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Technical analysis
Reading price charts — trends, support and resistance, volume, chart patterns, Fibonacci, divergence and multi-timeframe analysis.
Chart basics
- What is technical analysis? A complete guide to reading charts What technical analysis is, the assumptions behind it, how price, volume and time fit together, trend following vs mean reversion, and what the evidence says.
- Chart types explained: line, OHLC bar, candlestick and area charts How line, OHLC bar, candlestick and area charts draw the same prices, what each one shows and hides, and how to pick the right chart type for the job.
- Heikin-Ashi candles: formula, worked example and how to read them How Heikin-Ashi candles are calculated, a bar-by-bar worked example on real Apple prices, how to read their trends, and the price and lag trade-offs.
- Chart timeframes: intraday, daily, weekly and monthly charts What a chart timeframe is, how one stock looks on 5-minute, 30-minute, daily, weekly and monthly bars, and how to match the timeframe to how long you hold.
- Linear vs logarithmic price scale: which chart to use and why How linear and log price scales differ, 33 years of SPY drawn both ways, the math of percentage moves, and when each scale gives the honest picture.
- Volume analysis: confirmation, climax volume and relative volume How to read trading volume on a chart: confirming trends and breakouts, climax volume, relative volume, and three real 2025 cases including one that failed.
Trend and structure
- Trends and trendlines: how to identify a trend and draw it correctly How to tell an uptrend from a downtrend with swing highs and lows, draw a trendline that means something, and judge when a break matters, on real SPY data.
- Support and resistance: why price levels form and how to use them Why support and resistance levels form, how to find and rank them, why they are zones not lines, how role reversal and round numbers work, with SPY and MSFT examples.
- Trend channels: drawing parallel channels and reading their breaks How to draw a rising, falling or flat price channel, what the channel line and midline tell you, and how JPM traded inside and then out of a 2025 channel.
- Moving averages and trend: filters, the 50/200 and golden crosses How moving averages define a trend, why the 50- and 200-day lines matter, and what golden and death crosses did on real 2023–2026 data, whipsaws included.
- Dow theory: the six tenets and confirmation by the transports Where Dow theory came from, its six tenets explained plainly, how the industrials and transports confirm each other, and what DIA and IYT showed from 2024 to 2026.
- Breakouts and false breakouts: what the data says about each What a breakout is, why so many fail, and what volume and follow-through change, tested on 162 breakouts in 15 large US stocks and ETFs from 2025 to 2026.
- Chart gaps: common, breakaway, runaway, exhaustion and island gaps How to read the five classic chart gaps, what each says about a trend, how often true gaps fill by size, and real AMD, Meta and Alphabet examples from 2025.
Chart patterns
- Head and shoulders pattern: neckline, target and reliability How to spot a head and shoulders top or inverse bottom, draw the neckline, project the measured-move target, and what real occurrences on US stocks did next.
- Double top and double bottom patterns: rules, targets and examples How to recognize a double top or double bottom, where confirmation comes, how to project the target, and how 111 real cases on US stocks played out.
- Triple top and triple bottom: how to trade three tests of a level What a triple top or triple bottom is, why the confirmation level is the lowest valley or highest peak, how to set the target, and real wins and failures.
- Triangle chart patterns: ascending, descending and symmetrical How to draw ascending, descending and symmetrical triangles, where the breakout and target are, and why real triangles often break the "wrong" way.
- Flags and pennants: trading the pause after a sharp move How bull and bear flags and pennants form after a steep pole, how to measure the target, and how 66 real flags on large US stocks actually performed.
- Rising and falling wedge patterns: how to read and trade them How to tell a rising wedge from a falling wedge and from a triangle or channel, where the breakout and target are, and real wedges that broke both ways.
- Cup and handle pattern: shape, buy point and how often it works How a cup with handle forms, the guidelines William O’Neil popularized for its depth, length and handle, where the breakout is, and what 31 real cups did next.
- Rectangle chart pattern: trading ranges, breakouts and targets How to identify a rectangle (trading range), why it has no built-in direction, how to measure the breakout target, and real rectangles that broke up, down and failed.
Methods and testing
- Fibonacci retracements: levels, extensions and real evidence How Fibonacci retracement and extension levels are calculated and drawn, a real SPY swing measured level by level, and what the evidence says about them.
- Divergence: regular and hidden, bullish and bearish, with RSI and MACD How to spot regular and hidden divergence between price and RSI or MACD, real Tesla examples, a small test on seven symbols, and why divergence needs confirmation.
- Multi-timeframe analysis: weekly to daily to intraday, top down How to read one stock on weekly, daily and intraday charts in order, which timeframe decides what, and a real NVIDIA walk-through as of October 2026.
- Backtesting basics: biases, costs and an honest SPY test How to backtest a trading rule without fooling yourself: look-ahead and survivorship bias, overfitting, costs, out-of-sample tests, and a 32-year SPY example.
- Relative strength and market breadth: ratio lines, A/D and % above MA How to measure a stock or sector against a benchmark with a ratio line, how breadth gauges like the advance/decline line work, and what they showed in 2025–2026.
- Limitations of technical analysis: what the research really shows Efficient markets, data snooping and the published evidence on technical trading rules, a 1,000-random-rule experiment on SPY, and where charts genuinely help.
Educational content, not investment advice. Finabase Learn explains how markets and tools work. It does not recommend any security or strategy, and examples are for illustration only. Investing involves risk, including the loss of principal. Rules and figures are for the United States unless stated and can change — check the cited source before you act.