Technical Analysis

Technical analysis studies historical price and volume patterns to forecast future price movement, on the premise that patterns in how a stock has traded tend to repeat because they reflect recurring crowd psychology: fear, greed, and herd behavior. It uses tools like chart patterns, moving averages, and momentum indicators rather than a company's financial statements.

The approach is most useful for timing decisions (when to enter or exit a position) rather than for deciding what to own in the first place, and it works best on liquid stocks with enough trading volume for patterns to reflect broad market behavior rather than a handful of orders.