There are two types of analysis, fundamental as well as technical analysis. Fundamental analysis takes in to consideration the fundamentals of the company, whereas technical analysis tracks the stock prices on the basis of the market movements. All the securities which are traded on the stock market have open price, close price, the high price and the low price for all the trading days. All these are represented in graphical form that helps us to show the trend.
You can compare the price for one period to another period. In addition, technical analysis also enables to forecast on the basis of the trends revealed. Thus, the basis behind doing the technical analysis is that price discounts everything even the fundamentals. Fund managers and many experts do no consider technical analysis as a sole method of evaluating the company’s price.
Following are the technical terms explained in simple language for a layman:
Resistance and support: