PocketX Learn / Module 2
Technical Analysis
Read price action, trends, support, resistance, candlesticks, volume, indicators and chart signals.
1. What is Technical Analysis?
Technical Analysis is the study of a security’s historical price movements and trading volume to forecast future price behaviour. It is primarily used by traders and short-term inv...
2. How is Technical Analysis Different from Fundamental Analysis?
Technical Analysis focuses on price action and patterns, while Fundamental Analysis studies financial statements and business performance. Both aim to help investors make smarter d...
3. What Are the Three Key Assumptions of Technical Analysis?
Technical analysis is grounded in three powerful assumptions that shape how price, volume, and trends are interpreted. These assumptions help traders forecast future price movement...
4. What is the Dow Theory?
Dow Theory is one of the earliest and most influential concepts in technical analysis, developed by Charles H. Dow, the founder of the Wall Street Journal and co-founder of Dow Jon...
5. What is a Trend?
In the world of technical analysis, a trend refers to the general direction in which the price of a stock, index, or market moves over time. Understanding trends is foundational fo...
6. How Do You Draw an Uptrend Line?
An uptrend line is one of the most powerful tools in technical analysis. It helps traders visualize bullish market momentum, identify support levels, and make informed buy decision...
7. What is a Support Level?
A support level is a critical concept in technical analysis. It refers to a specific price zone where a stock repeatedly finds buying interest, preventing it from falling further....
8. What is a Resistance Level?
A resistance level is a key concept in technical analysis that refers to a price point at which a stock or index repeatedly struggles to move above. This happens because sellers be...
9. What is a Breakout?
A breakout occurs when the price of a stock or index moves decisively above a resistance level or below a support level, often accompanied by high trading volume. Breakouts signal...
10. What is Volume and Why is It Important?
Volume refers to the total number of shares or contracts traded for a particular stock, index, or asset during a given period (daily, hourly, etc.). It is one of the most crucial i...
11. What is a Candlestick Chart?
A candlestick chart is one of the most widely used tools in technical analysis. It visually represents a stock’s Open, High, Low, and Close (OHLC) prices for a specific time period...
12. What Does a Bullish Candlestick Indicate?
A bullish candlestick represents a scenario where the closing price of a stock is higher than the opening price during a specific time period. It indicates that buyers were in cont...
13. What is a Doji Candlestick?
A Doji candlestick is a special pattern where the opening and closing prices are almost equal, resulting in a candle with little to no body but visible upper and lower wicks (shado...
14. What is RSI (Relative Strength Index)?
The Relative Strength Index (RSI) is a momentum oscillator used in technical analysis to measure the speed and magnitude of recent price changes. RSI helps traders identify whether...
15. What RSI Values Indicate Overbought and Oversold Levels?
The Relative Strength Index (RSI) is a momentum indicator that provides values between 0 and 100, helping traders determine if a stock or asset is overbought (too expensive) or ove...
16. What is a Moving Average?
A Moving Average (MA) is one of the most essential tools in technical analysis. It helps traders and investors identify the overall trend of a stock by smoothing out price fluctuat...
17. What is the Difference Between SMA and EMA?
The Simple Moving Average (SMA) and the Exponential Moving Average (EMA) are both moving averages used to smooth out price data and identify trends. The key difference lies in how...
18. What is a Crossover Strategy?
A crossover strategy is a popular trend-following trading method where two moving averages — one short-term and one long-term — are plotted on a chart. When the short-term moving a...
19. What is MACD (Moving Average Convergence Divergence)?
MACD, or Moving Average Convergence Divergence, is a momentum and trend-following indicator used in technical analysis. It helps traders understand trend direction, momentum streng...
20. Why is Risk Management Important in Technical Trading?
Risk management is the backbone of successful trading. In technical trading—where decisions rely on charts, patterns, and indicators—not every trade will be correct. That’s why man...