10 Tips to Getting Started With Technical Analysis

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Tip #3: Technical Events

Chart patterns and relationships can be used in a number of ways, including:

• Entering a new position (either a long position or a short position)
• Closing an existing position
• Indicating when a better time to take action may come

Technical analysts get these cues from what are known as "technical events." Technical events occur when a significant pattern has formed or a significant price activity has occurred in a financial security. They highlight price situations that may be worth considering when researching an investment activity, and technical events usually occur when the price of a financial instrument crosses a critical line or threshold.

Examples of technical events include the confirmation of a price, confirmation that a pattern has formed, or confirmation that the price crossed a specific moving average.

Next: Tip #4