INTRODUCTION
Technical analysis applies numerical methods, mathematic modeling, and curve fitting to assist in determining the right time to enter into an investment. After all, buying a fundamentally fantastic stock for $50 is not such a good idea when the technical analysis indicates a price pull back is approaching. Most would agree, waiting for the pull back to complete then buying at $45 is much better and a more efficient use of capital. Basically, technical analysis can be used to give you an edge in the timing of your stock purchase. Is it perfect? It depends on how it’s used. If used recklessly, it can become nothing more than a casino gamble. But when exercised with diligence and combined with fundamental analysis, it can actually be more accurate than the fundamental analysis itself.
Many technical analysis indicators present similar information such as Momentum, Overbought, Oversold, Leading (or predictive), Lagging (or trend following), etc. And similar information often results in similar conclusions. Therefore, there is really no need to rely on every indicator available. And actually, it is more than sufficient to implement only a few indicators to be successful. Following are brief insights into some of the most popular technical indicators in use today. As an extra, review an explanation of our very own Action Zone stock list technical analysis methodology.
- Support
- Resistance
- Support & Resistance
- Trends and Channels
- Moving Averages (MA)
- Stochastic Oscillator
- MACD
- Bollinger Bands
- Volume
- Overbought and Oversold
- Lagging and Leading Indicators
- Price Characteristics
- Stock Cycles