Lahardan Financial
No Result
View All Result
Saturday, March 6, 2021
  • Home
  • About
  • Economy
  • Government & Politics
  • Investing
  • Retirement Planning
  • Wealth Protection
Lahardan Financial
  • Home
  • About
  • Economy
  • Government & Politics
  • Investing
  • Retirement Planning
  • Wealth Protection
No Result
View All Result
Lahardan Financial
No Result
View All Result
Home Cashflow For Retirement

Guide To Technical Analysis And How It Can Improve Your Investing Returns

Leon Wilfan by Leon Wilfan
July 29, 2020
in Cashflow For Retirement, Economy, Investing
0
roi guide written on notebook

Source: iStock/Michail_Petrov-96

Share on FacebookShare on TwitterLinkedIn

First off, let me calm you down.

The phrase “Technical Analysis” might sound daunting, but it’s not.

In fact, it can be surprisingly simple.

Of course, as a long-term investor, you could go without one and still have satisfactory returns.

However, by implementing the technical analysis in your decision-making process, those gains can be much higher.

Why buy or sell a stock at a random price, if you could do it at an optimal price.

Especially when all you have to do is follow this basic and straightforward principle.

The Only Technical Analysis Principle You’ll Ever Need To Learn

Google technical analysis and what you’ll find are hundreds of different indicators.

Relative strength index, moving averages, Bollinger bands, Ichimoku cloud, MACD, and so on. Quite overwhelming if you ask me.

However, what I’ve found in all my years of playing the markets is that those are quite insignificant.

All you need to focus on is something we call support and resistance lines, and they’re remarkably simple to understand.

Here’s a graphic representation how those look like.

chart showing support and resistance linesThis picture shows the price rising for a while, but then hitting a level it couldn’t surpass despite trying numerous times. It’s almost like there’s an invisible line preventing further moves to the upside. This is what we call resistance.

Conversely, the price in the picture is having trouble falling below a certain level. Another invisible line. We call that support.

Open any random stock chart, and you’ll see these two invisible lines in action.

Here’s one recent example.candle chart support and resistance linesAs you can see, the price is clearly moving within a well-defined range between two invisible lines (which I made visible) representing support and resistance.

Something you have to note is that, in reality, the price will never rebound precisely from the support and resistance lines. This is also evident in the above example. Nonetheless, it will do so close enough for these to matter.

Moreover, support and resistance lines don’t necessarily need to be horizontal. They are also important when the price is trending upwards or downwards.

Here’s an example of this.

candle chart rising support linesAs you can see, the price is moving higher, but it’s doing so in a well-defined channel. Accelerating near the support line, and decelerating at resistance.

Now that you know what to look for, let’s see how these magical lines can help you make better investing decisions.

How To Buy Low And Sell High Using Support And Resistance

First, you should understand this—technical analysis is not perfect. Its purpose is to act as a support mechanism.

Then, you must prepare a thorough fundamental analysis—why you think a stock or an asset will appreciate.

Technical analysis is there only to help you find the best entry point, so you can maximize your profits.

Here are a few examples.

Let’s say you’re bullish on a stock and want to buy.

The way you want to use technical analysis is to buy when the price is near the support line.

That’s because there’s a high probability the price will rebound of that level as it did in the past.

This also makes sure you buy at the lowest price available within that specific time frame.

This strategy is applicable both when the price is ranging sideways, as well as when it is trending upwards.

Let’s look at another scenario.

I’m again bullish on a stock, but with the price ranging sideways, I’m not sure if the rest of the market feels the same way. After all, I don’t want to invest in something that’s not making me any money.

The way you can use technical analysis here is to wait for the price to break above the resistance line.

When it does, it indicates that there are more buyers than sellers for this stock, making it a bullish signal.

It also typically marks the start of a new uptrend. This makes the breakout one of the most powerful signals on the market because you’re entering a new rally at the very beginning.

The third and final example I’m going to mention is about finding the perfect exit point.

Let’s say you’ve held a stock for a while and wish to sell it. Maybe you’ve found a better investment, or simply don’t feel like the prospects for the company are as promising.

There are two ways to do this.

First, let’s say you’ve decided to sell, but would prefer to wait for the stock to reach its peak.

In this case, you should wait for the price to break below the support line, be it in an uptrend or ranging sideways.

That would signal that the momentum is shifting downwards and that there’s little chance of price appreciating.

If, however, you’d like to sell ASAP, but still want to do it at the most optimal price, then wait for the stock to reach the resistance line, and sell then. In the short term, that’s probably as far as it will go, since it has reversed at resistance before.

You can apply these two sell signals in both an uptrend and sideways ranging movements.

The Price Of This Asset Just Made A Major Breakout

Believe it or not, but support and resistance are the only two technical tools I use. They’re just so much better and clearer than everything else.

Recently, these have helped me identify an underappreciated investment with massive upside potential.

And best of all, the uptrend has just started, making this the perfect buying opportunity.

Good investing,

Leon Wilfan

Share118Tweet74Share21
Previous Post

Has The Stock Market Bubble Just Reached Its Peak? This Is How You Want To Play It

Next Post

The Growing Political Divide And What It Means For Your Investments

Leon Wilfan

Leon Wilfan

Leon Wilfan is the Chief Investment Strategist for Lahardan Financial.In his early 20s, Leon started a career in real estate, working alongside his father to learn the principles of value investing. After five years, he took a break from his career to pursue an MBA degree at the prestigious Vienna University of Economics and Business. Vienna University is the birthplace of the Austrian Economic Theory, a way of thinking that explains that the reality of economics cannot be captured by mathematical models, but rather by the behavior of individuals on the market.

Today, Leon applies these principles in his analysis of the stock market, which allowed him to predict:

- In December 2018, the rise of gold prices
- In November 2019, the stock market expansion caused by the Fed’s “repo” operations
- In February 2020, the coronavirus crash
- In March 2020, the “QE Infinity” stock market turnaround

Leon’s highly-sought research has also been featured on CNN, Forbes, Newsmax, Money Life, Wealth Professional CA, Value Walk, and other financial outlets.You can follow his work at LahardanFinancial.com, or by subscribing to the free e-letter Cashflow For Retirement.

Next Post
man with magnifying glass loking at money on scales

The Growing Political Divide And What It Means For Your Investments

businessman chill beach

A Simple Set & Forget Cashflow Portfolio

silver stock prices

Silver Prices Are Going To The Moon. Here's Why

Leave Comment
Lahardan Financial

We bring you expert insights for taking control of your investments.

Categories

  • Bonds
  • Budgeting
  • Cashflow For Retirement
  • Crypto
  • Economy
  • Emerging Markets
  • Global Economy
  • Government & Politics
  • Investing
  • Retirement Planning
  • Stocks
  • Trading Strategies
  • U.S. Economy
  • Wealth Protection

Site Navigation

  • Home
  • About
  • Privacy Policy
  • Terms and Conditions
  • Whitelist
  • Disclaimer
  • Contact Us

Recent News

learning

Trading Stocks For A Living – Here Are My Top Three Lessons

September 25, 2020
Roller Coaster Economy Recovery

Is The Stock Market Correction Over? Here’s What You Should Know As We Enter The Riskiest Part Of The Year

September 23, 2020
  • Home
  • About
  • Privacy Policy
  • Terms and Conditions
  • Whitelist
  • Disclaimer
  • Contact Us

© Copyright 2020 Lahardan Financial

No Result
View All Result
  • Home
  • Cashflow For Retirement
  • Retirement Planning
  • Investing
  • Wealth Protection
  • Government & Politics
  • Terms and Conditions
  • Disclaimer
  • Privacy Policy
  • Contact Us

© Copyright 2020 Lahardan Financial

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.