Technical Analysis Study Guide: reading charts and patterns

How to read price bars, volume, trends and support and resistance, what each indicator measures, candle and chart patterns, and how to test an idea and plan a trade.

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📈 Trends: higher highs, higher lows and how trends endIn 30 seconds: A trend is the direction price has been moving, judged by its swing points. An uptrend makes higher highs and higher lows. A downtrend makes…
🧱 Support and resistance: the price levels that matterIn 30 seconds: Support is a price area where falling prices have tended to stop. Resistance is an area where rising prices have tended to stall. They form at…
〰️ Moving averages: SMA, EMA, crossovers and the cost of lagIn 30 seconds: A moving average is the average closing price over the last N days, recalculated every day. It smooths out noise so the trend is easier to…
🧭 Momentum indicators: RSI, MACD, stochastic and divergencesIn 30 seconds: Momentum indicators measure how fast and how consistently price is moving. RSI compares average gains with average losses on a 0 to 100 scale.…
🌊 Volatility tools: standard deviation, Bollinger Bands, ATR and the VIXIn 30 seconds: Volatility is how much price moves, regardless of direction. Standard deviation measures how spread out closing prices are around their…
🔺 Chart patterns: head and shoulders, double tops, triangles, flagsIn 30 seconds: Chart patterns are recurring shapes in price, like head and shoulders, double tops and bottoms, triangles, flags and the cup and handle. Each…
🚀 Breakouts and gaps: real moves, false starts and earnings jumpsIn 30 seconds: A breakout is when price closes beyond a level that has held before, such as the top of a range. Breakouts can start big moves, but many fail…
🔭 Using multiple time frames: top-down analysisIn 30 seconds: The same stock can be trending up on a weekly chart and down on a daily chart. Top-down analysis deals with this by giving each time frame one…
🔬 Does technical analysis work? What the research saysIn 30 seconds: The evidence is mixed, and the details matter. Price momentum over roughly 3 to 12 months is one of the best-documented effects in finance.…
🧭 What technical analysis is, what it assumes and what it cannot doIn 30 seconds: Technical analysis is the habit of reading a market’s own record of trades, mainly price and volume, to judge which outcomes are more likely…
🕯️ Reading price bars: candles, bars, time frames, scales and adjusted dataIn 30 seconds: A price bar squeezes a stretch of trading into four prices: open, high, low and close. That is useful, and it also throws away detail, such as…
🔊 Reading volume: confirmation, climaxes and dry-upsIn 30 seconds: Volume counts how many shares changed hands. On its own it says little. Compared with the stock’s own normal, it shows when a move had broad…
🧱 Market structure: swings, trends, ranges and the four phases of a cycleIn 30 seconds: Market structure is the pattern of swing highs and swing lows on a chart. To read it consistently, pick a swing rule and stick to it, because…
📐 Trendlines and channels: drawing them honestlyIn 30 seconds: A trendline is a guess about the pace of a trend, drawn as a straight line. Its value depends on drawing it the same way every time. Pick…
🧲 Support and resistance zones: why levels hold and how they flipIn 30 seconds: A support or resistance zone is a price band where orders showed up before and may show up again. Build it from the cluster of past turns…
〰️ Moving averages in practice: filters, pullbacks, crossovers and ribbonsIn 30 seconds: A moving average is most useful when you give it one clear job. A long average and its slope make a decent direction filter. A shorter one…
🌀 Fibonacci retracements, extensions and pivot pointsIn 30 seconds: Fibonacci retracements divide a finished swing into slices (23.6%, 38.2%, 50%, 61.8% and 78.6%) and mark where a pullback might pause.…
🎚️ Momentum oscillators: RSI, stochastic and rate of changeIn 30 seconds: RSI weighs recent up moves against down moves. The stochastic asks where the close sits inside the recent high to low range. Rate of change…
📶 MACD, its histogram and the percentage versionIn 30 seconds: MACD is the gap between a fast and a slow exponential moving average. The signal line is a smoothed copy of that gap, and the histogram is the…
💪 Measuring trend strength: ADX, Aroon, choppiness and IchimokuIn 30 seconds: Most indicators work in either a trend or a range, not both, so it helps to measure which one you are in. ADX measures how one-sided the…
📏 Volatility tools: ATR, Bollinger Bands®, Keltner Channels and squeezesIn 30 seconds: Volatility tools measure how far price tends to move, not which way. ATR averages the full daily range including gaps. Bollinger Bands® set…
🔊 Volume indicators: OBV, accumulation/distribution, money flow and VWAPIn 30 seconds: Volume indicators try to tell whether trading activity is leaning toward buying or selling. On-balance volume adds or subtracts a whole day’s…
🏁 Relative strength: comparing a stock with the market and its sectorIn 30 seconds: A relative strength line divides a stock’s price by a benchmark’s price. When the line rises, the stock is doing better than the benchmark…
🕯️ Single-candle patterns: doji, hammer, shooting star, marubozu and spinning topIn 30 seconds: A single candle tells you how one session went: who pushed, who gave up and where price settled. The doji, hammer, shooting star, marubozu and…
🧩 Two- and three-candle patterns: engulfing, harami, stars, soldiers and crowsIn 30 seconds: Multi-candle patterns show a change in control over two or three sessions. An engulfing candle overwhelms the one before it, a harami stalls…
🔄 Reversal chart patterns: head and shoulders, double and triple tops, rounding and V turnsIn 30 seconds: A reversal pattern is a trend running out of steam, drawn over weeks or months. Head and shoulders, double and triple tops and bottoms…
🚩 Continuation patterns: flags, pennants, triangles, wedges, rectangles, cup with handleIn 30 seconds: A continuation pattern is a rest inside a trend. Flags and pennants are short pauses after a sharp move. Triangles, wedges and rectangles are…
🌉 Gaps and breakouts: types of gaps, confirming a breakout, failed breakouts and measured movesIn 30 seconds: A gap is empty space on a chart where no trading happened. A breakout is a close beyond a level that held before. Both mark moments when the…
🧱 Heikin-Ashi, Renko, point and figure, Kagi and line break: when each one helpsIn 30 seconds: Regular candles plot every session, so they show every wiggle. Heikin-Ashi averages the candles. Renko, point and figure, Kagi and line break…
🔀 Divergence: when price and momentum disagreeIn 30 seconds: Divergence is a disagreement between price and a momentum indicator. When price makes a new high but momentum does not, the rise is losing…
🪟 Multiple time frames and confluenceIn 30 seconds: Every longer bar is made of shorter bars, so the weekly, daily and hourly charts are three views of one price history. A level that looks like…
📐 Building a trade plan from a chart: entry, stop, target and position sizeIn 30 seconds: A trade plan answers five questions before you act: where the idea is proven wrong, where you get in, where you expect to take profit, how…
🧪 Five classic setups written as rules you can testIn 30 seconds: A setup is only testable when two people reading the same rules would mark the same bars. This chapter writes five well-known ideas that way…
📊 Testing an idea: backtests, base rates, sample size, overfitting and costsIn 30 seconds: An idea is only interesting if it does better than what happens anyway, which is the base rate. With small samples the error is so wide that…
🪞 The psychology of chart reading and the most common mistakesIn 30 seconds: People are built to find shapes, and they find them in random lines too. Patterns look clear in the middle of a chart because the ending is…
⏱️ A 10-minute routine for reading any chart, with a checklistIn 30 seconds: Reading charts in the same order every time stops you from jumping to the part that agrees with you. This routine takes about ten minutes. It…
📖 Technical analysis glossary A to ZIn 30 seconds: Plain definitions of the words used across this guide, one or two sentences each. Some terms link to the chapter that covers them. A…