Technical analysis

Technical analysis refers to the evaluation of historical information about securities to predict their future price movements. Someone engaged in technical analysis typically focuses on different aspects of the prices and trading volumes of securities, with particular attention to patterns that may be repeatable. For example, an investor could invest based on his perception of how long a current trend is likely to continue.

Technical analysis is founded upon the belief that historical information indicates the likely direction of future price movements. A flaw in this logic is that technical analysis does not factor in the intrinsic value of a security, which is influenced by changes in the current financial performance of the issuer, as well as prospects for its future performance.