Technical analysis

A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume.

Technical analysis is a method of evaluating financial assets, such as stocks, currencies, or commodities, by analyzing historical price and volume data to predict future price movements. It is based on the belief that market trends and patterns repeat over time, and that these patterns can be identified and used to make informed investment decisions. Technical analysts use various tools and techniques to study price charts, such as trend lines, support and resistance levels, moving averages, and oscillators. They also analyze trading volume and other indicators to gain insights into market sentiment and the strength of price trends. The underlying premise of technical analysis is that price patterns and trends reflect the collective psychology of market participants, and that these patterns can help predict future price movements. For example, if a stock price has historically shown a tendency to rise after reaching a certain support level, technical analysts may anticipate a similar price increase in the future. Technical analysis can be used for various purposes, including identifying entry and exit points for trades, setting price targets, and managing risk. It is popular among short-term traders and active market participants who aim to profit from short-term price fluctuations. Critics of technical analysis argue that it is subjective and based on historical data, which may not always accurately reflect future market conditions. They contend that it does not consider fundamental factors or external events that can impact asset prices.