Technical analysis is the study of price movements. Instead of focusing on financial statements, it looks at trends and patterns.
**Key elements of technical analysis**
– **Charts:** Ways to track momentum.
– **Trends:** Identify direction.
– **Support and resistance:** Psychological zones for traders.
**Popular indicators**
– Moving averages (SMA, johnson & johnson stock EMA).
– Relative Strength Index (RSI).
– MACD (Moving Average Convergence Divergence).
– Highlight volatility.
**Limitations**
– Purely market-driven.
– False signals possible.
**Conclusion**
Technical analysis is helpful when combined with fundamentals. Learning candlesticks, moving averages, RSI, and MACD allows investors to time the market better.
