Stock market technical analysis is the study of past market data
statistics for patterns and trends in the activity of stock markets for
the
purposes of forecasting future price movements of stocks,
commodities, futures and forex etc.
Technical analysts believe that the market is always right, so all
relevant information is reflected in the price and historical price
patterns tend to repeat as traders and investors will have the same
collective emotions and reactions to events that previous traders and
investors
had.
Traders tip - there
are two driving forces in the stock markets,fear
and greed.
Technical
Analysis vs Fundamentals Analysis
Fundamentals analysts try to determine the future movement of a stocks
share price by studying all aspects of the companys business to
estimate the intrinsic value of the stock. They will use this estimate
to decide if it
is currently undervalued and worth buying or not.
The
biggest problem with fundamental analysis is the sheer volume of
information that the analyst has got to delve through to reach a
valuation. This severely limits the quantity of potential investments
that the average trader or investor can do a full analysis on
.
Supply
and demand for the products, earnings statements, costs analysis, cash
flow, future growth potential etc are all considerations for the
fundamentals analyst and the small traders like us are usually the last
to know when any surprise
news item hits the headlines.
Stock market technical analysis enables the analyst to spot
the possibility
of a repeating trend or price pattern by studying their technical
analysis charts for evidence of how the market is behaving at any given
point in time.
Since technical analysis stock trading is
based on that premise that the collective moods and emotions of the
markets produce the
same human reactions time and again, the technical analyst can follow a
far
wider range of potential investments for trading opportunities as the
same methods can be applied to most technical analysis charts .
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