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What is technical analysis?

technical analysis
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What is technical analysis?

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Technical analysis attempts to use past stock price and volume information to predict future price movements. Note the emphasis. It also attempts to time the markets. • Does it have any chance of working, or is it just like reading tea leaves? There are a couple of plausibility arguments. One is that the chart patterns represent the past behavior of the pool of investors. Since that pool doesn’t change rapidly, one might expect to see similar chart patterns in the future. Another argument is that the chart patterns display the action inherent in an auction market. Since not everyone reacts to information instantly, the chart can provide some predictive value. A third argument is that the chart patterns appear over and over again. Even if I don’t know why they happen, I shouldn’t trade or invest against them. A fourth argument is that investors swing from overly optimistic to excessively pessimistic and back again. Technical analysis can provide some estimates of this situation. A contr

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Technical Analysis is based upon the realization that markets are driven by people. People have perceivable seasonal and historical rhythms and we technicians measure and analyze these rhythms. Analysis of charts with scientific computer-based techniques reveals what people are doing in the markets, including all the people all over the world who have done fundamental analysis and are taking action in the markets based on this analysis.

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Technical analysis is a method of evaluating securities by analysing statistics generated by market activity, such as historic prices and volume. It does not attempt to measure a securities intrinsic (real) value, but instead uses charts and various theories to identify patterns that can suggest possible future activity and value.

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Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is “likely” to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time.

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Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is “likely” to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time. Technical analysis is applicable to stocks, indices, commodities, futures or any tradable instrument where the price is influenced by the forces of supply and demand. Price refers to any combination of the open, high, low, or close for a given security over a specific time frame. The time frame can be based on intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly), daily, weekly or monthly price data and last a few hours or many years. In addition, some technical analysts include volume or open interest figures with their study of price action.

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