Technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. This analysis has three principles. The first one is market action discounts everything. This principle is based on premise that all relevant information is already reflected by prices. Technical analyst believes it is important to understand what investor thinks of that information, known and perceived. The second one is price move in trends. Technical analyst believes that prices trend directionally, i.e., up, down, sideways (flat) or some combination. The last principle is history tends to repeat itself. Technical analysts believe that investors collectively repeat the behavior of the investors that preceded them.

We often hear about support and resistance level in technical analysis. So, what is support and resistance level? A support level is a price level where the price tends to find support as it is going down. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely to continue dropping until it finds another support level. The opposite of support level is the resistance level. It is where the price tends to find resistance as it is going up. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely that it will continue rising until it finds another resistance level.