Business, Legal & Accounting Glossary
Technical analysis is the practice of studying past prices of a stock and changes in its trading volume in an attempt to discover whether it will go up or down in the near future.
In finance, technical analysis is a security analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.
Technical Analysis is a method of forecasting prices of stocks, bonds, futures contracts, indices, or other financial instruments.
The goal of technical analysis is to predict the future price level or direction. It tends not to be the goal of technical analysis to explain why prices behave as they do; that would be fundamental analysis. Technical analysis primarily studies the action of a financial market.
Technical analysis can range from the simple (moving averages) to the arcane (stochastic oscillators and Bollinger bands). The efficacy of these techniques is disputed, but many traders claim to use them to achieve much higher annualized returns.
The working principle behind technical analysis is that any influence on the market is already reflected in current price levels. Followers of technical analysis believe that:
Technical analysis involves the use of different kinds of charts, or other market indicators such as moving averages, volume and open interest, oscillators, Japanese candlesticks, Elliott Wave Theory, and cycle analysis.
Technical analysts do not attempt to measure a security’s intrinsic value, but instead, use charts and other tools to identify patterns that can suggest future activity.
There are many techniques in technical analysis. Adherents of different techniques (for example, candlestick charting, Dow Theory, and Elliott wave theory) may ignore the other approaches, yet many traders combine elements from more than one technique.
Indicator
Bollinger bands
Market timing
Trader
Technical analysis is the practice of studying past prices of a stock and changes in its trading volume in an attempt to discover whether it will go up or down in the near future.
Technical analysis can range from the simple (moving averages) to the arcane (stochastic oscillators and Bollinger bands). The efficacy of these techniques is disputed, but many traders claim to use them to achieve much higher annualized returns.
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This glossary post was last updated: 28th November, 2021 | 0 Views.