Technical Analysis is a way of examining and predicting price fluctuations in the financial markets. Technical analysis uses historical prices, past patterns to define the direction of the future price. It is based on the logic that if a trader is able to identify previous price patterns for certain periods of time, the trader will be able to define which pattern will repeat itself.
It is one of two physilophis of market analysis. The other one is fundamental analysis. Fundamental analysis, in contrast, takes in consideration external factors which influence assets price.
Fundamental analysis is a way of evaluating an asset’s value by analyzing the external factors that might influence its price. This analysis is based on external factors, financial statements, and industry trends.
The fundamental analysis comes hand in hand with the technical one. If technical one derives its results from charts, fundamental one looks at outside factors that make the prices go up or down.