Learn › What is technical analysis?
Technical analysis is the study of price, volume and other market data to describe how a market has behaved — its trends, its ranges, how volatile it has been — and to turn observations about that behaviour into ideas specific enough to test.
Technical analysis works from the market's own record: the prices at which an instrument traded and how much of it traded. For each period — a day, an hour, five minutes — that record is summarised as four prices (open, high, low, close) and a volume. Everything else in technical analysis is calculated from, or drawn on top of, those five numbers.
It is different from fundamental analysis, which studies the business behind a share — revenue, profit, debt, valuation — to estimate what it is worth. The two answer different questions and are often used together: fundamentals for what, price behaviour for when and how much risk.
The most common chart is the candlestick. Each candle covers one period: its body spans the open and the close, and thin lines above and below (the wicks) reach the high and the low. A candle that closes above its open is conventionally drawn green (a rising period), one that closes below it red. The same stock looks different on a daily chart and a five-minute chart, so the timeframe is part of every observation.
Whether the market is trending, ranging, calm or volatile — its market regime — matters because the same tool behaves differently in each. A trend-following indicator is steady in a trend and gives false signals in a range.
A technical indicator is a calculation on price, volume or both that summarises one characteristic of the market. They fall into a few families, each answering a different question:
Several indicators from the same family usually measure the same thing in slightly different ways; five momentum indicators agreeing is closer to one piece of evidence counted five times. The indicator reference explains 60+ of them — what each measures, how its readings are conventionally interpreted, and where it is known to fail.
Candlestick patterns are shapes of one to three candles — a hammer, an engulfing pair, a doji — that traders read as signs of a shift in buying or selling pressure. Chart patterns develop over weeks: triangles, head and shoulders, double tops. Both are conventions about what a shape has tended to mean; how often it did is a question for the data.
Every convention in technical analysis — "RSI below 30 is oversold", "a golden cross is bullish" — is a claim about what tended to happen. Written as an exact rule, it can be checked against history: how often it occurred, what followed, and how it compared with simply holding the market. Two guides cover the two ways to do that:
The Test Bench publishes studies done this way, with the method, the comparison and the limitations stated — for example Donchian Channel breakouts across 179 US stocks, or RSI and other mean reversion signals on S&P 500 stocks, or the golden cross and other moving average rules.
GU Analyser's courses follow this order: Market Foundations (what a market is, how to read a candle, costs and position sizing), then Technical Analysis (trends, levels, indicators and turning an idea into a rule), then the two ways of testing it — event analysis and backtesting.
Learn it, then test it
GU Analyser's courses start from what a market is and go step by step to building and testing a rule, on real historical charts — free, with the tools on the S&P 500 ETF and no card.
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