What Is Technical Analysis? Trend, Support and Resistance, and Moving Averages, Explained Simply

A lot of people believe that a chart can tell them the future price, but in reality it cannot, and today we see why. In this lesson, we learn the three basic tools of technical analysis, simply. Why does it matter? Because these tools organise observation, they do not predict. Technical analysis means studying the past behaviour of price and volume on a chart. The three main tools: trend, support and resistance, and moving averages. Trend is the dominant direction of price: up, down, or sideways. Support is a repeating floor, resistance a repeating ceiling; zones, not exact lines. A moving average smooths the noise and shows the medium-term direction. Suppose a share has moved between one thousand and one thousand two hundred tomans. Technical analysis does not promise a bounce; it only describes the past. In Tehran, the daily price limit creates buy and sell queues. Read an adjusted chart, or capital raises and dividends will mislead the trend. An important warning: selling signals without a licence is a crime under Article forty-nine. Three mistakes: treating it as prophecy, overfitting the past, and trusting signal sellers. Bottom line: technical analysis is a tool of description, not a prediction machine. Now you have the answer: a chart describes the past, not the future. Save this lesson and review it later.