What is technical analysis?

What is technical analysis?

Technical analysis is the process of studying price movements using historical data such as charts, trading volume, and technical indicators with the aim of predicting future price trends. Technical analysis focuses on market behaviour and price movements rather than the fundamentals of the assets themselves (such as earnings reports or economic news), and is based on the idea that everything related to the markets has already been reflected in the prices.

The basic principles of technical analysis:

1. The market prices reflect everything:
Technical analysts believe that all factors affecting the market - whether economic, political, or social - are fully reflected in price movements. Therefore, there is no need to analyse news or events separately.

2. Prices move in trends:
Technical analysts believe that prices move in certain trends that can be identified and exploited. These trends are either upward, downward, or neutral (sideways).

3. History repeats itself:
Technical analysis is based on the idea that patterns and behaviours that have appeared in the past may repeat themselves in the future. Therefore, charts are used to identify patterns and predict upcoming price trends.