Technical Analysis from A to Z

About Technical Analysis

Technical Analysis involves looking at charts to get a better understanding of where prices have been, where they are, and ultimately where they are headed.

Just as a meteorologist studies charts of weather patterns (e.g., satellite photos, the jet stream, pressure systems, etc.) to anticipate changes in the weather, investors and traders use charts (and technical indicators) of security prices to anticipate changes prices.

Technical analysis focuses on the well-defined principles of supply and demand. This makes it well suited to investing in stocks, bonds, options, commodities, futures, indices, mutual funds, ETFs, REITs—anything that has a large number of buyers and sellers. The principles of supply and demand are timeless and could be applied to the days of bartering just as they can be applied to the era of high-speed internet trading.