Technical Analysis
Here we show excerpts from our introduction to Technical Analysis, including explanations of basic concepts, such as signals and price patterns, and details of key TA indicators.
Part 11: Thursday 28 August 2008
We will now look at some simple chart patterns and the signals that they suggest.
One of the most straightforward ‘buy’ signals is given when the price makes a higher peak after a higher trough.
On the breaking of potential resistance formed by the previous peak, the buy signal is given. So, a buy signal in Exxon Mobil is given on the breaking of the green line and at the breaking of every other subsequent minor resistance level. This way, we trade an uptrend.
In the same way, a simple ‘sell’ signal is given by the price making a lower trough after a lower high.