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Technical AnalysisTechnical analysis (or chartism) is the use of numerical series generated by market activity, such as price and volume, to predict future price trends. The techniques can be applied to any market with a comprehensive price history. Primarily, but not exclusively, technical analysis is conducted by studying charts of past price movement. Many different methods and tools are used in technical analysis, but they all rely on the assumption that price patterns and trends exist in markets, and that they can be identified and exploited. Technical analysis does not try to analyze the financial data of a company such as cashflow, dividends and projection of future dividends. That type of analysis is called fundamental analysis. Nor does it claim to be 100% accurate. It attempts to give the "most likely" outcome. Some speculators combine elements from both technical and fundamental analysis. (A budding field known as fusion analysis explicitly advocates the combined use of fundamental and technical analysis.) Technical analysis is viewed by many of its practitioners as more art than science. Many academic studies conclude that technical analysis has little, if any, predictive power. However, the practice has a dedicated following especially among active traders and does have support among the academic community. As an example of the debate regarding the efficacy of technical analysis, Peter Lynch, a very well-known and successful fundamental analyst, once commented, "Charts are great for predicting the past." On the other hand, the U.S. Federal Reserve once published a study saying that certain elements of technical analysis were effective in price forecasting in the intraday foreign exchange market.
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