Tech Analysis, or Technical Analysis, is a method used in the field of finance and investing to evaluate securities by analyzing statistics generated by market activity, such as past prices and volume. The core principle of technical analysis is that historical price movements can provide insights into future price behavior, based on the notion that market trends, patterns, and investor psychology repeat over time.
Technical analysts utilize charts and various indicators to identify patterns, trends, and potential reversals in price movements. Common tools include moving averages, relative strength index (RSI), and trend lines. Unlike fundamental analysis, which evaluates a security’s intrinsic value based on economic factors, technical analysis focuses purely on price movements and trading volume.
Traders use technical analysis to make informed decisions about buying and selling securities, aiming to capitalize on market trends and make predictions based on historical data. This approach is prevalent in various markets, including stocks, commodities, and foreign exchange. Overall, technical analysis serves as a framework for assessing market psychology and behavior to guide trading strategies.
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