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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
Using price charts and patterns to predict where a stock will go next.
Why It Matters
Technical analysis ignores company fundamentals and focuses purely on price and volume patterns. Traders look for patterns like 'head and shoulders,' moving average crossovers, and support/resistance levels. Many academics say it's barely better than coin-flipping, but millions of traders swear by it. At minimum, understanding technicals helps you know what other traders are watching.
Key Points
- Based on the idea that price history repeats and all information is already reflected in the price
- Common tools: moving averages, RSI (relative strength index), MACD, Bollinger Bands
- Short-term traders use it more; long-term investors often ignore it and focus on fundamentals
Related Terms
Common Questions
Using price charts and patterns to predict where a stock will go next. Technical analysis ignores company fundamentals and focuses purely on price and volume patterns. Traders look for patterns like 'head and shoulders,' moving average crossovers, and support/resistance levels.
Technical analysis ignores company fundamentals and focuses purely on price and volume patterns. Traders look for patterns like 'head and shoulders,' moving average crossovers, and support/resistance levels. Many academics say it's barely better than coin-flipping, but millions of traders swear by it. At minimum, understanding technicals helps you know what other traders are watching.
Based on the idea that price history repeats and all information is already reflected in the price
Common tools: moving averages, RSI (relative strength index), MACD, Bollinger Bands
Short-term traders use it more; long-term investors often ignore it and focus on fundamentals