Trading: One of the two basic techniques (the other is fundamental analysis) used by commodity
and stockmarket investors/speculators to estimate price
movements. Technical analysts (also called 'chartists' or 'technicians') believe that (in case of stocks) the intrinsic value
of a firm or its estimated earnings-potential, and (in case of commodities) the demand and supply information
, is insufficient to predict its future prices.
Instead, they rely on statistical methods
and collective (mob) psychology techniques, and use data
charts and computer programs, to study
past movements in prices and trading volumes to detect current
and future trends. Most technical analysis is short- or intermediate-term, and is based on three major tenets: (1) history repeats itself what goes around comes around, (2) prices move in trends and usually follow known patterns, and (3) current market price
of a stock
(share) or commodity reflects the effect of all available information about it.