The Psychology Behind Support and Resistance The reason that support and resistance work, and that the price will keep on touching and rebounding off them, is down to the psychology of the market participants. There is no ‘magic’, just commonsense. One explanation of why it works so well involves thinking of the psychology of the […]

Reversal of Roles Now for reasons I’ll go on to explain in the next section, often support and resistance reverse their roles, once they are penetrated or ‘broken’. If the price goes up through resistance by a good way, then that resistance level becomes a support level when the price comes back down. Here’s an […]

Support and Resistance Another way of looking at peaks and troughs in a price chart is using the concept of support and resistance. Again, this is a fundamental idea used in technical analysis, and the various aspects of it can be very powerful. httpv://www.youtube.com/watch?v=dBRK-ClmOf0 Support and Resistance The troughs, or low points, can be thought […]

The Parts of a Trend Now you may remember that Dow Theory talks about the three parts of a trend, the primary, secondary, and minor. The primary or major trend may last for years, and Dow classified it as something lasting more than a year, although depending on the market you trade in, such as […]

Module 3 – Trend Concepts Introduction Now that we have reviewed the fundamental ideas of technical analysis and the basics of charting, it is time to introduce you to some tools that you will use as you develop your knowledge and abilities. By the time you finish this module, you will start to see the […]

Ways of Using Charts Now it’s time to get an overall idea of how charts fit in to the world of technical analysis and the many ways that you can use them to help in your trading. They are an essential device for the trader to spot opportunities, but you don’t just work from what […]

Futures Charts When you’re looking at using long-term charts in connection with your trading, you may wonder how you can apply this to the futures markets. Futures markets, and for that matter options too, have expiry dates associated with them, which means that the same contracts do not run over periods of years. The longest […]

What about Inflation? Now with all this talk about long range charts, you may have been wondering whether inflation will upset your analysis, and whether you should try and account for it and make adjustments. After all, the rate of inflation must be reflected in the price of the security over the long term. This […]

Using Long-Term Charts in Trading Firstly, let’s be clear that you shouldn’t use long-term charts on their own for making any trading decisions. You can’t time your entries and exits from a trade with any precision based on long-term charts, and why would you want to anyway, when you have shorter term charts available? Long-term […]

Trendiness Now if you look at those three charts, for example, you will see why the Random Walk Theory is really disproved in practice, and why traders have no fear that their analytical basis is unsound. Quite often a daily chart will look somewhat random, as sometimes happens when there is no real driving force […]