What technical analysis actually is
Technical analysis is the study of price and volume history to describe how a market has behaved and how buyers and sellers are currently balanced. It does not predict the future and it is not a signal service — it is a vocabulary for reading a chart.
A price chart is simply a record of every transaction, plotted over time. Technicians study its patterns because human behaviour — fear, greed, hesitation — tends to repeat and leave recognisable footprints. The key discipline is to treat every pattern as a probability and a description, never a certainty.
Candlesticks — the basic unit
A candlestick shows four prices for a period: open, high, low and close. The body is the distance between open and close; the wicks show the extremes. Green (or hollow) means the close was above the open; red (or filled) means below.
- Doji — open and close nearly equal; a candle of indecision.
- Hammer / shooting star — small body with a long wick, showing a rejected move.
- Engulfing — a candle whose body fully covers the previous one, showing a shift in control.
- Marubozu — a full body with no wicks, showing one side dominated the whole period.
Single candles mean little in isolation. Analysts read them in context — the trend around them, the level they appear at, and the volume that accompanies them.
Chart patterns & market structure
Zoom out and candles form structures. Market structure is the sequence of highs and lows: rising highs and rising lows describe an uptrend; the reverse describes a downtrend; a sideways band is a range.
- Support & resistance — price zones where buying or selling has repeatedly appeared.
- Trend lines & channels — lines connecting swing points to frame the direction.
- Continuation patterns — flags, pennants and triangles that describe a pause within a trend.
- Reversal patterns — double tops/bottoms and head-and-shoulders that describe a change of control.
- Breakouts — price leaving a range or pattern, ideally confirmed by a rise in volume.
Indicators — what they measure
Indicators are formulas applied to price or volume. They fall into families, and each answers a different question. None of them removes the need to manage risk.
- Moving averages (SMA/EMA) — smooth price to show the underlying trend and dynamic support/resistance.
- RSI — a 0–100 momentum oscillator; readings near the extremes are often described as “overbought” or “oversold”, but strong trends can stay stretched for a long time.
- MACD — the gap between two moving averages, used to describe momentum shifts.
- Bollinger Bands — a moving average with volatility bands that widen and narrow as the market calms or excites.
- Volume & VWAP — participation measures that show whether price moves are backed by activity.
Key terms
Timeframe
The period each candle represents — 5-minute, daily, weekly. The same chart can look bullish on one timeframe and bearish on another.
Gap
A jump between one period's close and the next period's open, usually caused by news outside market hours.
Liquidity
How easily an instrument can be bought or sold without moving its price; thin liquidity makes charts erratic.
Confluence
When several independent tools point to the same zone — often treated as a stronger level than any one signal alone.
Test yourself
1. A long lower wick on a candle usually shows…
The wick marks a price that was reached and then pushed back — rejection, not a guarantee.
2. RSI is best described as…
RSI measures the speed and size of recent moves on a 0–100 scale.
3. Volume matters because…
Volume shows participation — moves on heavy volume carry more conviction.
FAQs
No. Technical analysis describes how price and volume have behaved and how buyers and sellers are currently balanced. It deals in probabilities and context, not predictions. PCJ teaches it as a concept and does not issue signals, targets or recommendations.
There is no single best indicator — each one measures a different thing (trend, momentum, volatility, participation), and all of them are built from past price, so they lag. Understanding what an indicator measures matters far more than collecting many of them.
No. PCJ provides the trading platform, charts and market data for you to study; it does not run a research desk and does not provide tips, signals or advice. Every decision is your own.
No. Long-term investors also use basic structure — trend and support/resistance — to understand context. But wealth is generally built by owning quality businesses and staying invested, not by predicting short-term moves.
Educational content for general awareness only — not investment, trading or tax advice, and not a recommendation to buy or sell any security. PCJ Holdings does not provide research or advisory services. Examples and calculator outputs are hypothetical and illustrative. Investments in securities markets are subject to market risks; read all related documents carefully. Figures are indicative for FY 2025-26 and may change.