Technical analysis is a method used to evaluate and predict the future price movements of financial assets, such as stocks, by analyzing past market data. This data typically includes price charts, trading volumes, and other historical information. The primary focus of technical analysis is to identify patterns, trends, and signals that can indicate potential trading opportunities.

Key components of technical analysis include:

• Price Charts: Visual representations of an asset’s historical prices over time.
• Trendlines: Lines drawn on price charts to identify the direction of the market (uptrend, downtrend, or sideways).
• Support and Resistance Levels: Specific price points where an asset tends to stop and reverse direction.
• Technical Indicators: Mathematical calculations based on historical price data, such as moving averages, Relative Strength Index (RSI), and Moving Average Convergence Divergence (MACD).
• Chart Patterns: Recognizable shapes or formations on price charts that indicate potential future price movements, such as head and shoulders, double tops, and triangles.

Technical analysis assumes that market prices reflect all available information and that price movements are not random but follow trends. By studying these trends and patterns, traders aim to make informed decisions about when to buy or sell assets, potentially improving their trading outcomes.