Technical Analysis

Candlestick charts are the language of technical traders. Each "candle" represents price action over a time period (1min, 1hr, 1 day, etc.).

A candle has four data points: Open (starting price), Close (ending price), High (highest price), Low (lowest price).

Green candle: Price closed higher than it opened (bullish).
Red candle: Price closed lower than it opened (bearish).

The "wick" (thin lines) shows the high and low extremes. A long upper wick means price was rejected at higher levels — a bearish signal. A long lower wick means buyers stepped in — a bullish signal.

Support and resistance are the most fundamental concepts in technical analysis.

Support is a price level where buying pressure is strong enough to prevent further decline. Think of it as a "floor" — the market has bounced from this level multiple times.

Resistance is a price level where selling pressure prevents further rise. Think of it as a "ceiling" — sellers consistently step in here.

Key insight: When resistance is broken, it often becomes the new support (and vice versa). This is called a "flip." Identifying these levels lets you set smarter entry and exit points.

Moving averages (MAs) smooth out price data to show the underlying trend. They're one of the most widely used indicators.

Simple Moving Average (SMA): The average price over N periods. The 50-day SMA and 200-day SMA are watched by millions of traders.

Exponential Moving Average (EMA): Weights recent prices more heavily, making it more responsive to new data.

Golden Cross: When the 50-day MA crosses above the 200-day MA — historically a strong bullish signal.
Death Cross: When the 50-day MA crosses below the 200-day MA — a bearish signal.

The Relative Strength Index (RSI) is one of the most popular momentum indicators. It measures the speed and magnitude of recent price changes to evaluate overbought or oversold conditions.

RSI ranges from 0 to 100:
• Above 70 = Overbought (potential reversal down)
• Below 30 = Oversold (potential reversal up)
• 50 = Neutral

RSI Divergence: When price makes a new high but RSI doesn't — bearish signal. When price makes a new low but RSI doesn't — bullish signal. Divergences often precede major reversals.

MACD (Moving Average Convergence Divergence) is another momentum tool. When the MACD line crosses above the signal line — buy signal. Cross below — sell signal.

Chart patterns are visual formations in price charts that hint at future price movements. Learning to recognize them gives you an edge.

Bull Flag: A sharp rally (flagpole) followed by a brief consolidation (flag). Usually resolves upward. Target = flagpole length added to breakout.

Ascending Triangle: Horizontal resistance + rising support. Buyers getting more aggressive each dip. Usually breaks upward.

Head & Shoulders: Three peaks — left shoulder, head (highest), right shoulder. The "neckline" is key support. A break below signals a major downtrend.

Double Bottom: Price tests a low, bounces, tests it again, then breaks up. A classic reversal pattern — strong buy signal when confirmed.