Introduction
If you trade – in Nifty, Bank Nifty, stocks, crypto, Forex, or commodities – you must have heard one term: Technical Analysis. which ever market it Technical Analysis’ is important.
It is not just a strategy, but a mindset and skill that helps you understand the price action of the market and decide the right entry and exit. In this blog, we will explain the basics of technical analysis from beginner to pro level in simple language.
What is Technical Analysis?
Technical Analysis is a technique in which you use past price and volume to predict future price movement. This approach is different from fundamental analysis. Whereas fundamental analysis looks at the company's balance sheet, revenue, and earnings, technical analysis works only on the basis of price charts, volume, and patterns. Its main focus is - "Price action speaks louder than fundamentals."
3 Main Assumptions of Technical Analysis. Technical Analysis is based on some basic assumptions that every trader should know
1. History Repeats Itself Market behavior repeats over time. Human psychology plays a major role in trading. People react with fear, greed, and hope every time. This is why chart patterns such as Double Top, Head and Shoulders, Flag Patterns work in every time frame – because the behavior remains the same.
2.
Price moves in trends
Price never moves randomly. It always happens in a trend — Uptrend, Downtrend, or Sideways.
Uptrend: When price makes Higher Highs (HH) and Higher Lows (HL).
Downtrend: When price makes Lower Highs (LH) and Lower Lows (LL).
Sideways: When price is in a range, waits for breakout.
Example:
If Gold is repeatedly making HH and HL, then understand that the market is in an uptrend. As long as this structure does not break, the chances of trend continuing are high.
3.
Market Discounts Everything
Technical analysis believes that every news, event, earnings report or global issue is already reflected in the price.
Meaning if any bad news has come, its impact will be seen in the chart. You just need to have the skill to understand the price. Charts never lie.
Where is Technical Analysis used?
Technical analysis is useful for every type of trader — whether you are a scalper, intraday trader, swing or positional investor. It can be used everywhere: Stocks (Nifty, Bank Nifty, Tata Motors, etc.) Indices Commodities (Gold, Silver, Crude) Crypto (BTC, ETH, etc.) Futures & Options
But where to avoid?
Technical analysis is less effective in penny stocks or micro-cap stocks — because there is a lot of manipulation there, and there is no genuine volume. Common Tools in Technical Analysis Support & Resistance Trendlines Moving Averages (9 EMA, 21 EMA, 200 DMA, etc.) Volume Analysis Indicators: RSI, MACD, Bollinger Bands Chart Patterns: Double Top, Triangle, Wedges All these tools teach you which zone the market is in, at what price to enter, and at what level to exit.
Next Step: Market Structure (Coming Soon)
In the next article we will talk about Market Structure, in which you will know: What are Swing Highs and Lows? What is the role of BOS (Break of Structure)? How to find POI (Point of Interest)? All these things are the foundation of Smart Money Concept (SMC) and Price Action Trading.
Conclusion
Technical Analysis is a skill that helps you understand the market like a language. When you watch the charts daily, you slowly start understanding their language. Just remember: Practice Keep journaling Learn from losses Follow the market structure One day you will also join those traders who recognize the mood of the market by looking at the price action.