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Introductory Technical Fundamental Economics Opinion Sectors International Regulatory Other Markets

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Definition

The discipline of "technical analysis" or "charting", as it is sometimes called, consists of studying chart patterns with a view to establishing patterns that can be used to improve prediction of future price movements. This subject can be broken into three areas:
<ol style="text-align: justify;">
<li>Formations</li>
<li>Line Charts</li>
<li>Wave and cycle theories</li>
</ol>
There are many different types of formations which occur commonly in financial charts. For example, double tops and double bottoms usually signal a change in the direction of the trend. The head and shoulders formation and its opposite, the reverse head and shoulders formation usually indicate respectively a protracted downward or upward move. To get a clearer understanding of the various formations and how to interpret them you should refer to the module on formations in the course material.

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