B. Trend Lines
Technical analysis is formed from the assumption of price trends. The trend line is an important tool in technical analysis, both for identification and confirmation. The trend line is a straight line connecting two or more price points and then in the future can form a support or resistance line.The trend line can be divided into 3 namely:
Upward Trend Lines, are positive slope lines, and these are formed by connecting two or more of the lowest price points. The second lowest price should be higher than the first in order for the slope to be positive. The uptrend reflects the excess demand.
The Down Trend, is the opposite of Up Trend, a line that has a negative slope, and is formed by connecting two or more of the highest points. The downward trend reflects the occurrence of supply excess.
- The lateral trend (Horizontal Trend), also called sideways trend, is a line that describes a trend that moves horizontally.
Also trend line if measured in time frame, there are three types of trends respectively as follows:
Major Trend: a long-term trend of market movement, usually determined within a period of at least 1 year.
Medium Trend: a trend of price movement for medium term timeframe usually between 2 weeks to 3 months and is a corrective move of the major trend (main trend).
Minor Trend: a price movement in a short span, usually in the daily period and as a corrective movement of the medium trend.
C. Support and Resistance
Support - resistance is the upper limit (resistance) and the lower (support) of the price movement. In detail, the support or support level is a price level (point / level / range) where at that level there will be a stronger buying interest than selling interest, which will lead to excess demand that will increase the price in the market, thus stopping the trend price reduction.
Conversely, the resistance point is the upper limit / point / range where at this level there will be a stronger selling interest that is higher than the buying interest which will automatically lead to the excess supply, which will cause the stock price to decline. Here's an example of Support - Resistance:
- Types - Types of Technical Analysis
To provide an overview of how technical analysts work, here are some of the most commonly used methods of stock analytical analysis and certainly have their respective advantages. The methods of technical analysis are as follows:
A. Moving Average (MA)
Moving average (MA) or moving average is one of the many stock price analysis methods that are often used in stock technical analysis. Average moving average (MA) is the average stock price over the past time period and then plotted into Graphs along with actual stock prices in the market at that time. The MA which comes from the average stock price for five trading days, for example, is written as MA-5. The average MA of the 15-day average is written as MA-15. So the moving average declares that the average stock price will be counted again as time goes by. The price data used is usually the closing price (closing price).
The way to analyze it is if the actual curve penetrates the MA curve from the bottom up with a fairly high trading volume, it gives the signal the right moment to buy the stock. Conversely, if the actual curve penetrates the MA curve with high trade volume from top to bottom, it gives Signal to sell. The movement of stock prices in the form of price increases followed by high trading volume is interpreted as a market signal will improve (bullish). While price changes in the form of price drop followed by high trading volume interpreted as market signal will deteriorate (bearish).
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