Technical analysis is the study of historical market data, including price and volume. Using insights from market psychology ,behavioural ,echonomics and quantative analysis, technical analysts aim to use past performance to predict future market behaviour. The two most common forms of technical analysis are chart patterns and technical (statistical) indicators.
KEY TAKEAWAYS
- Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities in price trends and patterns seen on charts.
- Technical analysts believe past trading activity and price changes of a security can be valuable indicators of the security's future price movements.
- Technical analysis may be contrasted with fundamental analysis, which focuses on a company's financials rather than historical price patterns or stock trends.
Professional analysts often use technical analysis in conjunction with other forms of research. Retail traders may make decisions based solely on the price charts of a security and similar statistics, but practicing equity analysts rarely limit their research to fundamental or technical analysis alone.
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