Description
What Is Technical Analysis?
Technical analysis is a method of evaluating statistical trends in trading activity, typically involving price movement and volume. It is used to identify trading and investment opportunities.
Unlike fundamental analysis, which attempts to evaluate a security’s value based on financial information such as sales and earnings, technical analysis focuses on price and volume to draw conclusions about future price movements.
Key Takeaways
- Technical analysis is used to evaluate price trends and patterns and thereby identify potential investments and trading opportunities.
- Technical analysts believe past trading activity and a security’s price changes 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.
- Technical analysis was introduced by Charles Dow.
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