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Technical analysis is
the forecasting of markets through the study and analysis of data generated exclusively from the buying and selling of financial instruments. It is part science and part formalization of trader intuition and experience. Any market for which there is a regular, transparent transaction history is a candidate for technical analysis. Planetary cycles, opinion polls, fundamental, monetary and economic data as well as any data not specifically generated from the buying and selling process, are not a part of orthodox technical analysis. |+|
Technical analysis is forecasting through the study of data. It of a , is analysis . , , and as and , of technical .
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|-|Yet there remains fierce debate over the true definition of technical analysis. For example, the Market Technicians Association, the main organizing body for technical analysis in the United States, includes the "behavior and psychology of market participants" in its definition of technical analysis, a definition which permits the inclusion of a wide range of activities not normally associated with markets or trading. Some well known technicians such as John Bollinger and others, believe that subjects normally associated with fundamental analysis, such as the study of stock dividends, qualify as technical analysis. Still others believe that "financial astrology" should be included under the definition of technical analysis. The Market Technicians Association has never directly acknowledged or rendered an official opinion concerning these important questions. |+|
Revision as of 12:37, 9 June 2009
Technical analysis is a method of forecasting future price movements through the study of past market data. It contrasts with the fundamental analysis of a company stock, currency or commodity and is based solely on price and volume information. Fundamental analysis examines the factors influencing supply and demand for shares, currencies or commodities. Technical analysts, who are also known as technicians or chartists, try to identify price patterns and trends in financial markets and exploit them. They search for chart patterns such as head and shoulders or double top reversal patterns, study indicators such as moving averages, and look for chart support and resistance. Major investment banks and brokerages will normally employ teams of technical as well as fundamental analysts.
See also: Candlestick Chart, Bar Chart