Technical analysis is a great way to decode market trends. Quality technical analysis can give the traders and investors a bird’s eye view of market trends which can prove to be extremely profitable in the long term. However, conducting technical analysis is no mean task as there are numerous chart types (Bar, Line etc.) and even more chart patterns to deal with. It goes without saying that no chartist can follow all the chart types and bet on all the chart patterns to make consistent money in the markets. Focus and developing expertise in specific charting techniques are the key attributes when it comes to success in technical analysis.
Often it is seen that a combination of two or more studies provides optimal results while executing trades using technical analysis, as for example, the use of candlestick charting techniques and oscillators. A combination of both can refine the stock selection and market timing, pushing the success ratio higher for any trader. One may add trend line to the study on a regular basis along with various chart patterns such as candlesticks and momentum oscillators to provide more authenticity to the trade setup.
Candlestick charting techniques is one of the most popular methods adopted by chartists. One of the most important reasons for the popularity of candlestick charting is the pictorial representations of stock prices and the way the market information is displayed so that traders can use this information to their maximum advantage. Candlestick charts are easy to read and are one of the oldest studies in technical analysis. They originated in Japan over 100 years before the bar and point-and-figure charts were developed in the western markets.
This story is from the August 17 - 30, 2020 edition of Dalal Street Investment Journal.
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This story is from the August 17 - 30, 2020 edition of Dalal Street Investment Journal.
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