What does technical analysis mean?
Refers to the process of examining current charts in order to predict which way the market will move next. It is usually used by day traders and swing traders. Technical analysis is also extremely popular with currency traders, and has been adopted as a major analysis tool by cryptocurrency traders.
It uses price movements and patterns as well as volume statistics to make predictions about the future price of assets. The underlying concept behind technical analysis is that price action tends to repeat itself, leading to certain patterns when visually charted. These patterns are held to be indicative of higher probability price movements.
Some consider technical analysis to be nothing more than the study of supply and demand within the market, and over the years there have been a large number of indicators developed to track not only price data, but also open interest and volume.
It is a widely accepted fact of technical analysis that longer time frames yield more accurate results. So, the data on a monthly chart can predict future prices more accurately than that on a daily chart, which in turn is more accurate than a 15 minute chart. This is primarily due to the “noise” that is inherent in markets.