Technical analysisTechnical analysis is a method of investing which focuses on past price movements and attempts to identify trends that indicate future price movement. The successful technical analyst buys and sells on the basis of his preferred technical indicators, and hopes to make a profit when the share price fulfils his predictions.Underpinning technical analysis are three core principles which are central to the TA faith:Share prices move in patternsPatterns repeat themselvesIf you anticipate a pattern correctly, you can profit from itDifferent technical analysts use different techniques, but for the most part they rely on the same raw data:Price (whether share prices, commodity prices or option prices)Volume (the number of shares or other instrument traded per day)Using historical data of these two variables, the analyst creates a chart (usually on a computer using special software), identifies patterns, and trades on the basis of what they tell him.If a trend indicates that the price of a share is due to go up, he buys shares or call options.If a trend indicates that the price of a share is due to go down, be sells shares or buys put options.
Technical analysisSecurity analysis that seeks to detect and interpret patterns in past security prices.
Technical descriptorsTechnical descriptors
Variables that are used to describe the market in terms of patterns in historical data.
Technical barrier to tradeTechnical barrier to trade
A technical regulation or other requirement (for testing, labeling, packaging, marketing, certificaiton, etc.) applied to imports in a way that restricts trade.
Technical analystsTechnical analysts
Also called chartists or technicians, analysts who use mechanical rules to detect changes in the supply of and demand for a stock, and to capitalize on the expected change.
Technical rallyTechnical rally
Short rise in securities or commodities futures prices in the face of a general declining trend. Such a rally may result because investors are bargain hunting or because analysts have noticed a particular support level at which securities usually bounce up. Antithesis of correction.
Technical forecastingTechnical forecasting
A forecasting method that uses historical prices and trends.
Further SuggestionsTechnical inefficiency
Technical condition of a market