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What technical analysis can and cannot tell you
புதுப்பிப்பு 4 ஆகஸ்ட் 2026 · 3 நிமிட வாசிப்பு · 14 உள்ளடக்கம்
எளிய மொழி விளக்கம்
Technical analysis studies recorded price, volume and time for an exact instrument. It can organise observations about trend, momentum, volatility and participation, but it cannot reveal a company's intrinsic value or guarantee what the next bar will do.
Learning objectives #
By the end of this chapter you should be able to distinguish technical analysis from fundamental analysis, describe its three main assumptions, and state why every conclusion needs an instrument, exchange, interval, price basis and observation time.
Core concept #
The method normally assumes that known information is reflected imperfectly in traded prices, that movements can persist long enough to describe trends, and that recurring behaviour can produce recognisable structures. These are working assumptions rather than laws. A pattern is a compressed description of past observations, not a causal explanation or a forecast.
Method and conventions #
Begin with a falsifiable research question such as ‘Was the latest completed close above its 50-session average while reported volume exceeded its preceding 20-session average?’ Define every input before opening the chart. Avoid questions such as ‘Is this chart good?’ because they have no measurable rule, time horizon or invalidation condition.
Use it in XMarketRadar #
In XMarketRadar, select the exact exchange listing, confirm native currency and source, choose a bar interval, and verify that the newest bar is complete. Add one study at a time and open its glossary definition to confirm formula, period, smoothing and warm-up. Save observations as research evidence; the platform does not place orders.
Worked example #
Suppose an NSE listing closes at INR 104 above an SMA(5) of INR 100 after closes of 96, 98, 100, 102 and 104. The observation is simply that the latest close is above that five-session mean. It does not estimate tomorrow's return, prove fair value or establish that the listing is suitable for anyone.
How to interpret it #
A positive or bullish label means only that a published formula entered its positive state on the selected completed bar. It should be read with the underlying bars, history length, volume quality and a separate risk framework. Different indicators derived from the same price series are often correlated rather than independent confirmation.
Limitations and common mistakes #
Common errors are choosing a conclusion before defining the rule, changing the interval until a preferred pattern appears, treating a continuing state as a fresh event, and combining technical labels with unrelated company claims. Technical analysis is especially fragile around corporate actions, stale bars and thin trading.
Market-specific differences #
The mathematical ideas travel across markets, but sessions, holidays, auctions, tick sizes, liquidity, price limits and quote scales differ. A daily NSE bar, a NASDAQ extended-hours series and continuously traded crypto are not interchangeable samples.
Key takeaway #
Key takeaway: technical analysis is a disciplined vocabulary for describing market behaviour. Its value comes from explicit definitions, comparable data and honest limitations—not from the authority of a pattern name.
Practice exercise #
Practice: choose one listing and write a one-sentence observation containing its exchange, interval, completed-bar date, price basis and one measurable condition. Then write one fact that the observation cannot establish.
Educational use only #
This chapter is descriptive education. It is not investment advice, a price prediction, a recommendation, a claim of predictive accuracy, or an instruction to buy, sell, rebalance or place an order.