Here’s a simple explanation of Technical Analysis:
What is Technical Analysis?
Technical analysis is a method used by traders and investors to evaluate and predict the future price movements of stocks, currencies, or other financial assets based on past market data. Instead of focusing on a company’s financial health or economic factors, technical analysts study price charts, trading volumes, and various indicators to identify patterns and trends.
The basic idea is that all important information is already reflected in the price, and by analyzing how the price has moved in the past, one can make educated guesses about where it might go next. Technical analysts use tools like candlestick charts, moving averages, support and resistance levels, and momentum indicators to find entry and exit points for trades.
Why Use Technical Analysis?
It helps traders spot trends (upward, downward, or sideways), measure market strength, and make decisions based on historical price behavior, improving the chances of profitable trades.
In short, technical analysis is like reading a price “map” to understand market psychology and anticipate future moves.