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    What is Technical Analysis?

    Rohit Singh

    Mr. Chartist · SEBI RA

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    Technical Analysis (TA) is the study of past price and volume data to predict future price movements. It's based on three core assumptions: (1) The market discounts everything — all known information is already reflected in the price, (2) Prices move in trends — uptrends, downtrends, and sideways trends, (3) History tends to repeat itself — because human psychology (greed and fear) doesn't change. Unlike fundamental analysis which asks 'what to buy', technical analysis answers 'when to buy and sell'.

    Key points

    TA works on any timeframe: 1-minute charts for scalpers to monthly charts for long-term investors
    It works on any asset: Stocks, indices, commodities, forex, crypto — because it studies human behavior through price
    Charles Dow (founder of Dow Jones) created the foundation of modern TA in the late 1800s
    Japanese candlestick charting (developed by Munehisa Homma in the 1700s for rice trading) is the most popular charting method today
    TA is probabilistic, not deterministic — it gives you an 'edge', not certainty. Good setups fail regularly, which is why position sizing and a pre-defined invalidation level matter more than the entry
    Volume is the single most important confirmation tool — price tells you WHAT happened, volume tells you WHO was behind it
    The key to profitable TA is risk management (stop-losses, position sizing) — not finding the 'perfect' indicator

    Pro tip — Don't try to learn every indicator and pattern at once. Master these 4 things first: (1) Candlestick patterns, (2) Support & Resistance, (3) Trend lines, (4) Volume analysis. These alone can make you consistently profitable. Everything else is secondary.

    Related — Candlestick Patterns Book
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