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Michael C. Thomsett is a widely published options author. His "Getting Started in Options" (Wiley, 9th edition) has sold over 300,000 copies. He also is author of "Options Trading for the Conservative Investor" and "The Options Trading Body of Knowledge" (both FT... More
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Michael C. Thomsett, author
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Getting Started in Stock Investing and Trading
  • Technical Analysis -- The Key Indicators Everyone Needs 1 comment
    Feb 2, 2013 11:27 AM

    Traditional, or "Western" technical analysis, consists of a few key elements. These are the concept of the trading range and how price behaves near resistance and support; well-known price patterns like double tops or bottoms, repetitive gaps, head and shoulders, and retracements.

    There is more. And using as many tools as possible adds to your expertise in interpreting charts, spotting reversals, and finding that all-important confirmation.

    The additional elements, combined with Western indicators, make up a body of valuable tools for technical analysis. These include:

    1. Candlesticks. This form of charting is not merely a replacement for other charting formats. Candlestick indicators appear in one, two or three-session patterns that provide reversal signals.

    2. Volume. In addition to a few useful volume indicators, the simple and easily spotted volume spike often accompanies (and confirms) reversal signals.

    3. Momentum oscillators. A trend never lasts forever, and eventually slows down and then stops. Momentum oscillators spot these reductions in the trend's strength and speed, and further confirm what price patterns reveal.

    The location of reversal signals is crucial. When these appear at or close to resistance and support, the indication is at its strongest. If price gaps above resistance or below support and then forms up an opposite signal (which can be further confirmed by other signals) you have the best possible sign that price is about to turn and move back in the opposite direction.

    I spend a lot of time studying charts and using technical signals for my website, where I trade options based on charts of the underlying -- and with considerable success derived from better timing.

    To gain more perspective on insights to trading observations and specific strategies, I hope you will join me at ThomsettOptions.com where I publish many articles about options as well as technical analysis. I also enter a regular series of daily trades and updates. For new trades, I usually include a stock chart marked up with reversal and confirmation, and provide detailed explanations of my rationale. Link to the site at ThomsettOptions.com to learn more.

    I also offer a weekly newsletter subscription if you are interested in a periodic update of news and information and a summary of performance in the virtual portfolio that I manage. All it requires is your e-mail address. Join at Weekly Newsletter I look forward to having you as a subscriber.

    Finally, I have just published a Kindle edition of a book about technical analysis, which I hope you will look at. The link to Amazon.com for this book is

    http://tinyurl.com/auhfqub

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    new Kindle edition of technical analysis book
    2 Feb 2013, 11:31 AM Reply Like
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