Technical Analysis, in the simplest sense, is the forecasting of the future with past data .
Typically a wide variety of charts and data are examined to see what the past movement or trend can tell us about the future movement and trend.
The word forecasting tells us that the it is not an absolute certainly but a close possibility .
This, if you must, is first take away of Technical Analysis (TA).
The effective use of technical analysis can help investors anticipate what is “most likely” to happen. The investor may still need to assess TA result objectively based on information outside the domain.
With the advance of technology, investment decisions are made quicker and in short period of time. Short term investors and traders find that TA yield more insights that techniques such as fundamental analysis in the short time span.
TA is often viewed as a collective representation of the crowd. Their behaviors, expectation and level of optimism or pessimism can be interpretated from the various turning points, peaks, troughts and trend on the charts.
Online References:
- Technical Analysis: Introduction
- Chart School - What is Technical Analysis?
- Technical analysis terms
Books:
- Technical Analysis Explained
by Martin J. Pring
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