Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. 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. Technical analysis is widely used among traders and financial professionals, and is often used as a supplement to fundamental analysis.
History of Technical Analysis
Technical analysis has been used since the early days of stock market trading. The first recorded use of technical analysis was in 1704, when Japanese rice trader Homma Munehisa used candlestick charting to predict rice prices. In the late 19th century, Charles Dow, one of the founders of Dow Jones & Company, developed a system of analysis known as Dow Theory. This theory formed the basis of modern technical analysis, and is still widely used today.
Comparison of Technical Analysis and Fundamental Analysis
|Technical Analysis||Fundamental Analysis|
|Uses past price and volume data to identify patterns||Uses financial statements and economic data to assess a security’s intrinsic value|
|Focuses on short-term price movements||Focuses on long-term price movements|
|Used by traders and investors||Used by investors|
Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. It has been used since the early days of stock market trading, and is still widely used today. Technical analysis is often used as a supplement to fundamental analysis, and is used by traders and investors to identify short-term price movements. For more information about technical analysis, visit Investopedia, The Balance, or Investing.com.
- Candlestick Charting
- Dow Theory
- Fundamental Analysis
- Price Action
- Relative Strength Index (RSI)
- Moving Average Convergence Divergence (MACD)
- Bollinger Bands
- Fibonacci Retracement
- Elliot Wave Theory
- Price-Volume Analysis