The 14 Basic Questions about Technical Analysis below serve as a quick test to help you evaluate your current level of understanding about Technical Analysis.
Take a few minutes to read through each question and try answering them yourself. These are the fundamental and most essential concepts that form the foundation of technical analysis.
Please note that the answers provided here are based on my personal understanding and writing style, not taken from any specific textbooks or formal trading materials. Therefore, there may be limitations, and I sincerely welcome feedback and comments from readers so we can improve and refine these foundational concepts together.
1. What are the three main states of the market?
They are uptrend, downtrend, and sideways movement.
2. What is an uptrend?
An uptrend is a market condition where rising prices dominate, marked by higher highs and higher lows.
3. What is a downtrend?
A downtrend is dominated by falling prices and is characterized by lower highs and lower lows.
4. What is a sideways trend?
A sideways trend represents a relatively balanced market where neither buyers nor sellers dominate. Price forms horizontal highs and horizontal lows, creating a range.
5. What is a trend channel?
A trend channel is the price movement boundary formed by connecting highs with highs and lows with lows. An upward channel slopes upward, a downward channel slopes downward, and a sideways channel lies horizontally.
6. What is a strong uptrend?
7. What is a strong downtrend?
8. When does a trend weaken?
A trend begins to weaken when the distance between new highs and previous highs shrinks, and the same happens with lows. The market may even start moving sideways, accompanied by decreasing trading volume.
9. Does each timeframe have its own trend?
Yes. Each timeframe reflects its own market behavior and analytical structure, so each timeframe has its own independent trend.
(You can see a deeper explanation about trend interactions in my previous article on Trend vs. Support–Resistance — internal link.)
10. What is a support level?
A support level is a price zone considered a potential buying area. It may be a previous low or a previous high. At support, market psychology often leans toward buying, making it a combination of both technical factors and sentiment.
11. What is a resistance level?
A resistance level is a price zone considered a potential selling area. It may be a previous high or previous low. At resistance, market psychology generally favors selling, so resistance also carries both technical and psychological meaning.
12. When does an uptrend reverse into a downtrend?
13. When does a downtrend reverse into an uptrend?
14. Is Technical Analysis always correct?
These are the 14 most fundamental questions about Technical Analysis. I hope this article provides value and helps reinforce your core knowledge base. Thank you for visiting the blog — please share it if you think it could help others. See you in the next posts.
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