TRADING GLOSSARY

Technical analysis: reading charts to predict price movement

Technical analysis is the study of historical price and volume data to forecast future price movements. It is based on three core principles: the market discounts everything (price reflects all available information), prices move in trends, and history tends to repeat itself.

Core tools

Charts: Candlestick, bar, and line charts visualize price movements. Trend lines: Lines connecting highs or lows that define trend direction. Support and resistance: Price levels where buying or selling has historically been strong. Indicators: Mathematical calculations applied to price and volume data (RSI, MACD, moving averages, Bollinger Bands, etc.).

Chart patterns

Continuation patterns: Flags, pennants, triangles, and wedges that suggest the existing trend will resume. Reversal patterns: Head and shoulders, double tops/bottoms, and rising/falling wedges that suggest a trend change. Candlestick patterns: Individual or multi-candle formations like doji, engulfing, and morning/evening stars.

Combining tools

The best technical analysis uses multiple tools in confluence. A buy signal is stronger when price is at support AND RSI is oversold AND a bullish candle pattern appears AND volume is increasing. No single indicator is reliable on its own — confluence is key.

AskTrade’s Technical Analysis Agent combines all of these tools automatically, analyzing multiple timeframes simultaneously.

Disclaimer: This is for educational purposes only and does not constitute financial advice. Trading involves significant risk of loss.

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AskTrade analyses are AI-generated and do not constitute financial advice.