Technical analysis of the securities market: some measurement techniques

Such a procedure as technical analysis of the securities market, in the simplest sense, is a study of the state and trends in the dynamics of the stock market. The theoretical and methodological basis of this study is the recognition of the principle of external disturbances of the market. According to this principle, as a result of such disturbances, the indicators of trade volumes and, accordingly, the price level indicators change. That is why the technical analysis of the securities market assumes the possibility of ignoring the factors of an external character in the study, and paying the greatest attention to the dynamics of the indicators of the market itself. In order to avoid cumbersome research procedures, it is necessary to clearly distinguish those sources that use strategic analysis of the market, and which are expedient for using in the analysis of the technical. Strategic, as such, involves the use of annual reports, the company's internal press, media publications, expert interviews, exhibitions, benchmark interviews, a variety of independent data sources, trade policy analysis, and others.

Another feature, which involves technical analysis of the securities market, is that the previous parameters of the state of the market from time to time can be repeated, and this makes it possible, based on a comparison of the dynamics of these states, to identify some trends in its development, which is very important for economic forecasting of it Condition in future periods.

The market conjuncture is always determined by the nature of the interaction of the two most important indicators of its state - supply and demand. That is why technical analysis is designed to accurately determine the parameters of their nonequilibrium state: by time, magnitude, repeatability, depth of risks, etc. As a rule, in contrast to strategic analysis, the technical one should provide answers to questions about short-term trends in market dynamics.

The main method of technical analysis is the compilation and comparison of price trend charts. They reflect the time and price indicators. The researcher himself determines the amount of acceptable change (the step of the dynamics) that should be taken into account and then correct the activities of the company or enterprise, or those whose values can be neglected.

As a rule, these graphs reflect the maximum permissible values.

Line of resistance, the value at which the price of assets should not increase. In the technical analysis it is considered that if the price of an asset exceeds the resistance line, then this is a sign for its purchase.

The support line is an indicator that indicates that the price of the asset should not be reduced further. In this case, the technical analysis of the securities market "gives a signal" about the need to sell shares.

Also a common methodology that is widely used when conducting technical analysis is the method of measuring the price trend, which has been dubbed "head and shoulders". This name arose from the appearance of the diagram obtained by displaying the values. It contains three peak indicators: one high (greater in value) and two (on the sides of the high) smaller in value - head and shoulders. On the lower values of the peaks of the "shoulders", a signal line of resistance is conducted, which indicates the need to change the trend or to save it. This method is very common and effective, for example, if necessary, to conduct an analysis of the goods market, because it gives a quick and fairly accurate picture of the behavior of the consumer market.

In addition to the study of charts and diagrams reflecting the behavior of the market, the methodology of its study provides analysis and such indicators as the growth of trade, the determination of the number of transactions with assets.

There is also a concept of the opposite opinion, which assumes that the investor must act contrary to the technical analysis, that is, take steps that are contrary to the general current state of the market and even its trends.