Technical Analysis: An Overview
Technical analysis studies price and volume charts to identify patterns that may help anticipate future price movements — based on the premise that price reflects all available information, that trends tend to persist, and that crowd psychology (and therefore price patterns) tends to repeat. This guide covers how to read candlestick charts and volume, the concepts of trends, support, and resistance, moving averages (SMA vs EMA, and crossover signals like the “golden cross”), and a brief glossary of common indicators (RSI, MACD, Bollinger Bands) and chart patterns. We contrast TA’s “when to buy/sell” focus with fundamental analysis’s “what to buy” focus, and close with TA’s honest limitations — subjectivity, its lagging nature, the ongoing Efficient Market Hypothesis debate about whether price patterns can reliably predict the future at all, and its inability to anticipate sudden fundamental shocks.