S3 E2 : BASIC OF TECHNICAL ANALYSIS
“How Traders Read Charts Like Doctors Read X-Rays”
👀 First, What is Technical Analysis?
Imagine looking at a stock price chart — those wavy lines going up and down.
Traders treat it like a secret language.
Technical Analysis is the art of reading these charts to understand:
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When to buy
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When to sell
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When to stay calm
It’s not about how good a company is.
It’s about how the price behaves — like watching the mood of the crowd.
🩺 Doctor Analogy:
A doctor looks at:
- Your X-ray to see your bones
- Your report to see your blood levels
A trader looks at:
- Stock charts to see price movement
- Indicators to check market health
They don’t guess.
They observe patterns, just like doctors do.
🖼️ So… What is on the Chart?
A stock chart shows how the price changed over time.
You’ll usually see:
- Lines or candles (we’ll learn soon)
- Volume bars (how many people are buying/selling)
- Timeframe (1-day, 5-day, 1-month etc.)
It’s like a history diary of a stock’s emotions.
📉 Example: Reliance Chart
Let’s say Reliance stock has been:
- Moving between ₹2,500 and ₹2,700
- Every time it hits ₹2,700, it comes down
- Every time it hits ₹2,500, it goes up again
A trader notices this “mood pattern”
They think:
“If it’s near ₹2,500, I’ll buy. If it goes near ₹2,700, I’ll sell.”
That's technical analysis in action!
🧠 What Traders Look For:
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Trends
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Is the stock going UP, DOWN, or SIDEWAYS?
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Support & Resistance
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Support = A price where the stock usually stops falling
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Resistance = A price where the stock usually stops rising
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Volume
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More volume = More interest = Stronger moves
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Indicators
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Like tools that help you read better (we’ll learn soon: RSI, MACD, etc.)
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🛠️ Why Use Technical Analysis?
- To find entry and exit points
- To plan your trade, not act on emotion
- To avoid buying “at the top” or selling “at the bottom”
🎮 Real-Life Analogy: Weather App
You’re planning a picnic.
- You open a weather app
- It shows clouds and wind
- You decide if it’s safe to go or not
Traders do the same with stock charts.
They check the signals before taking action.
📌 Recap:
✅ Technical Analysis = Reading stock charts like a report
✅ Focuses on price and volume
✅ Helps decide when to enter/exit a trade
✅ Just like doctors use reports, traders use charts
✅ No emotions — just patterns, history, and logic