Trading A Stock Using Technical Analysis by Thom Hartle
The search goes on for key indicators to help traders find profitable opportunities in the market. Here, Stocks & Commodities Editor Thom Hartle provides an example of a recent trade in a stock based on the foundations of technical analysis, price and volume.
Technical analysis has two purposes. The first is to develop an idea about where a market is heading,
answering the question of what is happening. For example, if Treasury bond and Treasury bill yields are
rising, indicated by a series of higher highs and higher lows, then you should conclude that the interest
rate environment is one in which rates are rising. Once a trend is established, you should respect the trend
until there is sufficient evidence that a new trend is under way. In this case, technical analysis is being
used as a form of descriptive technique.
The second purpose of technical analysis is to answer the question of when is something happening,
something that most people want to know. In this case, technical analysis is being used as a timing