Trendlines show support boundaries under prices. Temporary trendline penetrations are not as significant as a close beyond the trendline. Prices retrace a portion of the current trend before resuming in the original direction. These counter trend moves tend to retrace to certain predictable percentages. When prices trend between two parallel trendlines, they form a Channel. When prices hit the bottom trendline, this may be used as a buying area, and when prices hit the upper trendline, this may be used as a selling area.
The noun “chartist” and related verb “charting” are also used, sometimes referring to a subset of technical anaysis. Also, technical analysts are often referred to as “noise traders” in the academic literature (noise being anything other than news). Technical analysis is research of market dynamics that is done mainly with the help of charts and with the purpose of forecasting future price development. Technical analysis comprises several approaches to the study of price movement which are interconnected in the framework of one harmonious theory. This type of analysis studies the price movement on the market by means of analyzing three market factors: price, volumes, and, in case of study of futures contracts’ market, of an open interest (number of open positions). Of these three factors the primary one for technical analysis is the prices, while the alterations in other factors are studies mainly in order to confirm the correctness of the identified price trend. This technical theory, just like any theory, has its core postulates.
The noun “chartist” and related verb “charting” are also used, sometimes referring to a subset of technical anaysis. Also, technical analysts are often referred to as “noise traders” in the academic literature (noise being anything other than news). Technical analysis is research of market dynamics that is done mainly with the help of charts and with the purpose of forecasting future price development. Technical analysis comprises several approaches to the study of price movement which are interconnected in the framework of one harmonious theory. This type of analysis studies the price movement on the market by means of analyzing three market factors: price, volumes, and, in case of study of futures contracts’ market, of an open interest (number of open positions). Of these three factors the primary one for technical analysis is the prices, while the alterations in other factors are studies mainly in order to confirm the correctness of the identified price trend. This technical theory, just like any theory, has its core postulates.
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