If You're New Here, Welcome! Learn One Of Our Techniques. Find Support And Resistance Zones In Advance. Knowledge Is Power And Money! Details Here.
Stock market technical analysis should be a part of every trader’s market routine. It doesn’t need to take a lot of time nor must it be complicated. A few minutes a couple of times a week will improve the odds of trading success. Here are a couple of easy-to-implement ideas:
- Draw a line on a major average, like the S&P, following the movement of price for the last 3 months, 6 months , and the last year.
Do all three time periods agree to the market’s direction? The dominant trend is the longest, or yearly trend — what direction is the market going? Does the short-term trend (3 months) agree with the long-term trend?
Move up one time-frame and locate areas of obvious support and resistance. The following chart is the same S&P , but it is a weekly chart. The yellow arrows mark obvious areas of support and resistance.
- Move back to the original time-frame (mine was a daily look) and see how the chart appears with the support and resistance levels drawn from the higher time-frame.
Once the basic directional and support/resistance arrows are on the chart a quick look every night can aid your trading decisions. For example, it may not be wise to take a long trade when the average approaches an area of resistance. Conversely, if the index falls back to support and holds the level it may be a good low-risk entry for a buy.
These simple techniques can be quite powerful, especially the higher time-frame support and resistance zones. The next S&P chart has support and resistance levels drawn on a 30 minute chart.
Here is the same data on a 15 minute chart:
5 minute:
A successful stock trading system doesn’t need to be complicated — in fact, some of the best, most profitable systems are deceptively simple.
If you choose to incorporate these easy and quick stock market technical analysis techniques it could be the basis for a successful stock trading system.
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