Technical Analysis

Technical analysis is the practice of forecasting future price movements by studying past price data, chart patterns, and statistical indicators. The core assumption is that all known information is already reflected in the price, so you don't need to study economic data or news — the chart tells you everything.

Technical analysis encompasses a wide range of tools and methods: support and resistance analysis, trend identification, candlestick patterns, chart patterns (head and shoulders, triangles, flags), indicators (moving averages, RSI, MACD), and volume analysis. Most traders use a subset of these tools that align with their trading style.

Critics argue that technical analysis is no better than reading tea leaves — that patterns are visible in hindsight but not predictive. Proponents counter that while no indicator is perfect, technical analysis provides a structured framework for making decisions and managing risk. The reality is somewhere in between: technical analysis works best as a decision-support tool, not a crystal ball. The traders who profit from it combine it with solid risk management and a probabilistic mindset.