Technical Analysis
A method of evaluating securities by analyzing historical price and volume data to forecast future price movements and identify trading opportunities.
What is Technical Analysis?
Technical analysis is a trading discipline that evaluates securities by studying historical market data — primarily price and volume — to identify patterns and signals that suggest future price behavior. Practitioners believe that all available information is reflected in a stock's price and that history tends to repeat itself, creating recognizable patterns. Core tools include chart types (candlestick, bar, line), trend lines, support and resistance levels, moving averages, momentum oscillators such as the RSI and MACD, and volume indicators. Technical analysis is widely used by active traders and is often contrasted with fundamental analysis, which focuses on a company's financial health and intrinsic value rather than price patterns.
Example
In mid-2023, shares of Meta Platforms broke above a key resistance level at $300 with significantly elevated volume — a technical signal that many chartists interpreted as a bullish breakout confirming institutional buying. Traders who used this technical signal to enter long positions benefited as Meta subsequently rallied above $500 over the following months, though technical signals carry no guarantee of future performance.