Stock Technical Analysis: How to Do It?

Hello, News Friends! For those of you who are interested in investing in stocks, of course you need to do an analysis first before deciding to buy shares. One type of analysis that can be done is stock technical analysis.

Stock technical analysis is a type of analysis that utilizes historical stock price data to predict future stock price movements. How to do it? Here’s the explanation:

1. Look at the Stock Price Chart

The first step in technical analysis of stocks is to pay attention to stock price charts. The stock price chart shows the movement of stock prices in a certain period.

Pay attention to whether the chart shows an uptrend, downtrend, or sideways. An uptrend shows that stock prices tend to rise in a certain period, a downtrend shows that stock prices tend to fall in a certain period, while sideways shows stock prices tend to be stagnant in a certain period.

2. Identify Support and Resistance

After paying attention to the stock price chart, the next step is to identify support and resistance. Support is a stock price level that tends to be the lower limit of stock price movements, while resistance is a stock price level that tends to be the upper limit of stock price movements.

By identifying support and resistance, you can determine entry and exit levels to buy and sell stocks.

3. Use Technical Indicators

Technical indicators are tools used to assist stock technical analysis. Technical indicators can be used to provide buy or sell signals, as well as help determine support and resistance levels.

Several technical indicators that are commonly used include the Moving Average, Relative Strength Index (RSI), and Bollinger Bands.

4. Use Candlestick Patterns

The candlestick pattern is a stock technical analysis technique that shows stock price formations in the form of candlestick charts. Candlestick patterns can be used to provide buy or sell signals.

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Some commonly used candlestick patterns include Doji, Hammer, and Engulfing.

5. Perform Volume Analysis

Volume analysis is an analysis that shows the number of shares traded in a certain period. Volume analysis can be used to show strengths or weaknesses in stock price movements.

If trading volume increases, it can indicate strong buying or selling pressure. Conversely, if the trading volume decreases, this can indicate a lack of interest from market participants. High trading volume often indicates strong momentum and can be a signal for traders to enter or exit a position. For example, if a stock’s price is rising with high trading volume, this could indicate strong upward momentum and allow traders to consider buying the stock.

Determining the Trend with the Moving Average Indicator

One of the technical indicators that is often used to determine the trend is the Moving Average (MA). This indicator can help traders identify trend direction and determine support and resistance levels. Moving Average can be calculated by adding the closing price of a stock over a certain period and then dividing by the number of periods. The results of these calculations are then plotted on the stock price chart.

In general, MAs calculated over longer periods can provide slower but more accurate signals about trends, whereas MAs calculated over shorter periods can provide faster signals but are more susceptible to market noise. For example, if the 50-day MA shows an increase and the stock price is above the MA, then this could indicate an uptrend is taking place.

Defining Support and Resistance Levels with the Fibonacci Retracement Indicator

Fibonacci Retracement is a technical indicator that can help traders determine support and resistance levels. This indicator is based on the concept that stock prices tend to retrace before continuing the main trend. In this case, a retracement is a stock price movement in the opposite direction to the main trend.

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Fibonacci Retracement is based on the Fibonacci number sequence, which is a series of numbers where each next number is the sum of the two previous numbers, namely 0, 1, 1, 2, 3, 5, 8, 13, 21, and so on. In Fibonacci Retracement, support and resistance levels are calculated by taking the highest and lowest points of the stock price movement, then drawing horizontal lines at the retracement levels contained in the ratios of Fibonacci numbers.

In general, retracement levels yes frequently used are 38.2%, 50%, and 61.8%. If the stock price retracements 38.2% of the main trend movement, then the 38.2% level can be a potential support or resistance level. If the stock price manages to break through the 38.2% and 50% levels, then this can indicate a strong momentum to continue the main trend.

Determining Entry and Exit Points with the Relative Strength Index Indicator

The Relative Strength Index (RSI) is a technical indicator that can indicate confusion or uncertainty in the stock market. Trading volume can also be used to confirm trends or signals seen on price charts. For example, if an uptrend is seen on the price chart and trading volume is increasing, this could indicate that there is strong buying power and the uptrend may continue.

As a technical analyst, it is important to understand the different types of charts and indicators used in technical analysis. One type of chart that is commonly used is a candlestick chart. Candlestick charts display information about the movement of a stock’s price over a specific period of time, usually one day. Each candlestick shows the opening price, closing price, and the highest and lowest prices for that period.

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Various indicators can also be used in technical analysis, such as moving averages, relative strength index (RSI), and stochastic oscillator. Moving averages can help see price trends over a certain period of time, while the RSI and stochastic oscillator can help identify whether a stock is overbought (too much bought) or oversold (too much sold).

As an investor or stock trader, it is important to stay abreast of the latest market developments and economic news. Economic news can significantly affect stock prices, such as news about an increase in interest rates or a company’s decision to launch a new product. Therefore, it is important to always monitor economic news and make investment strategies accordingly.


Technical analysis is a method that can be used to make stock investment decisions. In technical analysis, investors or stock traders use price charts and various indicators to find out price trends, support and resistance levels, and the right moments to buy or sell stocks. However, keep in mind that technical analysis also has limitations, such as the inability to take fundamental factors into account in investment decisions. Therefore, it is important to always combine technical analysis with fundamental analysis and do research before deciding to buy or sell stocks.

So this article is about technical analysis of stocks. Hopefully this article is useful for those of you who want to learn more about stock investing. See you again in another interesting article!

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