Technical Analysis is the practice of anticipating price changes of a financial instrument {like shares} or the market as a whole by analyzing prior price changes and looking for patterns and relationships in the price history. It is the art of gauging the trends, momentum, and the overall sentiment behind the price movement of a stock or any other security helping us to make the investment decision. Lying the foundation of technical analysis are hundreds of indicators that are used, compare, screen, and then applied as a part of an underlying investment strategy. However, it is interesting to note that no single indicator has ever been found to be completely conclusive.

Charts are the key tool utilized in technical analysis. For each instrument, the daily and weekly charts are analyzed to identify various types of technical analysis opportunities. Some events are bullish suggesting a rising price, while others are bearish suggesting a falling price.

Technical Analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends. The term ‘Market Action’ includes the three principal sources of information available to the Technical Analyst. i.e. Price, Volume, and Open Interest. (Open Interest is used only in Derivatives Market).

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The term “Price Action”, which is often used, seems too narrow because most technicians include volume and open interest as an integral part of their market analysis. With this distinction made, the terms “Price action” and “Market Action” are used Interchangeably.

There are 3 premises on which the Technical Approach is based:
  1. Market Action Discounts Everything
  2. Price moves in Trends.
  3. History Repeats Itself.   

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