Technical Analysis: Reading Charts and Price Action

Technical analysis is the study of prices and volume to make trading decisions. It ranges from ideas with strong evidence behind them, such as trend and momentum, to ideas that fail almost every fair test. This course teaches the tools and the tests together, so you finish knowing both how an indicator works and whether it has earned your trust.

What does each technical indicator measure?

Every indicator is a calculation on past prices or volume. A moving average is an average; RSI compares recent gains with recent losses; the average true range measures the size of recent moves. The course has you calculate each by hand on a short series once, so that none of them is a black box.

How do you test technical analysis without code?

State the rule exactly, apply it to a long price history in a spreadsheet, subtract costs, and compare the result with simply holding the market. Then test it again on a period you did not look at. The course walks you through this for one rule of your choice, the graded center of the course.

What does a candlestick actually show?

How to read stock charts is the first practical skill most traders learn, and often the one they learn worst. A chart is a record of prices and volume, nothing more. It can show where buyers and sellers met; it cannot show you what they will do next. Reading it well means knowing the difference.

Four prices for a period, the open, high, low and close, and usually the volume traded. Everything else, from patterns to trend lines, is interpretation. The course starts with the record itself and builds up to interpretation one step at a time, with a rule for each mark you make.

What is market structure in trading?

Price action trading means making decisions from the chart itself: where price has turned, where it broke out and where it failed. It suits discretionary traders well, and it is also the style where vague rules hide the most losses. This course keeps the craft and removes the vagueness.

The sequence of swing highs and lows that shows whether a market is trending or ranging. A trend makes higher highs and higher lows, or the reverse; a range does neither. The course gives you a rule for marking swings so that your map of structure is the same every time you look.

Who is this course for?

Traders who use charts and want to know what they can rely on. No programming is needed.

What you will be able to do

• Explain what each major indicator measures and calculate it by hand for a short series.
• State an indicator rule precisely enough that it can be tested.
• Test a technical rule on a market of your choice in a spreadsheet, after costs.
• Summarize the academic evidence on trend, momentum and pattern rules.
• Read open, high, low, close and volume from any bar or candle chart.
• Map market structure on any timeframe with a consistent rule for swing highs and lows.

Syllabus, module by module

1. Trend indicators

   Simple and exponential moving averages, crossovers and channels.

2. Momentum oscillators

   RSI, stochastics and MACD: what they compute and why they lag.

3. Volume and volatility

   On-balance volume, VWAP, average true range and Bollinger bands.

4. Bars, candles and lines

   What each chart type records and what it hides; log and linear scales.

5. Market structure

   Swing highs and lows, higher highs and lower lows, and a rule that removes guesswork.

What every course contains

Every paid course comes with the first seven and the certificate, whichever level it sits at. The proctored exam and the credential come when the course is taken as part of a Certificate, Diploma or Fellowship. Everything is self-paced: the material is yours to study in any order, at any hour, for the whole of the license.

1. Workbooks. Written to train the thinking patterns and the important concepts of the course, with worked problems and the reasoning behind each answer, so that you learn to think the way the subject is thought.
2. Audio edition. Focused, well-presented recordings with explainers and examples of the material, made to be interesting, relevant and entertaining, so that the general subject can be learned away from the desk.
3. Notes. Pre-produced notes with every fact the course relies on, written out in full, so that nothing has to be transcribed from the films or the audio.
4. Cheat sheet. One sheet with every important learning concept of the course on it, to keep beside you during the work and to revise from before the exam.
5. Named sources. Every fact in the notes names its source, the paper, the book or the dataset, for anyone who wants to dig in further.
6. Explainer films. Focused films, in the style of the sample films on the catalog page, that walk through the most difficult concepts of the course with visual explanations of a high standard.
7. Transcript. A full transcript of every film and every audio recording, searchable and quotable.
8. Proctored exam. Taken as part of a Certificate, Diploma or Fellowship, the course ends in a proctored multiple-choice questionnaire, with a pass mark of 60% and three retakes included. A course taken on its own is assessed by its coursework and has no exam.
9. Verifiable certificate. A certificate of completion that a third party can verify: an employer sends the code on it to the credentials office and receives written confirmation of the course, the date and the result.
10. Credential of the program. The Certificate, Diploma or Fellowship of the program, track or path the course belongs to, awarded when every course in it is passed. Which one depends on the program you choose.

How the certificate is earned

Unit quizzes and two graded problem sets: an indicator workbook, and a spreadsheet test of one technical rule against a buy-and-hold benchmark. On a pass you receive the Course certificate in Technical Analysis, issued by the Institute with a verification code. A course taken as part of a Certificate, Diploma or Fellowship ends in a proctored online exam with a pass mark of 60%. The fee includes three retakes; each attempt after that carries a reduced proctored exam fee. A course taken on its own is assessed by its coursework and has no exam. Read how certification works.

Before you start

This course assumes the material of the courses below, or the same knowledge gained elsewhere.

• Stop Losses, Position Sizing and Your Trading Edge