![]() ![]() The stock price moved from 100 to 350 in about 2 years period. Strong uptrend can be seen from the movement. The chart below is a plot of the price movement of the Apple Inc which made very good stride during March 2009 to May 2011. uptrend / downtrend / oscillating / triangle examples. Decreasing ranges between highs are lows are considered triangle patterns. If the price oscillates without any clear direction, it is said to be range-bound or in consolidation. Similarly, a downtrend has lower peaks and prices continue to make new lows. An uptrend is a situation in which we experience rising prices in the form of new highs and shallow pullbacks. There is a vital piece of information that is revealed when confirming support or resistance. Shorter term trends may indicate a shift in market expectations from one level of earnings to another of from a change in the level of confidence and a trend analysis may seek to identify this trend as something distinct from the overall trend caused by the fundamental performance of the business. Businesses that are continuously making losses will deplete their reserves and their instruments will tend to fall in value over the long term. As a general rule equity instruments tend to trend upwards over time, because of the preference of boards to retain earnings and grow the business rather paying out all the surpluses or profits produced to equity holders. ![]() Numerous types of trends can be identified in market price data including trends including increasing and decreasing price trends as well as range-bound or oscillating trends. By the time the price reaches the resistance level, it is believed that supply will overcome demand and prevent the price from rising above resistance. The logic dictates that, as the price advances towards resistance, sellers become more inclined to sell and buyers become less inclined to buy. Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further. By the time the price reaches the support level, it is believed that demand will overcome supply and prevent the price from falling below support. The logic dictates that as the price declines towards support and gets cheaper, buyers become more inclined to buy and sellers become less inclined to sell. Support is the price level at which demand is thought to be strong enough to prevent the price from declining further. Support and Resistance īefore we get started on trends, there are 2 terms that should be understood first that are: Support and Resistance Here are some of the downtrend and uptrend patterns that are popular in technical analysis of chart patterns Resistance analysis is similar to signal analysis, except that it views the break points in terms of price limits beyond which the market is unlikely to move. ![]() Signal analysis may supplement trend analysis by assisting analysts to identify when the market will break out of a trend that it has followed in the recent past by identifying price-movement patterns. Trend analysis assumes that past market behavior can be extrapolated into the future and that the trends of the past will repeat or persist in the future. Technical analysis employs three approaches for identifying changes in market moods over time: trend, signal and resistance analysis. ![]()
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