Technical analysis is a trading tool that used to scrutinize securities as well as an attempt to forecast their future movements by analyzing trading activity statistics such as volume and price fluctuations. Where fundamental analysts attempt to evaluate the intrinsic value of a security, technical analytics view charts of price movements and forecast future price movements through many analytical tools to evaluate a security’s strength or weakness.
Moving Averages are prominently used technical indicators that smooth out price action by filtering out random price fluctuations. It’s a trend-following (lagging) indicator as it is based on past pricing. The two basic Moving Averages are the simple moving average (SMA), the simple average of a security over a defined number of time, and the exponential moving average (EMA), which gives more prominence to recent prices. The most common reasons why MAs are used are to determine support and resistance levels and to identify trend direction.
Though MAs are useful on their own, they also lay the foundation for other indicators such as the Moving Average Convergence Divergence (MACD). Nxp Semiconductors (NXPI)’s 1-Month Moving Average is 112.38, while the 3-Month Moving Average is 110.48.
Average Volume is the amount of securities traded in a day on average over a specific time period. Trading activity relates to the liquidity of a security. When average volume is high, the stock has high liquidity and can be therefore easily traded, while conversely, when the trading volume is low, the commodity will be less expensive as traders are not as willing to purchase it.
Average volume has an effect on the price of the security. Nxp Semiconductors (NXPI)’s 1-Month Average Volume is 112.38 and the 3-Month Average Volume is 110.48.
Nxp Semiconductors (NXPI)’s 50-Day Raw Stochastic, which shows (on a range of 0%-100%) where the price closed in relation to its price range over the last 50 Days is 88.84%. Their 50-Day Stochastic %K, which indicates (on a range of 0%-100%) where the price closed in relation to its price range over the last 50 Days with a 3-period exponential moving average applied is 85.70%.
Finally, their 50-Day Stochastic %D, the indicator that shows (on a range of 0%-100%) where the price closed in relation to its price range over the last 50 Days with a 3-period exponential moving average applied, is 81.93%.
Nxp Semiconductors (NXPI)’s TrendSpotter Opinion, the signal from Trendspotter, a Barchart trend analysis system that uses wave theory, market momentum & volatility in an attempt to find a general trend, is Buy.
Its TrendSpotter Strength, the strength of the signal compared to its historical performance where Maximum is the strongest this signal has been and Minimum the weakest, is Weak, while the company’s TrendSpotter Direction, which indicates whether the Buy or Sell signal is strengthening or weakening, or whether a Hold signal is heading towards a buy or sell signal, is Strengthening.
Barchart Opinions show investors what a variety of popular trading systems are suggesting. These Opinions take up to 2 years’ worth of historical data and runs the prices through thirteen technical indicators. After each calculation, a buy, sell or hold value for each study is assigned, depending on where the price is in reference to the interpretation of the study.
Today’s opinion, the overall signal based on where the price lies in reference to the common interpretation of all 13 studies, for Nxp Semiconductors (NXPI) is 88% Buy. The Opinion Direction, a three-day measurement of the movement of the signal, an indication of whether the most recent price movement is going along with the signal. Strongest, Strengthening, Average, Weakening, or Weakest. A buy or sell signal with a “strongest” direction means the signal is becoming stronger.
A hold signal direction indicates where the signal is heading (towards a buy or sell): Bullish, Rising, Steady, Falling, or Bearish. Nxp Semiconductors (NXPI)’s direction is Strongest. Nxp Semiconductors (NXPI)’s opinion strength, a long-term measurement of signal strength vs. the historical strength, is Strong. Opinion strength ranges from Maximum, Strong, Average, Weak, Minimum. A stronger strength is less volatile and a hold signal does not have any strength.
Technical analysts believe in the idea that price changes of a security and past trading activity are better indicators of that given security’s future price movements than simply the intrinsic value of said security. Technical analysis was created out of simple concepts learned from Dow Theory, the theory of trading market movements that originated from the early writings of Charles Dow.
The two basic assumptions of Dow Theory say analysis are: 1.) market price discounts all the factors that could influence a security’s price and: 2.) market price movements are not simply random but move in an identifiable pattern and that repeat over time.
The first assumption, that price discounts everything, means the market price of a commodity at any given point in time perfectly reflects all available information, and represents the security’s true fair value. It is based on the idea the market price always reflects the sum total knowledge of the market.
The second basic assumption, the notion that price changes are not just random, leads to the belief that both short term and long term market trends can be identified, allowing traders to profit from investing when following the existing trend.
Technical analysis is used in order to forecast the price movement of all tradable instruments that are subject to the forces of supply and demand, including currency pairs, bonds, stocks, and futures.
Technical analysis can be viewed simply as the study of supply and demand as reflected in market price movements of securities. It is usually applied to price changes, though analysts may also track numbers other than price, such as open interest figures or trading volume.
Many technical indicators have been developed by analysts over the years in an attempt to forecast future price movements accurately. Some indicators are focused on determining the how strong a trend is and also the possibility of its continuation while other indicators focus on identifying current market trends, including resistance areas and support.
Commonly used technical indicators include moving averages, trendlines, and momentum indicators like the moving average convergence divergence (MACD) indicator.
Technical analysts apply these indicators to charts of differing timeframes. Short-term traders may use charts covering one-minute timeframes to hourly or even four-hour timeframes, and traders analyzing more long-term price movements look over daily, weekly or monthly charts.
Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.