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Technical Analysis

In short

Studying price charts and indicators to forecast future price movements

Technical analysis reads charts and price patterns to predict future price moves. It assumes all information is already in the price. Unlike fundamental analysis, it doesn't care about earnings — just supply and demand dynamics.

Technical analysis studies historical price and volume data to identify patterns and forecast future movements. Key tools include moving averages, oscillators (RSI, MACD), and chart patterns (head & shoulders, triangles). Works best in liquid, trending markets.

Related concepts

  • Fundamental Analysis — Fundamental analysis digs into a company's financial statements, business model, and competitive position to figure out what it's really worth. If the stock price is below intrinsic value, it might be a buy.
  • RSI (Relative Strength Index) — RSI scores a stock from 0–100. Above 70 means it's been rising so fast it might be due for a pullback (overbought). Below 30 means it's fallen a lot and could bounce (oversold).
  • MACD — MACD compares two moving averages to show momentum. When the fast line crosses above the slow line, it's a buy signal. Cross below = sell signal. Like two runners — when the faster one pulls ahead, momentum is shifting.
  • Simple Moving Average (SMA) — Take the last 50 days of prices and average them. That's the 50-day SMA. It smooths out daily noise so you can see the real trend. Price above its SMA = uptrend; below = downtrend.