Technical Analysis

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The process of forecasting future price movements based on past price movements with the help of statistical charts is known as Technical Analysis. It allows investors to make financial decisions such as Buying, Holding, or Selling Stocks.

Technical analysis was first introduced in the late 1800s by Mr. Charles Dow, who developed the Dow Theory. Other researchers, including Mr. William P. Hamilton, Mr. Robert Rhea, Mr. Edson Gould, and Mr. John Magee, further contributed to the theory's concepts, forming its basis.

Technical Analysis indicators provide investors with simple, easy-to-read signals to help them know when to Enter or Exit a trade and Make a Profit. This type of analysis can be used on any security with historical trading data including Stocks, Futures, Commodities and Currencies, etc.

Technical analysis is based on three main assumptions.

  • The market discounts everything, meaning that all factors, including a company's fundamentals and external factors, are already priced into the stock.

  • Price moves in trends, and a stock price is more likely to continue a past trend than move erratically.

  • History tends to repeat itself, and the repetitive nature of price movements is often attributed to predictable market psychology based on emotions such as fear or excitement.

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