Technical analysis is a tool that can be extremely useful for options traders, as it allows you to make predictions about future price movements based on historical data. There are many different strategies and techniques for using technical analysis. Still, these strategies generally aim to identify predictable patterns in prices or trading volumes, which traders can then use to determine when an asset’s price is likely to change direction.
One of the most commonly-used tools for technical analysis is the moving average, which calculates a “typical” price by taking the average value over a certain period. By plotting this typical price on a graph alongside the actual historical prices of an asset over time, traders can get an idea of how its value will likely change in the future.
Another common technical analysis strategy is charting, which involves plotting patterns or trends on a price chart and interpreting them to … Read more