Technical Analysis Basics
Trading Mastery
8 min read
Learn to read the market without news using price, volume, and chart structure as your primary information source.
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8 min read
Learn to read the market without news using price, volume, and chart structure as your primary information source.
Technical analysis (TA) is the practice of forecasting future price behavior from historical price and volume data alone, without reference to a security's fundamentals.
While fundamentals explain why something should move, TA shows you how it's moving—right now. It helps traders:
In this post, you’ll learn the building blocks of TA:
This is your visual toolkit. The next four lessons in Tools deepen each piece: how TA compares to fundamentals, indicators, patterns, and volume profile.
TA is contested. Academic finance (EMH) says past prices don't predict future ones; practitioners point to anchoring, reflexivity, and the simple fact that levels become real because enough people watch them. Both are partly true. TA works best when participation is concentrated and predictable; it fails when liquidity disappears or the regime changes.
Academic finance (EMH) says past prices don't forecast future ones; many famous chart patterns underperform once you control for selection bias. TA's value is not prediction — it is a disciplined way to read context, place stops, and stay out of trades you can't define.
Candlesticks show what price did during a specific time period.
Each candle contains:
Anatomy of a candle: the body shows direction (green up, red down) and the wicks show the high and low of the period.
Think of candles as visual footprints of trader behavior.
Volume shows how many contracts/shares/coins were traded in a candle.
Why it matters:
Combine volume with price:
Trendlines help define directional bias:
A trendline needs at least 3 touches to be tradable; 2 touches is a hypothesis, not a level. The same applies to horizontal support/resistance.
They’re not perfect lines—but visual guides.
Think of them as slope indicators: Is the market climbing or sliding?
Price bounced from here before → possible bounce again
Price was rejected here → may struggle to break again
These levels often:
They work because traders remember them—and act on them.
If three of the four lenses below agree, you have context. If they disagree, you have a question — not a trade.
Technical analysis (TA) is the practice of forecasting future price behavior from historical price and volume data alone, without reference to a security's fundamentals. It treats the chart itself — candles, volume, structure — as the primary information source.
No. TA doesn't predict the future — it describes current context. Academic studies on chart patterns are mixed; many famous patterns underperform once you control for selection bias. TA's value isn't prediction — it's a disciplined way to read context, place stops, and stay out of trades you can't define.
Volume measures conviction behind a price move. High volume on a breakout signals real participation; low volume signals indecision or weak hands. The combination of price direction and volume is far more informative than either alone — and divergences between the two are the cleanest read.
A trendline needs at least 3 touches to be tradable; 2 touches is a hypothesis, not a level. The same rule applies to horizontal support and resistance — one bounce is noise, two is suggestive, three is structure.
Four lenses: DNA (candles), fuel (volume), slope (trendlines), memory (support/resistance). Stack them. If three agree, you have context. If they disagree, you have a question — not a trade.
Technical analysis doesn’t predict the future—it tells you the current context.
TA is contested. Academic studies on chart patterns are mixed; many famous patterns underperform once you control for selection. TA's value isn't prediction — it's a disciplined way to read context, place stops, and stay out of trades you can't define.
Used properly, it lets you: