Technical analysis is a method used to evaluate securities by analyzing statistics generated by market activity, such as past prices and volume. The idea behind technical analysis is that market trends, as shown by charts and other technical indicators, can predict future activity.
One of the key principles of technical analysis is that the market discounts everything. In other words, all known information about a security, such as financial data and economic and political events, is already reflected in the current market price. Therefore, technical analysts believe that by analyzing charts and other technical indicators, they can gain insight into what the market is thinking and predict future price movements.
One of the most popular tools of technical analysis is the chart. Charts are used to represent the movement of a security’s price over a certain period of time. Technical analysts use charts to look for patterns, such as head and shoulders or support and resistance levels, that can indicate a security’s future price movements.
Another important tool of technical analysis is the use of technical indicators. Technical indicators are mathematical calculations that are based on the price and/or volume of a security. Some popular technical indicators include the moving average, relative strength index (RSI), and the stochastic oscillator. These indicators can be used to identify trends and potential buy and sell opportunities.
Some analysts also use a combination of both technical and fundamental analysis to make their investment decisions. Fundamental analysis looks at the underlying economic and financial factors that can affect a security’s price, whereas technical analysis focuses on the market data and trends.
In conclusion, technical analysis is a method used to evaluate securities by analyzing statistics generated by market activity. Technical analysts use charts and technical indicators to identify patterns and trends that can indicate a security’s future price movements. Technical analysis can be used in combination with fundamental analysis to make investment decisions.
If you would like to read some interesting books on TA, here is the link. Its very important that before investing in any market to learn and self educate. I highly recommend you to learn Technical Analysis so that you gain knowledge and experience, it will help you make right decision and make consistent profits at the same time reduce losses if any.
Here is the link for free online charts, you may ” play” with it. For regular updates on Dubai & Abu Dhabi Stock Market click here.
All the best !