16 Facts About Technical analysis

In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume.

The efficacy of both technical and fundamental analysis is disputed by the efficient-market hypothesis, which states that stock market prices are essentially unpredictable, and research on whether technical analysis offers any benefit has produced mixed results.

Principles of technical analysis are derived from hundreds of years of financial market data.

Some aspects of technical analysis began to appear in Amsterdam-based merchant Joseph de la Vega's accounts of the Dutch financial markets in the 17th century.

Early technical analysis was almost exclusively the analysis of charts because the processing power of computers was not available for the modern degree of statistical analysis.

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Pure forms of technical analysis can hold that prices already reflect all the underlying fundamental factors.

Contrast against quantitative Technical analysis is less clear cut than the distinction with fundamental Technical analysis.

Academics such as Eugene Fama say the evidence for technical analysis is sparse and is inconsistent with the weak form of the efficient-market hypothesis.

Users hold that even if technical analysis cannot predict the future, it helps to identify trends, tendencies, and trading opportunities.

Core principle of technical analysis is that a market's price reflects all relevant information impacting that market.

Hence technical analysis focuses on identifiable price trends and conditions.

Industry is globally represented by the International Federation of Technical analysis Analysts, which is a federation of regional and national organizations.

Whether technical analysis actually works is a matter of controversy.

Efficient-market hypothesis contradicts the basic tenets of technical analysis by stating that past prices cannot be used to profitably predict future prices.

One of the problems with conventional technical analysis has been the difficulty of specifying the patterns in a manner that permits objective testing.

In 2013, Kim Man Lui and T Chong pointed out that the past findings on technical analysis mostly reported the profitability of specific trading rules for a given set of historical data.