Technical Analysis Fundamentals

Technical analysis is the study of historical price and volume data to identify patterns and predict future market movements.

Dexorder scope: Only crypto OHLCV data is available. TradFi data (equities, forex, bonds, options, macro) and alternative data (news, sentiment, on-chain) are not supported. See ../pandas-ta-reference.md for the full catalog of built-in indicators, and ../indicators/indicator-development.md for creating custom indicators.

Key Concepts

Price Action

Raw price movement without indicators:

Support and resistance levels
Trend lines and channels
Chart patterns (head and shoulders, double tops, etc.)
Candlestick patterns

Trends

Markets move in trends:

Uptrend: Higher highs and higher lows
Downtrend: Lower highs and lower lows
Sideways: Range-bound consolidation
Trend strength measured by consistency

Volume

Trading volume confirms price movements:

High volume confirms trends
Low volume suggests weak moves
Volume precedes price
Divergences signal reversals

Common Indicators

Trend Indicators

Moving Averages: SMA, EMA, WMA
MACD: Trend and momentum
ADX: Trend strength
Parabolic SAR: Trend direction

Momentum Indicators

RSI: Overbought/oversold conditions (0-100)
Stochastic: Fast vs slow momentum
CCI: Cyclical trends
Williams %R: Momentum oscillator

Volatility Indicators

Bollinger Bands: Price envelope around MA
ATR: Average True Range for volatility
Keltner Channels: ATR-based bands
Donchian Channels: High/low breakouts

Volume Indicators

OBV: On Balance Volume
VWAP: Volume Weighted Average Price
Volume Profile: Price levels by volume
Chaikin Money Flow: Volume pressure

Timeframes

Different timeframes for different strategies:

Scalping: 1m, 5m charts
Day Trading: 5m, 15m, 1h charts
Swing Trading: 4h, 1D charts
Position Trading: 1D, 1W charts

Always analyze multiple timeframes for context.

Risk Management

Essential principles:

Position Sizing: Risk 1-2% per trade
Stop Losses: Define exit before entry
Risk/Reward: Minimum 1:2 ratio
Diversification: Multiple uncorrelated positions

Never trade without a plan and defined risk parameters.

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