Technical Analysis: Practical Implications of Various Theories

- Nirav Shah, B.W.T. Institute of Business Administration

Abstract:

The technical analysis to investing is essentially a reflection of the idea that prices move in trends which are determined by the changing behaviour of investors toward a variety of macro-economic, financial, political and pyshological forces. The art of technical analysis - for it is an art - is to identify trend changes at an early stage and to maintain an investment posture until the weight of the evidence indicates that the trend has been reversed. The main basic principles of technical analysis are barring minor deviations, stock prices tend to move in fairly persistent trends , shifts in demand and supply bring about changes in trends etc.

This paper highlights the theories of technical analysis and its implications on stocks. The MACD and RSI indicators are commonly used by the investors to invest in various stocks.

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