Syndicate
Market Analysis Summary
After this exposition that introduces you to the technical analysis, you can outline the main ideas that you have to take into account when using it:
- in the measure in which the period of time included in a chart trustworthy are the conclusions that can be obtained of the same. In this way, for example, a chart of a 6 month period is more powerful than a chart of a 3 week period.
- In the same sense, we can affirm that in the measures that the term of time required for completing a figure (Head & Shoulders, Double Crest, etc.) increases, the more trustworthy is the conclusion obtained from the chart.
- The longer the period of the chart, the longer will the prediction term will be. For example, with a 3 month chart you can only do short term predictions. But with a chart that contains the prices and volumes of several years, you can elaborate long-term predictions. Anyways, to make short-term predictions, the technical analysis would be more appropriate; for long-term predictions it is more convenient to use fundamental analysis (Analysis of statements, stock exchange ratios and of the economic sector in which the company operates). With the short-term analysis you try to obtain small capital gains (5 – 20%) in a few days or weeks. But with the long-term analysis, what you are trying to do is obtain larger capital gains in a longer period of time.
- The moving averages can be of short term ( from 7 to 10 sessions) of medium term (of about 40 to 70 sessions) and of long-term (from 100 sessions to more). They can be interpreted as resistance lines on the rise (when the quotation is under the average), or as support lines (when the quotation is above the average).
- To avoid taking rushed decisions it is recommended to confirm the detected buying and selling signals. For it, it is convenient to use not only the evolution of the chart of quotation, but also that of volume of negotiations more than one oscillator. When all the indicators coincide in the sense that you have to sell or buy or wait, you have to do as it says.