Learn the stock market › Technical analysis: the basics › Lesson 1 of 6
What is technical analysis?
Alphabet, the last year
Price50-day average200-day average
Three things it reads
All of this can be read from the same chart, without a single number from the company's reports.
The trend. Is the price going up, down or sideways? A common way to measure that is to compare the price with an average of recent days. Trends have their own lesson.
The levels. Where has the price turned before? Those levels are called support and resistance.
The speed. How quickly has the price moved in recent weeks? RSI is the most common measure.
Here they are for Alphabet on Nov 6, 2026:
| What is read | Alphabet, Nov 6, 2026 |
|---|---|
| Trend: price against the 200-day average | −16.0% |
| Level: from the year's high, $402.11 | −29.2% |
| Level: from the year's low, $273.16 | +4.3% |
| Speed: RSI, 14 days | 30 |
The numbers describe how the price has moved. None of them says why, and none says what happens tomorrow.
The idea behind it
Technical analysis rests on two ideas. The first is that the price already shows what buyers and sellers believe, because every trade is a decision by someone who has read the news. The second is that people behave in similar ways when prices rise and fall, so the same course of events comes back.
Those are ideas, not laws. How they differ from reading the company's numbers is in fundamental vs technical analysis.
What it can't do
A chart is easy to read afterwards, when you can already see how things went. Two people can also read the same chart differently, because there is no single right answer to where a trend begins or which level counts.
That is why it can be put to the test: decide the rule in advance and count how it went. This course does that where it can, and the study at the end of the course does it for five well-known signals.
Test yourself
Which of these belongs to technical analysis?
More numbers are on the Alphabet stock page.