named Steve Nison wrote a book about them. They’re still called by their Japanese names, which adds a cool touch.

Candlesticks show the same prices as bar charts but in a way that’s easier to read. They have a body that shows the opening and closing prices and shadows that show the highest and lowest prices. If the stock went up, we use a green candle; if it went down, we use a red one.

Here’s how to picture a candlestick:

• The body is a rectangle connecting the open and close prices.

• The upper shadow connects the body to the highest price.

• The lower shadow connects the body to the lowest price.

For example, if a stock opens at $62, goes as high as $70, drops as low as $58, and then closes at $67, we’d draw a green candlestick with a body from $62 to $67 and shadows reaching up to $70 and down to $58.

Once you get the hang of drawing candlesticks, spotting patterns and making sense of them gets much easier.

These prices help us understand how the stock has moved throughout the day and give us hints about what might happen next. We’ll get into more details as we go along in the module.

Quick one

When you’re looking at stock charts, you can choose different time periods to study, like a whole month, a week, a day, or even just part of a day. Each period is like a snapshot of what happened with the stock’s price during that time.

Here’s a simple way to think about it:

Monthly Charts: You look at the first and last price of the month, and the highest and lowest prices in between. You get 12 of these “snapshots” for a year.

Weekly Charts: You start with the price on Monday morning and end with the price on Friday afternoon, checking the highest and lowest prices during the week. There are 52 weeks, so you get 52 “snapshots” in a year.

Daily Charts: You see how the stock started and ended each day, plus the highest and lowest points it hit. Since the stock market is open for about 252 days a year, you get 252 daily “snapshots.”

Intraday Charts: These are for when you want to zoom in and look at smaller parts of the day, like every 30 minutes, 15 minutes, or even 5 minutes. The more you zoom in, the more “snapshots” you get in a day.

If you’re a trader who makes lots of trades really fast, you might want to look at 1-minute charts to catch every little move. But if you’re planning to invest for a longer time, weekly or monthly charts can give you a clearer picture without all the small ups and downs that don’t matter as much to you.

So, it’s important to pick the right time frame that matches how you trade. If you look too closely, you might get distracted by all the little details, but if you step back, you can see the bigger trends that really matter.

Candlestick Patterns

Chart patterns are like clues in a treasure map of the stock market. They’re shapes that keep showing up on price charts, and they can give us hints about where prices might go next. Some patterns tell us prices might change direction, while others say the current trend might keep going. For example, an “ascending triangle” is a shape that suggests prices could jump up higher.

We’re going to check out 9 important candlestick patterns and see them in action with real examples. We’ll split them into two groups: ones that hint at a price direction change (reversal patterns) and ones that hint the price will keep going the same way (continuation patterns).

Reversal Patterns:

Hammer: This one says prices might start going up. It looks like a hammer and shows that buyers are stepping in when prices are low.

Engulfing Pattern: When a big candlestick wraps around the one before it, it’s a sign that prices might flip direction.

Piercing Line: A positive sign that prices might break through and start climbing. It’s like a candlestick cutting through the one before it.

Shooting Star: This pattern points to prices possibly falling. It’s like a star falling from the sky, showing that higher prices didn’t stick.

Hanging Man: Similar to a shooting star, but it shows up when prices have been rising. It’s a warning that the uptrend might be running out of steam.

Continuation Patterns:

Doji: This candlestick is all about indecision. It’s got a tiny body and long wicks and means the market can’t make up its mind, so the current trend might just keep on going.

Pennant: Much like a flag, but the lines come together. It’s another pause that usually leads to the trend continuing.

Another Important Pattern:

Head and Shoulders: This one’s a big deal. It looks like a person with a head and two shoulders. If prices break through the “neckline,” it’s a strong hint that they’re about to change direction in a big way. The “inverse” version flips it upside down and suggests the opposite.

Let's take a deeper look into each of these patterns

Hammer (Bullish)

The “Hammer” is a type of candlestick pattern you might see on a stock chart, and it’s pretty interesting because it can tell us that the stock’s price might be about to go up.

Here’s what a Hammer looks like:

So, why does it mean the price might go up? Well, during the time that the Hammer is formed, the stock price drops a lot, but then it bounces back up before the time period ends. This bounce-back is what makes the long wick. It shows that even though there was a lot of selling and the price went down, buyers came in and pushed the price back up. This fight between sellers and buyers, where the buyers win, is a hint that the stock might start to climb.

Remember, while the Hammer can be a helpful clue, it’s not a sure thing. Traders usually wait for more signs to confirm that the price is really going to go up before they make a move.

Let's put your knowledge to the test! Using the interactive chart below, select any stock and switch to a 1-minute time frame. Can you identify 5 different instances of the hammer candlestick pattern? Did you notice a price increase (or rebound) following the hammer candlestick patterns?

Engulfing Pattern (Bullish/Bearish)

The “Engulfing Pattern” is a candlestick pattern that’s really useful for traders because it can signal a big change in the market’s direction. It’s like a signal flare that says, “Heads up, things might be about to change around here!”

Here’s what you need to know about the Engulfing Pattern:

What It Looks Like: An Engulfing Pattern happens when a larger candlestick completely covers or “engulfs” the smaller candlestick right before it. It’s like a big fish swallowing a little fish.

Bullish Engulfing: This one pops up during a downtrend. The first candle is small and red, showing that prices went down. But the next candle is much bigger and green, showing that prices went up and passed the previous candle’s range. It’s a hint that the downtrend might be over and prices could start climbing.

Bearish Engulfing: This is the opposite. It shows up during an uptrend. The first candle is small and green, showing that prices went up. But then a big red candle comes along and covers the green one, showing that prices went down and went past the green candle’s range. It’s a hint that the uptrend might be done and prices could start falling.

Why It Matters: The Engulfing Pattern is important because it shows a strong shift in the market’s mood. In the Bullish Engulfing, buyers are taking control from sellers, and in the Bearish Engulfing, sellers are taking over from buyers.

What to Look For: To spot an Engulfing Pattern, look for a small candle followed by a much larger one that completely covers the first candle’s body. The color change between the two candles is key – it shows who’s winning the battle between buyers and sellers.

Let's put your knowledge to the test! Using the interactive chart below, select any stock and switch to a 1-minute time frame. Can you identify 5 different instances of the Engulfing Pattern? Did you notice a price increase or decrease following the bullish or bearish Engulfing Pattern?

Piercing Line (Bullish)

The “Piercing Line” is a candlestick pattern that’s like a beacon of hope for traders during a downtrend, suggesting that brighter days might be just ahead. It is like a signal that the bears might be losing their grip and the bulls are starting to take over. It’s a hint that the downtrend could be turning around and prices might start to rise.

Here’s a simple explanation of the Piercing Line pattern:

Shape: The Piercing Line consists of two candlesticks. The first one is red, showing that prices have fallen. The second one is green and starts below the first one’s low but closes more than halfway into the first one’s body.

Let's put your knowledge to the test! Using the interactive chart below, select any stock and switch to a 1-minute time frame. Can you identify 5 different instances of the Piercing Pattern? Did you notice a price increase or decrease following the bullish or bearish Piercing Pattern?

Shooting Star (Bearish Pattern)

The “Shooting Star” is a candlestick pattern that traders often look out for because it can indicate that the stock price might be about to fall. It’s like a warning light that flashes when prices have been rising.

Here’s a breakdown of the Shooting Star pattern:

• Shape: The Shooting Star looks like a star falling from the sky. It has a small body at the lower end and a long upper wick. The wick is usually much longer than the body, at least twice its size.

• Color: The body of the Shooting Star can be green or red, but the color isn’t as important as the shape. What matters is the long upper wick.

• Position: You’ll find this pattern after a price increase. It shows up at the top of an uptrend, suggesting that the price might be peaking.

Let's put your knowledge to the test! Using the interactive chart below, select any stock and switch to a 1-minute time frame. Can you identify 5 different instances of the shooting star pattern? Did you notice a price increase or decrease following the shooting star pattern?

Hanging Man (Bearish)

The “Hanging Man” is a candlestick pattern that traders pay attention to because it might signal that the stock price could start dropping soon. It’s like a red flag at the end of an uptrend, suggesting that the climb in price might be over.

Here’s how to understand the Hanging Man pattern:

Shape: The Hanging Man looks like a figure hanging from the top, with a small body near the upper end of the range and a long lower wick. The wick is typically much longer than the body, showing a significant drop in price during the period.

Position: This pattern appears after a price increase, at the end of an uptrend. It’s like a warning sign that the buyers who were driving the price up might be losing control.

Let's put your knowledge to the test! Using the interactive chart below, select any stock and switch to a 1-minute time frame. Can you identify 5 different instances of the Hanging Man pattern? Did you notice a price decrease following the pattern?

Doji

Shape: A Doji looks like a cross or a plus sign. It has a very small body, which means the opening and closing prices are almost the same or exactly the same.

What It Means: The Doji represents indecision in the market. Buyers and sellers are in a tug-of-war, and neither side is winning. It’s like a stalemate in a game of chess.

When It Appears: You can see a Doji in any trend, up or down. It’s a pause, a moment when everyone is waiting to see what happens next.

Pennant

Shape: A Pennant is similar to a Flag but looks more like a small triangle. It’s created when the price movements start to converge after a strong move, making higher lows and lower highs.

What It Means: Like the Flag, a Pennant suggests that the trend will likely continue after this brief pause. It’s a sign that the market is catching its breath before potentially moving on in the same direction.

When It Appears: Pennants are also found in the middle of trends, right after a big move in price. It’s like a brief huddle in a sports game before the action resumes.

The “Head and Shoulders” pattern is a famous chart pattern that traders look for because it often signals a big change in the direction of a stock’s price. It’s like a story told by the price itself, showing a struggle between buyers and sellers.

Here’s how to understand the Head and Shoulders pattern:

Shape: Picture a person’s silhouette with two shoulders and a head in between. In the stock market, this pattern forms over time with three peaks: the left shoulder, the head, and the right shoulder. The head is the highest peak, and the shoulders are lower and roughly equal in height.

What It Means: This pattern tells us that after a long upward trend, the stock might be getting ready to go down. The first shoulder shows the price rising and then falling, the head shows the price rising higher and then falling again, and the final shoulder shows the price rising but not as high as the head before falling once more.

Neckline: The “neckline” is a line drawn across the bottom of the pattern, connecting the lowest points of the two troughs between the three peaks. It’s like drawing a line across the base of the shoulders and head.

Confirmation: The pattern is confirmed when the price falls below the neckline after forming the right shoulder. It’s like the stock is saying, “I can’t go up anymore, I’m heading down.”

There’s also an “Inverse Head and Shoulders” pattern, which is just the opposite and signals that prices might start rising after a downward trend.

Let's put your knowledge to the test! Using the interactive chart below, select any stock and switch to a 1-minute time frame. Can you identify 2 different instances of the Head and Shoulders? Did you notice a price increase or decrease following the Head and Shoulders pattern?

Technical Indicators

Technical indicators are like tools in a trader's toolbox, helping them analyze price data and identify trends and momentum. There are various types of technical indicators, including trend-following indicators, momentum indicators, and volume-based indicators.

Let's explore some common technical indicators and how they work:

Simple Moving Average (SMA)

The Simple Moving Average (SMA) is a widely used technical indicator that calculates the average price of a security over a specified period. It smooths out price fluctuations and helps traders identify trends by highlighting the direction in which prices are moving. For example, if you calculate the 50-day SMA for a stock, it will represent the average price of that stock over the past 50 trading days. Traders often use SMAs to identify potential support and resistance levels and to confirm trend reversals.

Let's say you're analyzing the 50-day SMA of Company X's stock. If the current stock price is consistently trading above the 50-day SMA, it suggests an uptrend. Conversely, if the stock price is consistently trading below the 50-day SMA, it indicates a downtrend.

Traders often use the SMA to identify potential support and resistance levels. For example, if the stock price bounces off the 50-day SMA multiple times without breaking below it, it could serve as a support level. Conversely, if the stock price consistently fails to break above the 50-day SMA, it could act as a resistance level.

Question: How can traders use the Simple Moving Average to identify potential support and resistance levels in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart

Exponential Moving Average (EMA)

The Exponential Moving Average (EMA) is similar to the SMA but gives more weight to recent price data, making it more responsive to changes in price trends. It is calculated by applying a greater weight to the most recent data points, resulting in a smoother and more accurate representation of current price movements. Traders often use EMAs to identify short-term trends and to generate buy or sell signals when the EMA crosses above or below the price.

Let's consider Company Y's stock and calculate its 20-day EMA. If the stock price is trading above the 20-day EMA and the EMA is sloping upwards, it suggests an uptrend. Conversely, if the stock price is trading below the 20-day EMA and the EMA is sloping downwards, it indicates a downtrend.

Traders often use the EMA to generate buy or sell signals. For example, when the shorter-term EMA crosses above the longer-term EMA, it may signal a bullish crossover and a potential buying opportunity. Conversely, when the shorter-term EMA crosses below the longer-term EMA, it may signal a bearish crossover and a potential selling opportunity.

Question: How do traders use the Exponential Moving Average to generate buy or sell signals in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart

Moving Average Convergence/Divergence (MACD)

The Moving Average Convergence/Divergence (MACD) is a versatile technical indicator that combines two exponential moving averages (EMA) to identify changes in momentum and trend direction. The MACD line is calculated by subtracting the 26-day EMA from the 12-day EMA, while the signal line is a 9-day EMA of the MACD line. Traders use the MACD to generate buy or sell signals when the MACD line crosses above or below the signal line, indicating a potential change in trend.

Let's analyze the MACD of Company Z's stock. When the MACD line crosses above the signal line, it indicates bullish momentum and a potential buying opportunity. Conversely, when the MACD line crosses below the signal line, it suggests bearish momentum and a potential selling opportunity.

Traders often use the MACD to confirm trend direction and identify potential entry and exit points. For example, when the MACD line crosses above the zero line, it confirms an uptrend. When it crosses below the zero line, it confirms a downtrend.

Question: How can traders use the Moving Average Convergence/Divergence (MACD) to confirm trend direction and identify potential entry and exit points in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart

Relative Strength Index (RSI)

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. It ranges from 0 to 100 and is used to identify overbought or oversold conditions in a security. A reading above 70 suggests that a security is overbought and may be due for a reversal, while a reading below 30 suggests that it is oversold and may be due for a bounce. Traders often use the RSI to confirm trend strength and to identify potential entry and exit points.

Let's examine the RSI of Company A's stock. If the RSI is above 70, it suggests that the stock is overbought and may be due for a pullback. Conversely, if the RSI is below 30, it indicates that the stock is oversold and may be due for a bounce.

Traders often use the RSI to identify potential trend reversals. For example, when the RSI crosses above 30 from below, it may signal a bullish reversal and a potential buying opportunity. When it crosses below 70 from above, it may signal a bearish reversal and a potential selling opportunity.

Question: How do traders use the Relative Strength Index (RSI) to identify potential trend reversals and overbought or oversold conditions in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart

Rate of Change

The Rate of Change (ROC) is a momentum indicator that measures the percentage change in price over a specified period. It helps traders identify the speed at which prices are changing and can be used to confirm trends or identify potential reversals. For example, a positive ROC indicates that prices are rising at an increasing rate, while a negative ROC suggests that prices are falling at an increasing rate. Traders often use ROC in conjunction with other indicators to confirm trend strength and identify trading opportunities.

Let's calculate the ROC of Company B's stock over the past 10 trading days. If the ROC is positive, it indicates that prices are rising at an increasing rate. If it is negative, it suggests that prices are falling at an increasing rate.

Traders often use the ROC to confirm trends and identify potential reversals. For example, when the ROC is rising along with the price, it confirms an uptrend. When it diverges from the price and starts to decline, it may signal a potential trend reversal.

Question: How can traders use the Rate of Change (ROC) to confirm trends and identify potential reversals in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart

Stochastic Oscillator

The Stochastic Oscillator is a momentum indicator that compares a security's closing price to its price range over a specified period. It consists of two lines: the %K line and the %D line. The %K line represents the current price relative to the price range, while the %D line is a moving average of the %K line. Traders use the Stochastic Oscillator to identify overbought or oversold conditions and to generate buy or sell signals when the %K line crosses above or below the %D line.

Let's analyze the Stochastic Oscillator of Company C's stock. When the %K line crosses above the %D line while in the oversold zone (below 20), it may signal a bullish reversal. When it crosses below the %D line while in the overbought zone (above 80), it may signal a bearish reversal.

Traders often use the Stochastic Oscillator to identify potential trend reversals and overbought or oversold conditions. For example, when the %K line crosses above the %D line in the oversold zone, it may signal a potential buying opportunity. When it crosses below the %D line in the overbought zone, it may signal a potential selling opportunity.

Question: How do traders use the Stochastic Oscillator to identify potential trend reversals and overbought or oversold conditions in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart

Bollinger Bands

Bollinger Bands are a volatility indicator that consists of a middle band, an upper band, and a lower band. The middle band is typically a simple moving average (SMA), while the upper and lower bands are calculated based on the standard deviation of price movements. Bollinger Bands expand and contract based on market volatility, with wider bands indicating higher volatility and narrower bands indicating lower volatility. Traders use Bollinger Bands to identify potential overbought or oversold conditions and to gauge market volatility.

Let's analyze the Bollinger Bands of Company G's stock. When the stock price touches or crosses the upper band, it may signal overbought conditions. When it touches or crosses the lower band, it may signal oversold conditions.

Traders often use Bollinger Bands to identify potential reversal points and gauge market volatility. For example, when the bands contract, it indicates low volatility, and traders may expect a breakout. When the bands expand, it indicates high volatility, and traders may expect a consolidation.

Question: How do traders use Bollinger Bands to identify potential reversal points and gauge market volatility in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart

Ichimoku Cloud

The Ichimoku Cloud is a comprehensive technical indicator that provides information about trend direction, support and resistance levels, and momentum. It consists of several components, including the Kumo (cloud), Senkou Span A and Senkou Span B (leading lines), Tenkan Sen (fast line), and Kijun Sen (slow line). Traders use the Ichimoku Cloud to identify trend direction and to generate buy or sell signals based on the interaction between its various components.

Let's analyze the Ichimoku Cloud of Company H's stock. It consists of multiple components, including the Kumo (cloud), Senkou Span A and Senkou Span B (leading lines), Tenkan Sen (fast line), and Kijun Sen (slow line). Traders use the interactions between these components to identify potential trading opportunities.

Traders often use the Ichimoku Cloud to confirm trend direction and identify potential entry and exit points. For example, when the price is above the Kumo and the Senkou Span A is above the Senkou Span B, it indicates a bullish trend. When the price is below the Kumo and the Senkou Span A is below the Senkou Span B, it indicates a bearish trend.

Question: How do traders use the Ichimoku Cloud to confirm trend direction and identify potential entry and exit points in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart

Keltner Channels

Keltner Channels are a volatility-based technical indicator that consists of an upper band, a middle band, and a lower band. The middle band is typically a simple moving average (SMA), while the upper and lower bands are calculated based on the average true range (ATR) of price movements. Keltner Channels expand and contract based on market volatility, with wider channels indicating higher volatility and narrower channels indicating lower volatility. Traders use Keltner Channels to identify potential overbought or oversold conditions and to gauge market volatility.

Let's analyze the Keltner Channels of Company I's stock. They expand and contract based on market volatility, with wider channels indicating higher volatility and narrower channels indicating lower volatility.

Traders often use Keltner Channels to identify potential overbought or oversold conditions and gauge market volatility. For example, when the price touches or crosses the upper band, it may signal overbought conditions. When it touches or crosses the lower band, it may signal oversold conditions.

Question: How do traders use Keltner Channels to identify potential overbought or oversold conditions and gauge market volatility in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart

Pivot Points

Pivot Points are a widely used technical indicator that identifies potential support and resistance levels based on previous price action. They are calculated using the high, low, and close prices of the previous trading session. Pivot Points consist of a central pivot point and several support and resistance levels. Traders use Pivot Points to identify key price levels where the market is likely to react and to plan their trading strategies accordingly.

Let's calculate the Pivot Points of Company J's stock. They consist of a central pivot point and several support and resistance levels. Traders use these levels to identify key price levels where the market is likely to react.

Traders often use Pivot Points to plan their trading strategies and set profit targets and stop-loss levels. For example, if the price breaks above the central pivot point, it may signal a bullish continuation. If it breaks below, it may signal a bearish reversal.

Question: How do traders use Pivot Points to plan their trading strategies and set profit targets and stop-loss levels in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart

On Balance Volume (OBV)

On Balance Volume (OBV) is a volume-based technical indicator that measures buying and selling pressure by adding or subtracting the volume of trades based on whether the price closes higher or lower than the previous close. It helps traders identify potential trend reversals or continuations by analyzing changes in volume relative to price movements. Traders use OBV to confirm the strength of a trend and to identify potential entry and exit points based on changes in buying and selling pressure.

Let's analyze the OBV of Company N's stock. It helps identify potential trend reversals or continuations based on changes in buying and selling pressure.

Traders often use OBV to confirm the strength of a trend and identify potential entry and exit points based on changes in buying and selling pressure. For example, if OBV is rising along with the price, it confirms bullish momentum. If it diverges from the price and starts to decline, it may signal a potential trend reversal.

Question: How do traders use On Balance Volume (OBV) to confirm the strength of a trend and identify potential entry and exit points in a stock's price chart?

Go here to practice what you just learned before moving on to the next section: https://www.consx.io/technical-analysis-chart