Popular technical Analysis Techniques

Technical Analysis uses a wide variety of charts in examining past price movements over time to forecast future financial price movements. The analysis can help investors anticipate what is possible to happen to prices over time. Technical analysis is applicable to stocks, indices, commodities, futures or any tradable instrument where the price is influenced by the forces of supply and demand. The following are a few popular techniques

MOVING AVERAGE
Average price of a stock or index over a period, graphed as a curving line that smoothes out large price moves. A variation called the exponential moving average gives more weight to recent prices.

STOCHASTIC OSCILLATOR
A complex formula that tracks momentum. Measured on a 100-point scale, a number between 0 and 20 or 80 and 100 means the trend may be ending.

BOLLINGER BANDS
A 20-day moving average plotted alongside two additional lines that measure divergences from the average price. On their own, BBs indicate volatility and extreme levels of buying and selling.

MACD
The "moving average convergence/divergence" is calculated by subtracting the 26-day exponential moving average from the 13-day exponential moving average. It indicates both the trend and momentum.