What is meant by Technical Analysis?
The purpose of technical analysis is to evaluate assets and identify trading opportunities based on historical data and statistical trends gathered from trading activity, such as price movement and volume. Unlike fundamental analysis, which focuses on sales and earnings, technical analysis focuses on price and volume to determine a security's value.
The technical analysis includes 3 key indicators:
1. Summary
2. Moving Averages
3. Indicators
1. Summary: This tab provides multiple technical analysis tools such as technical meter, support & resistance, price performance details and Beta analysis. Each of these terminologies are explained as below:
- Technical meter: Technical meter is the tool that provides the consolidated view (i.e., Bullish/Bearish) based on a total of 26 indicators to measure a stock's technical strength in this widget. The overall result is based on categorizing indicator results into 3 baskets - Buy, Sell & Neutral.
For instance, The 5-minute timeframe of SBIN is stating that 14 out of 26 indicators point towards ‘Sell’. Thus, the overall result for that timeframe is displayed as 'Sell' as shown below:
- Support & Resistance: The 'Support & Resistance' option helps the users to check out all the price levels of support and resistance. For more details, refer to this article.
- Price Performance info: The Price performance info as the name suggests provides you with the comparative performance of a particular company's price with the Nifty50 Index. To know more, refer to this article.
- Beta analysis: The Beta is the measure of a stock’s volatility against the index. Beta Analysis provides how volatile is the stock compared to the index. To know more, refer to this article.
2. Moving Averages: The Moving Averages (MA) provide you with the levels of simple and exponential moving averages at different periods. The moving average is an indicator that calculates the average price over a given period.
For instance, If you select a 20-day moving average to trade in SBIN (LTP - ₹598.10), then the SBIN 20-Day simple MA will be 587.54 and the exponential MA will be ₹587.09 as displayed in the screenshot below:
Similarly, the tool will provide you with 50-Day, 100-Day, and 200-Day MA levels that could help you save time.
3. Indicators: The 'Indicators' tab provides you with the signals of the most popular indicators such as MACD, RSI, MFI, ADX, ATI, etc., all at one place.
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