Technical analysis uses historical market data like prices and volumes to identify trends and patterns that may forecast future price movements. The document outlines several technical analysis techniques including:
Dow Theory which looks at trends in the Dow Jones Industrial Average and Transportation Average. Elliot Wave Theory which identifies repeating cycles in market data. Charting techniques like bar charts, candlestick charts, and point and figure charts are used to visually identify patterns. Common patterns include head and shoulders, triangles, and rounded tops/bottoms. Indicators like MACD, RSI, and Bollinger Bands provide buy/sell signals. The goal of technical analysis is to predict turning points in markets based on the assumption that historical patterns repeat.