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POSTED BY ON September 26, 2010 9:04 am COMMENTS (2)
In general it is logical to give target for a stock based on its business earnings. I just want to understand how does the technical analysis works by analysing the chart patterns alone. If the stock price movement is determined by the graph patterns are we determining the mass of investors/traders mind without considering the micro/macro economies, business etc…
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@Ayem You can read this basic ebook created by me on Technical analysis :
http://sites.google.com/site/manishpucsd/Basics_of__Technical_Analysis_from_J.pdf?attredirects=0
PS : Make sure to keep title of the question very short 🙂
Chemistry formula says if you combine 2 molecules of Hydrogen with 2 molecules of Oxygen, you get 1 molecule of water. This can be applied by anyone & that’s why it is called science.
Same is the rule with technical analysis. There are mathematical formulas from which we can derive many figures not just support & resistance. So, anyone can apply that & it is also called Science.
Many times stock just zooms inspite of bad balance sheet or falls by 20% in a month inspite of good profit. Why?
Because most of the FII’s (and now Indian investors also) follows technical rules.
The whole topic can not explained here. Just try to learn some basics of it & apply on charts & see yourself.
Just to give you some examples, just visit http://www.DodaCharts.com
You’ll get some idea why sensex & gold are rising, why Reliance is in correction mode & when will it move upward etc.
Hope it will help you.
MoneySavingsHelp