The term technical analysis refers to a forecasting methodology that attempts to predict future price movement based on historical price patterns. Technical analysts will examine a security's past prices, trading volumes, open interest, as well as short selling when predicting future price direction.
Technical analysis is used by investors to predict future price movements of a security. The information analyzed by the investor includes historical trading trends, price volatility, and trading volumes. While a fundamental analyst will examine data like a company's balance sheet, income statement and financial ratios; the focus of a technical analyst is historical trends. Some of the basic tenets of technical analysis include: