Technical analysis is a method of analysis which attempts to predict future share price movements by looking at past price movements and identifying trends that indicate future price movement.
The successful technical analyst buys and sells on the basis of his preferred technical indicators and by reference to the price chart, and hopes to make a profit when the share price fulfils his predictions.
Underpinning technical analysis are three core principles:
Different technical analysts use different techniques, but for the most part they rely on the same raw data:
Using historical data of these two variables, the analyst creates a chart (usually on a computer using special software), identifies patterns, and trades on the basis of what they tell him.
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