What is technical analysis?

In the financial markets, there are two main methods of market analysis. Both these methods are employed by traders in order to analyse price movements and make wise investments.

These two methods are known as Technical Analysis and Fundamental Analysis.

The main difference between the two schools of thought is their approach towards their analysis of the market. To determine the future activity of an asset or commodity, technical analysis studies its historical performance, focusing on its price movements in the market. Conversely, fundamental analysis concentrates primarily on external factors that include economic, geopolitical and social conditions, and how these affect or could affect the price of an asset.

In this section, we will look at the basics of technical analysis in more detail, examine the importance of chart patterns, moving averages and indicators, and show how you can use technical analysis to improve your trading style.

Did you know?

U.S. President Richard Nixon is credited with enabling a free-floating currency system after ending the Bretton Woods Accord.

Word of the day
"Fundamental Analysis (FA)" - A method of market analysis that concentrates on external factors such as the economic, geopolitical and social climates that affect or could affect the price of an asset. Fundamental analysis is largely based on the belief that assets are always either overpriced or under-priced, and constantly in effort to reach their true value.
Pro Tip

Stable Internet connection is a pre-requisite for trading.