| name | tw-stock-technical |
| description | Technical analysis for Taiwan-listed stocks — candlestick patterns, moving averages, MACD, RSI, KD, Bollinger Bands, volume-price relationships, support / resistance, and a multi-indicator confluence framework. Concept- focused; pairs best with fundamental and chip-flow analysis.
|
| category | finance |
| tags | ["stock","taiwan","tw-stock","technical-analysis","charting","indicators"] |
| keywords | ["MACD","RSI","KD","Bollinger Bands","moving average","support","resistance","candlestick"] |
| related | ["tw-stock-fundamental","tw-stock-chip","tw-stock-quant","tw-stock-data","tw-stock-options","tw-stock-trend"] |
Taiwan Stock Technical Analysis
Technical analysis answers "what is the current price action implying?" It doesn't tell you whether the company is good (fundamentals), nor who is buying (chip flow); it tells you "where the market consensus is moving".
When to Use This Skill
- You have a fundamentals + chip-flow shortlist and need actual entry/exit prices
- Reading the tape and judging short-term (1–2 week) trend direction
- Setting technical-level stops and targets
- Reading TAIEX overall regime
- Avoiding entering against weak technicals
1. Candlestick Basics
Single candles
| Pattern | Visual | Meaning |
|---|
| Long red (long bull) | Long body, short wicks | Bulls dominate (in TW: red = up) |
| Long black (long bear) | Long body, short wicks | Bears dominate (in TW: black = down) |
| Doji | Tiny body, equal upper/lower wicks | Indecision; reversal hint |
| Long upper wick | Upper wick > 2x body | Selling pressure above (shooting star) |
| Long lower wick | Lower wick > 2x body | Buying pressure below (hammer) |
TW convention: Taiwan candles are red-up / black-down (opposite of US convention). Calibrate when reading TA books.
Common combinations
| Pattern | Where | Meaning |
|---|
| Morning Star | Bottom | Down → doji → up; bottom-reversal signal |
| Evening Star | Top | Up → doji → down; top-reversal signal |
| Engulfing | Top / Bottom | Second bar fully engulfs the first; strong reversal |
| Three white soldiers | Bottom | Three rising bull candles; bullish setup |
| Three black crows | Top | Three falling bear candles; bearish move |
| Island reversal | Top / Bottom | Gap up then gap down (or reverse); strong reversal |
Usage rules
- Don't decide on a single candle. It's a clue, not a conclusion.
- Pair with location and volume. A doji mid-trend is not the same as a doji at a key support.
- Daily for short term, weekly for medium term, monthly for long term. Signals across timeframes can conflict — defer to the longer frame.
2. Moving Averages
Common MAs
| MA | Tag | Type | Represents |
|---|
| 5-day | MA5 | Short | Weekly average — ultra-short trading line |
| 10-day | MA10 | Short | Two-week average |
| 20-day | MA20 | Short-mid | Monthly line — most-watched by retail |
| 60-day | MA60 | Mid | Quarterly line — institutional cost line |
| 120-day | MA120 | Mid-long | Half-year line |
| 240-day | MA240 | Long | Annual line — long-term bull/bear divider |
MA stacking
| Stack | Pattern | Meaning |
|---|
| Bullish stack | MA5 > MA20 > MA60 > MA120 > MA240 | Strong uptrend |
| Bearish stack | MA5 < MA20 < MA60 < MA120 < MA240 | Strong downtrend |
| Tangle | All MAs converged | Imminent breakout, direction unconfirmed |
MA signals
| Signal | Meaning | Note |
|---|
| Golden cross | Short MA crosses up through long MA | Bull start, but volume must confirm |
| Death cross | Short MA crosses down through long MA | Bear start |
| Reclaim MA20 | Close > MA20 | First step in short-term strength |
| Lose MA60 | Close < MA60 | Mid-term weakness; institutional cost line breached |
| Lose MA240 | Close < MA240 | Long-term bull/bear flip warning |
Rules
- MAs are lagging indicators. They confirm trend, not predict reversals.
- After a break, watch for "holding" vs "false break". Three consecutive closes above/below is more reliable.
- In bullish stacks, look for pullback buys (test MA, hold). In bearish stacks, look for rebound shorts.
3. Indicators
MACD (Moving Average Convergence Divergence)
- Components: DIF, MACD (signal), histogram
- Default: 12, 26, 9
| Signal | Meaning |
|---|
| DIF crosses up MACD (golden cross) | Bull momentum strengthening |
| DIF crosses down MACD (death cross) | Bear momentum strengthening |
| Histogram flips from negative to positive | Down momentum easing; potential reversal |
| Histogram shrinks consecutively | Current trend losing strength |
| Bearish divergence (price new high, DIF doesn't) | Top — pullback expected |
| Bullish divergence (price new low, DIF doesn't) | Bottom — rebound expected |
Key: MACD divergence is one of the strongest reversal signals in TA.
RSI (Relative Strength Index)
- Range: 0–100
- Default: RSI(14)
| Range | Meaning |
|---|
| RSI > 80 | Overbought; short-term pullback risk high |
| RSI < 20 | Oversold; rebound likely |
| Around RSI 50 | Bull/bear divider; follow trend direction |
| RSI divergence | Same logic as MACD divergence |
Note: strong stocks can stay above RSI 80 for weeks. Overbought ≠ "must drop" — it just means "risen too fast".
KD (Stochastic)
- Components: K and D lines (D = smoothed K)
- Range: 0–100
- Default: 9, 3, 3
| Signal | Meaning |
|---|
| K crosses up D (golden cross) | Short-term buy |
| K crosses down D (death cross) | Short-term sell |
| KD > 80 | Overbought zone |
| KD < 20 | Oversold zone |
| Sustained low (KD < 20) | Oversold but pressure persists; don't catch a falling knife |
| Sustained high (KD > 80) | Overbought but momentum continues; don't fade the top |
KD vs RSI: KD is more sensitive (short-term); RSI is steadier (mid-term).
Bollinger Bands
- Components: middle (MA20), upper (+2σ), lower (−2σ)
- Statistically ~95% of price action stays inside the bands.
| Pattern | Meaning |
|---|
| Touches upper | Short-term hot, but strong trends can ride it (not a sell) |
| Touches lower | Short-term cold, but weak trends can ride it (not a buy) |
| Squeeze (narrowing) | Volatility low; breakout pending. Direction unknown. |
| Sudden expansion | Trend ignition; follow the breakout direction |
| Drops below lower then closes back inside | False break; rebound signal |
4. Volume-Price Relationships
Core principle
Volume leads price. Price moves without volume confirmation are unreliable.
| Combination | Meaning |
|---|
| Up + volume up | Healthy advance, bulls confident |
| Up + volume down | Chase momentum fading; rally may top |
| Down + volume up | Panic selling, but could also be a shakeout (depends on level) |
| Down + volume down | Selling pressure easing; possibly approaching a bottom |
| Massive bull candle on huge volume | Breakout (most meaningful at the bottom of a range) |
| Massive bear candle on huge volume | Bull-to-bull capitulation / distribution (most dangerous at highs) |
| Up on flat volume | Suspicious advance; persistence questionable |
Volume baselines
- "Massive volume" = volume > 2× the 20-day average.
- "Low volume" = volume < 50% of the 20-day average.
- Use relative volume. TSMC's 30,000-lot daily average vs a small cap's 300-lot daily average aren't directly comparable.
5. Support and Resistance
Support (where buyers tend to appear)
| Source | Notes |
|---|
| Prior low | Buyers often catch the prior low |
| Moving averages | MA20, MA60, MA240 are dynamic supports |
| Upper edge of an unfilled gap | Unfilled gaps = strong support |
| Round numbers | Psychological levels (NT$100, NT$500) |
| Bottom of high-volume node | Lower bound of a big-volume zone |
Resistance (where sellers tend to appear)
| Source | Notes |
|---|
| Prior high | Sellers often take profit at the prior high |
| Moving averages (in bearish stack) | MAs become resistance in a downtrend |
| Lower edge of a downward gap | Gap-down lower edge = resistance |
| Trapped supply zone | Prior high-volume sideways zone — "trapped" longs sell on recovery |
Support/resistance flip
- Support broken becomes resistance; resistance broken becomes support. One of the most fundamental rules in TA.
6. Price Patterns
Reversal patterns
| Pattern | Where | Meaning |
|---|
| Head and shoulders top | Top | LS-Head-RS, breakdown of neckline confirms downside |
| Inverse head and shoulders | Bottom | Mirror; neckline breakout confirms upside |
| Double top (M) | Top | Two failed pushes through resistance |
| Double bottom (W) | Bottom | Two successful holds at support |
| Rounded top / bottom | Top / Bottom | Slow reversal, energy gradually shifting |
Continuation patterns
| Pattern | Meaning |
|---|
| Flag | Small counter-trend consolidation; resumes prior direction on completion |
| Triangle convergence | Highs and lows converge; breakout direction = trend direction |
| Box / range | Sideways within a band; long on upside break, short on downside break |
Pattern usage
- All patterns must be "confirmed" before they count. H&S top requires neckline break; triangle requires edge break. Until then, "tentative".
- Volume must agree. Reversal completion should be accompanied by volume on the breakout side.
- Timeframe matters. A weekly pattern beats a daily one (a weekly W-bottom is far more reliable).
7. Multi-Indicator Confluence
A single indicator can deceive. Multiple indicators pointing the same way is what counts.
Entry signal (≥ 3 of 5)
Exit / caution signal (any 2 of 4)
Cross-timeframe integration
| Larger frame (weekly) | Smaller frame (daily) | Strategy |
|---|
| Bullish | Bullish | Aggressive long |
| Bullish | Pullback | Wait for pullback to end (best buy) |
| Bearish | Rebound | Watch or scalp the bounce (high risk) |
| Bearish | Bearish | Sit in cash |
- The larger frame sets direction; the smaller frame sets timing. Don't size up on a weekly bear because of a daily golden cross.
8. Common Traps
| Trap | Description | Counter |
|---|
| False breakout | Price pokes through resistance and pulls back | Wait for close + next-day hold |
| Indicator saturation | KD / RSI stays in extreme zone for a long time | In strong trends saturation is normal — don't fade |
| Single-indicator decisions | Buying on RSI oversold or MACD golden cross alone | Wait for confluence |
| Ignoring index regime | A great single-stock setup can't survive an index crash | Read the index trend first |
| Screen addiction | Watching tick-by-tick, emotional decisions | Set entry/exit conditions, walk away |
| Hindsight bias | "It was so obvious here" | Decide only on what's visible at the moment |
| Predicting instead of following | "I think it'll reverse" | Wait for the signal |
9. Pre-Decision Checklist
Before any technical decision:
10. Integrating with Fundamentals and Chip Flow
| Fundamentals | Chip flow | Technicals | Verdict |
|---|
| Good | Good | Good | Best entry |
| Good | Good | Bad | Wait for technicals to turn (reclaim support) |
| Good | Bad | Good | Technicals may be just a bounce; cautious |
| Bad | — | Good | Pure technical play, short-term mindset, hard stop |
Three-way confluence is the highest-probability entry. Any leg missing → smaller size or wait.
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