What is a Technical chart?
A technical chart shows a unique pattern or formation of stocks or commodities which gives an indication to the trader about the probable future movements in price. These patterns can be used to interpret reversals and current trends in the market. In order to make informed decision making, technical analysis or charts is an effective tool.
What is Technical Analysis?
Technical analysis is usually considered as a trading tool which helps to evaluate the past price movements and attempt to forecast their future movement by analyzing statistics gathered from trading activity.
Different Charts involving various structures are prepared with commodity information like prices and volume. This is purelybased on analyzing current demand-supply of commodities, indices, futures or any tradable instrument.
Two important factors that are considered in Technical analysis:
A. The current price
B. History of price movement
Three major assumptions we have in Technical analysis:
A. The market discounts everything
B. Price movements based on trends
C. History trends as to repeat itself
What is Technical Chart Time?
The applicability of the Technical analysis may range between the following Time frame:
Intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly), daily, weekly or monthly price data and last a few hours or many years.
Right Time frame for Commodity Traders
Day Trader : 5 - 15min Charts
BTST Trad : 30min - hourly Charts
Positional Trader : Daily Charts
Contract Carryover : weekly Charts
Strengths and Limitations of Technical Analysis
|Focus on price
|Pictorial price history
|Predefined calculation entry on exit
||Too late (Signal followers)