Share prices constantly change, as a trader your objective is to learn to identify where the prices may go next. Traders track historical prices using price charts. By keeping track of historical prices, traders are able to more accurately project where prices are likely to head in the future. The process of analysing historical prices to intelligently predict future price movement is called Technical Analysis.
Technical Analysis, or chart reading, is the natural progression after you have conducted your fundamental analysis. Fundamental analysis helps you determine whether you should buy or sell a particular share or CFD. Technical analysis helps you determine when you should buy or sell that share or CFD.
While Technical Analysis may seem complex, it is indispensable to successful trading, and the basics are reasonably simple:
- Trends – where prices may be going
- Support and Resistance – where prices may stop and turn around