Term:TECHNICAL ANALYSIS

The analysis of group investor behaviour, as reflected in the patterns of share prices and volumes, indices, exchange rates and other data streams. More commonly known as charting, this consists of carefully examining the share price, and drawing graphs to establish patterns which can then be used to give, buy and sell signals. The primary function of your software is to enable you to do technical analysis by looking at the various line indicators available. These line indicators are listed in alphabetical order in the bottom left-hand corner of your screen under the heading “All Indicators”. If you click on the down-arrow adjacent to this heading you can then select the particular indicator that you want. Technical analysis also involves the observation and analysis of common formations like  channel lines, support, resistance, double tops and bottoms, head-and-shoulders and so on. For example, consider the following chart:

technical analysis

Sasol (SOL) October 2013 to June 2018

This shows a clear “double top” followed by a strong downward trend and then an extended period where the share oscillated between resistance at R480 and support at R360. This type of simple observation of formations and patterns can greatly assist you to buy and sell at the right times.

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