Technical Analysis is a method used by traders and investors to evaluate securities by analyzing statistical trends gathered from trading activity—such as price movement and volume. Unlike fundamental analysis, which focuses on a company’s financial health, technical analysis is primarily concerned with identifying patterns and trends in market data to forecast future price movements.

At its core, technical analysis operates on the belief that market prices reflect all available information and that price movements often follow identifiable trends. Traders use a range of tools, such as charts, indicators, and oscillators—including Moving Averages, Relative Strength Index (RSI), MACD, and Bollinger Bands—to recognize potential entry and exit points.

The approach can be applied across various asset classes such as stocks, commodities, forex, and indices. By studying price charts and historical data, analysts aim to understand market psychology and predict short- or medium-term price directions. For instance, a breakout above a resistance level may indicate a potential uptrend, while a drop below support could signal a downtrend.

While technical analysis offers insights into market timing, it is not foolproof. Price patterns are subject to market volatility and external factors like economic news or geopolitical events. Hence, it is often used in combination with risk management strategies and, in some cases, fundamental analysis for more balanced decision-making.

In India, traders are encouraged to use technical analysis for educational and research purposes within SEBI’s regulatory framework. It helps market participants make informed decisions based on data-driven insights rather than speculation, ultimately improving trading discipline and market understanding.