Glossary

Chart analysis

Analysis of historical price data

Chart analysis attempts to predict the future price development of securities on the basis of historical price trends. Typical patterns in the price charts (e.g., double tops, V formations, head-and-shoulders) are used to identify short-term trends. Support and resistance lines, which are of particular importance in chart analysis, are derived using historical price charts. A new trend is signaled by a breakout, in which a price drops below its support level or rises above its resistance level.

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