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TechniTrader teaches "5 Key Aspects of Stock Technical Analysis" 

TC2000 Candlestick Chart Patterns Reveal What, When, Why, Who, and Where

Technical Analysis is the study and interpretation of price, time, and volume for stocks and indexes. Due to the massive changes to the Stock Market Structure since the Banking Debacle and Sub Prime Mortgage disaster, Technical Analysis has been evolving and changing. There are many aspects of Technical Analysis including Candlestick Patterns, Support and Resistance, Trendline Patterns, Angle of Ascent™ and Angle of Descent™ as well as Overall Trend, Uptrend, Downtrend, Sideways Trending, Institutional activity, High Frequency Trader activity, Small Funds and Retail activity, Entry and Exit Signals, and Indicators.

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All of this can be simplified down to 5 areas of analysis which makes stock pick selection faster, easier, and far more reliable. Here is a list of the 5 Key Aspects of Technical Analysis to analyze and interpret:

  1. WHAT is the basic type of sideways price action in terms of width:
    a.  Trading Range
    b.  Platform
    c.  Consolidation
    d.  Wide Sideways
    e.  Bottoming
    f.   Topping
    g.  Compression

So what Sideways Pattern is in the chart below?

The answer is a Trading Range.

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2. WHEN does a Trading Range occur or in other words, in which of the following Market Conditions do Trading Range sideways patterns develop:

a. Platform Markets

b. Trading Range Market Conditions

c. Topping Market Conditions

d. Long Term Bottoms after a Great Bear Market

e. Occasionally in Moderately Trending markets, when Index component stocks are lagging behind new technology stocks.

The WHEN helps identify the current Market Condition. This is critical information because the Market Condition present at the time you decide to buy a stock, tells you how much momentum is in the market, how resistance and support will behave, where to place stop losses, how to calculate run gain or target gain potential, and the overall risk.

3. WHY tells you the reason the stock is moving in that particular trend and trendline pattern. It defines the overall fundamental conditions and economic conditions that can and do influence technical patterns. Adding fundamental indicators to your analysis will help clarify the institutional interest, and other crucial financial information. Using fundamental indicators in addition to technical indicators, streamlines the decision of which stock to invest or trade.

4. WHO is all about which of the nine Market Participant Groups created that price action. Trading Range price action is not created by the giant and large institutions that use Dark Pools. Trading Ranges tend to form when several different smaller lots and High Frequency Traders HFTs are disagreeing on the direction the stock will take. Sentiment is fractured, and neither the buy nor sell side controls price sufficiently to sustain the uptrend or the downtrend.

5. WHERE is the understanding of where the greatest potential for an excellent stock trade is that will earn high profits with very low risk. WHERE tells you the price level, as well as the entry and exit. WHERE tells you how to trade, what strategies to use, and how long to hold the stock.

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The 5 Key Aspects of Technical Analysis, provides a deeper understanding about the stock before you decide to trade it. This eliminates weaker stock picks, brings clarity to the stock analysis process, and continually reminds you of the overall conditions in which you are trading. WHAT price pattern tells you the overall trend and trendline pattern. WHEN gives you the market condition. WHY tells you why a stock moves that way. WHO controls price will tell you how price will behave in the near term. WHERE tells you the entry price, risk, exit, and the strategy to use.


Instead of starting with a strategy and trying to find a stock that MIGHT move as that strategy requires it to move the WHAT, WHEN, WHY, WHO, and WHERE of Technical Analysis shows you how to trade the stock properly, with far more control on your part and thus more reliable trading results.

Strategies are not the first thing to choose, they are the LAST thing you should choose. Let the stock chart and the 5 Key Aspects of Technical Analysis tell you how to trade the stock for optimal results.

Technical Analysis is the study of the movement of Price and Quantity over time in investing instruments. Put simply, it is Chart Study. Charts are available for Stocks, ETFs, Indexes, Futures, E-minis, Forex, Mutual Funds, Pink Slips, Bulletin Board Stocks, and more. It is not a crystal ball approach to the markets, as many think. It is anticipating future price action based on the sentiment that has been typical for a trading instrument in the past.

Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.

Chartered Market Technician
Instructor and Developer of TechniTrader Stock & Option Markets Courses

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