Trend detection and technical analysis


Technical analysis means the study of market movements which we already seen in technical analysis article. It tries to detect turning points in the market with the calculation of economy trends and investors sentiments.
As we seen already, technical analysis was used for stocks, but nowadays we can use it for derivatives, commodities, currencies and bonds as well. For accurate and more precise forecast or predictions, traders must use various techniques and methods to detect price trend and reversals.

Trend determination techniques mostly include with price patterns, trendlines, moving averages study, momentum indicators, and oscillators. Studying market structure with this can help as well as improve your trend detection ability. Market structure study includes analyzing market data, major indices, and indicators.

Combining trend determination technique with market structure study will build the perfect and accurate framework for profitable trades or investments.
The trend of investor confidence are responsible for price movements and this emotional aspect is examined from four perspectives or dimensions, namely price, time, volume and breath.
Changes in price mean change in investor’s attitude. Price is the first dimension that indicate the underlying change.

Time is the second dimension which calculate recurrence and length of cycles in investor’s psychology. Sometimes these cycle as shorts and sometimes are long depending upon investors swing towards excessive optimism or great depression.
The degree of price movement in the market is usually the function of the time element. Mostly for large and strong price moves, a great time is required.
Volume is the third dimension which reflect the intensity of changes in investor’s sentiment. Enthusiasm implied by a price rise on low volume is not nearly strong as that implied by a similar price advance accompanied by strong volume.

The fourth dimension is breath which measures the extent of underlying emotions. For example, a secular rally in market support bull market and its trend but as soon as major investors start of concentrate on handful blue chip stocks then doubts start to rise about the market trend as well as a continuation of a trend.

Most of the indicators measures two or more dimensions. Like simple price chart measure price as well as time. Advance/decline chart measures breadth with time.
Use of these principles of technical analysis can put the odds of success very much in favor of the investors or traders and fulfill its mean.

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The Author

Pramod Baviskar

Professional Market Trader And Owner Of Dalal Street Winners Advisory And Coaching Services. Working Since 2007 And Online Presence Since 2010. We Provide Highly Accurate And Professional 1 Entry And 1 Exit Future, Option, Commodity, Currency And Intraday Stock Tips On Whatsapp With Live Support And Follow Up.
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