What is Technical Analysis?
Technical Analysis is a methodology used to predict the future price of securities based on past price movement and trading volume of that security. This is used to identify new investment opportunities, as well as to evaluate current investments. The underlying belief behind technical analysis is that price moves in trends and history repeats itself.
How is technical analysis conducted?
It relies heavily on charts that show the past price and trading volume. Sophisticated tools are used to analyze these charts, and predict the future price. Technical analysts use trend lines, moving averages, patterns, etc for this analysis – we would cover these terms in detail in a separate video.
Is technical analysis only for stocks?
No. It can be used for any security that has historical trading data, like stocks, fixed-income, currencies and other securities.
Is Technical Analysis the only way to forecast a security’s price?
No. There is also fundamental analysis – but that’s a topic for another time…