When you talk about finances, the common term used is technical analysis. This is a method of security analysis to forecast directions prices by studying the past market of data usually, the volume and the price. Two of the most fields that use this method are behavioral economics and quantitative analysis. This is the type that became one important aspect in the active management and its efficacy also has been debated by the market hypothesis that states prices are unpredictable.

Earnings, dividends, assets, quality, ratio, new products, research, etc. Are being examined by fundamental analysts. Many types of method are being provided for usage but the very common type is the chart. Charts are said to be very useful especially for making futures technical analysis much easier especially for the identification of price patterns and also market trends of financial market for exploiting patterns.

The technicians are going to search on the patterns such as the head and shoulders or double bottom or top reversal pattern, to study about technical indicators, to move the averages, and to look for forms like resistance, lines of support, channels, and some other forms that are obscure such as pennants, handle and cup patterns, flags, and balance days. They also use many kind of indicators and some of these are the mathematical transformation of prices. This transformation often includes up and down volumes and advanced or declined data and other type of inputs.

They also look on the relationships between the indices of price and volume and also the indicators. Some examples of this include relative strength indices, MACD, and moving averages. There are also other important indicators which include bull or bear ratios, implied volatility, put or call ratios, short interest, etc.

There are many techniques which can be used for this technical method and one of those is subjective judgment. It is done to decide what pattern will the instrument reflect in a certain time and what interpretation will that pattern have. Other technicians use either mechanical or systematic approach for identifying and interpreting the pattern.

As a contrast, a fundamental method studies on economic factors which can influence the decision of investors of pricing financial markets. The technical procedure stated that prices are reflected already to fundamental factors. Other traders are using either of the methods and others are using both.

The technical method is being used widely by different traders and other financial professionals and usually, it is used by the market makers, pit traders, and day traders. But users have stated that this cannot be able to predict the future, but instead, helps in identifying the trading opportunities. This is because its evidences are sparse and inconsistent.

The main principle for this method or procedure is reflecting the prices to relevant information. They do this in order for them to analyze not on external drivers but on looking at the history for security trading pattern. Drivers are news, fundamental, and economic events.

There are 3 principles in which most analysts believe. It includes market action discounting everything, prices move in trends, and history keeps on repeating itself. Thus, actions of price will keep on repeating since the investors continue on tending to patterned behaviors.

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