|What is Technical Analysis|
What is Technical Analysis
Technical analysis is the study of charts and price trends.
The basis behind technical analysis is the idea that the current market price reflects the total knowledge/opinion of all players in the market. Technical analysts also believe that market prices are not random as suggested by "the random walk theory" (which has been largely discounted) and that market prices will/can trend.
If prices can trend (and there is plenty of evidence of trends) then a technical analysis main focus is to identify the direction of that trend and to react upon the changes of that trend. (ie: if the trend stops going up then sell, if the trend stops going down and starts moving up there is potential for a new uptrend and one can buy).
While some technical analysts believe that only technical analysis is required (based on the idea that the current market price already reflects the sum knowledge of fundamentals) the ChartFilter philosophy is that understanding the fundamentals of a company will dramatically improve the potential for finding/defining a potential long term trend. Technical analysis is then used to ensure the profit potential of that trend.