Technical analysis studies price and volume patterns to estimate where a stock might go next. The core idea is that markets discount information quickly, so price itself carries the consensus view of all buyers and sellers.
Start with the basics: support is a price level where buying has historically stepped in, and resistance is where selling has capped gains. Trend lines and moving averages help you identify whether the path is up, down, or sideways.
Technical signals work best as risk management tools, telling you where a trade idea is wrong, rather than as standalone crystal balls. Combine them with fundamentals, and you have a more complete picture.
Key takeaways
- Price and volume summarize the market's consensus
- Support and resistance mark the levels to watch
- Use charts for exits and risk, not just entries
