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Why Technical Analysis?
Price is Everything
Technical analysis is the study of historical
price performance in an effort to predict future price performance. Price
is a very important statistic in the world of technical analysis because it is the only accurate measure of investor sentiment -- it
is the intersection of supply and demand.
Technical analysis makes the assumption that
investor sentiment is at least and possibly a more important determinant of price than fundamental
factors like earnings, revenues and profit margins.
Given this outlook many draw the conclusion that fundamental
and technical analysis are at odds but nothing could be further from the
truth. Technical analysis is the study of price and the factors that
determine price. It would be silly to believe that fundamental analysis
does not play a role in shaping investors perception of. value. The
technical analyst believes that all perceptions of value are encapsulated in one
statistic, price.
There are three important principles that govern all technical
analysis. First, price is NOT random, second, price anticipates
fundamental change and third, the relationship between price and time is
linear.
Now that we have a
roadmap, let's get started on the journey to understanding some of
the basic concepts of technical analysis.
introduction
price is not
random
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Basics > Why Technical Analysis? 
