When talking about finance, technical analysis is a type of method for security analysis in order to forecast the direction of all the prices through studying the past data of market, usually the price and the volume. Two common fields that are using this kind of method are the behavioral economics and the quantitative analysis. This method has become one of the aspects of active management and also, its efficacy, together with fundamental analysis is being debated by market hypothesis in which it states that the prices are very unpredictable.
The job of fundamental analysts is to examine the quality, earnings, ratio, dividends, new products, assets, research, etc. Many methods are already being used by most people but the most common is the chart. Through using the charts, to do futures technical analysis is made so much easy to identify the patterns of the prices and also the market trends in financial market and to exploit the patterns.
The technicians will be searching about the patterns like double top or bottom reversal or head and shoulders pattern for studying technical indicators, moving the averages, and looking for forms such as lines of support, resistance, channels, and other forms which are obscure like cup and handle patterns, balance days, pennants, and flags. Other types of indicators are also being used like mathematical transformations of prices. The transformation usually includes advance or decline data, up or down volumes, and some other types of input.
Technicians also are looking on the relations of price and volume indices and indicators. The examples on this are moving averages, relative strength index, and MACD. Other indicator types such as short interest, call ratio and pull ratio, implied volatility, bear ratio and bull ratio, etc. Are also important.
There are many techniques which can be used for this technical method and one of those is subjective judgment. It is done to decide what pattern will the instrument reflect in a certain time and what interpretation will that pattern have. Other technicians use either mechanical or systematic approach for identifying and interpreting the pattern.
In contrast with it, the fundamental method is a study about the economic factors that will influence on how the investors will price their financial markets. In technical method, it is stated that the prices are already reflected to the fundamental factors. Some traders use either of the two methods while others use both.
The technical method is being used widely by different traders and other financial professionals and usually, it is used by the market makers, pit traders, and day traders. But users have stated that this cannot be able to predict the future, but instead, helps in identifying the trading opportunities. This is because its evidences are sparse and inconsistent.
One main principle on this method is prices reflect the relevant information. This is done so that the analysis will look on the trading security pattern history rather than external drivers. The drivers are economic, news, and fundamental events.
There are 3 principles in which most analysts believe. It includes market action discounting everything, prices move in trends, and history keeps on repeating itself. Thus, actions of price will keep on repeating since the investors continue on tending to patterned behaviors.
The job of fundamental analysts is to examine the quality, earnings, ratio, dividends, new products, assets, research, etc. Many methods are already being used by most people but the most common is the chart. Through using the charts, to do futures technical analysis is made so much easy to identify the patterns of the prices and also the market trends in financial market and to exploit the patterns.
The technicians will be searching about the patterns like double top or bottom reversal or head and shoulders pattern for studying technical indicators, moving the averages, and looking for forms such as lines of support, resistance, channels, and other forms which are obscure like cup and handle patterns, balance days, pennants, and flags. Other types of indicators are also being used like mathematical transformations of prices. The transformation usually includes advance or decline data, up or down volumes, and some other types of input.
Technicians also are looking on the relations of price and volume indices and indicators. The examples on this are moving averages, relative strength index, and MACD. Other indicator types such as short interest, call ratio and pull ratio, implied volatility, bear ratio and bull ratio, etc. Are also important.
There are many techniques which can be used for this technical method and one of those is subjective judgment. It is done to decide what pattern will the instrument reflect in a certain time and what interpretation will that pattern have. Other technicians use either mechanical or systematic approach for identifying and interpreting the pattern.
In contrast with it, the fundamental method is a study about the economic factors that will influence on how the investors will price their financial markets. In technical method, it is stated that the prices are already reflected to the fundamental factors. Some traders use either of the two methods while others use both.
The technical method is being used widely by different traders and other financial professionals and usually, it is used by the market makers, pit traders, and day traders. But users have stated that this cannot be able to predict the future, but instead, helps in identifying the trading opportunities. This is because its evidences are sparse and inconsistent.
One main principle on this method is prices reflect the relevant information. This is done so that the analysis will look on the trading security pattern history rather than external drivers. The drivers are economic, news, and fundamental events.
There are 3 principles in which most analysts believe. It includes market action discounting everything, prices move in trends, and history keeps on repeating itself. Thus, actions of price will keep on repeating since the investors continue on tending to patterned behaviors.
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