📊 Technical Analysis Fundamentals
Technical analysis involves studying price charts and patterns to predict future movements.
Essential Chart Patterns:
Bullish Patterns (Price likely to go UP):
- 📈 Ascending Triangle – Higher lows with flat resistance
- 📈 Cup and Handle – U-shaped recovery with small dip
- 📈 Double Bottom – W-shaped reversal pattern
- 📈 Inverse Head and Shoulders – Three troughs with middle deepest
- 📈 Bull Flag – Sharp rise followed by slight downward consolidation
- 📈 Falling Wedge – Converging downward trendlines (breakout UP)
Bearish Patterns (Price likely to go DOWN):
- 📉 Descending Triangle – Lower highs with flat support
- 📉 Head and Shoulders – Three peaks with middle highest
- 📉 Double Top – M-shaped reversal pattern
- 📉 Bear Flag – Sharp drop followed by slight upward consolidation
- 📉 Rising Wedge – Converging upward trendlines (breakdown)
Key Technical Indicators:
| Indicator | What It Shows | How to Use |
|---|---|---|
| RSI (Relative Strength Index) | Overbought/oversold conditions | >70 = overbought, <30 = oversold |
| MACD (Moving Average Convergence Divergence) | Trend direction and momentum | Signal line crossovers |
| Bollinger Bands | Volatility and price range | Price touching bands signals reversal |
| Moving Averages (SMA/EMA) | Trend direction | Golden cross = bullish, Death cross = bearish |
| Volume | Trading activity strength | High volume confirms trends |
| Fibonacci Retracement | Support/resistance levels | Key levels: 23.6%, 38.2%, 50%, 61.8% |
| Stochastic Oscillator | Momentum indicator | >80 = overbought, <20 = oversold |
| VWAP | Volume-weighted average price | Institutional entry/exit levels |
| Ichimoku Cloud | Trend, support, resistance | Price above cloud = bullish |
| OBV (On-Balance Volume) | Volume flow | Rising OBV = accumulation |