Technical Analysis

Technical analysis is the analysis of the price movements in a market or of an instrument over a period of time, which could range from short term to long term, to reveal investor trends.

Investor sentiments and behaviour dictate prices which are set at the meeting point of demand and supply at any given point in time. 

To conduct technical analysis, one does not need to know the instrument or the market in depth but needs the data of a freely-traded instrument or market because price movements betray investor behaviour and can reveal the best time to buy or sell for investors.

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Technical analysis, however, is limited to studying market trends and lacks the ability to deep-dive into an instrument or an industry to understand its workings. This denies technical analysis the ability to predict possible outcomes. Fundamental analysis is better suited to predict information flow or even outcomes.

Technical analysis is at its most relevant and insightful when the market has begun to move a certain way, rather than predicting the movement which needs fundamental background analysis. 

Combining technical analysis with fundamental analysis leads to a more sound way of reading the markets.