Technical analysis looks at charts of past prices and volume rather than at a company’s accounts or products. Followers believe that collective behaviour leaves patterns that can guide short term decisions. Critics say those patterns are often coincidence and that past price paths do not forecast the future reliably.
Key takeaways
- Common tools include trend lines, moving averages, and support or resistance levels drawn on a chart.
- Technical analysis does not measure whether a share is cheap or expensive relative to earnings or assets.
- No chart pattern guarantees a profit, and costs plus false signals can erase gains.
- Many long term investors ignore charts and focus on business value instead.