What is Technical Analysis?
Analysis of price charts and indicators to predict future price movements — the chart-driven complement to fundamental analysis.
Technical analysis (TA) is the study of price charts and statistical indicators to identify probability-weighted patterns in price movement. The premise is that all known information is already reflected in price, so price action itself is the most actionable forecasting tool.
Three main TA categories. Classical chart patterns: head-and-shoulders, double tops, triangles, flags. Indicator-based: moving averages, RSI, MACD, Bollinger Bands. Modern institutional concepts: SMC, ICT, market structure, order blocks, fair value gaps. Each has merit; combining 2-3 with strict rules produces better edge than relying on any one.
The biggest TA pitfall is curve-fitting: backtesting against historical data until the rules look profitable, then watching the live performance fall apart. Robust TA strategies have few parameters, work across multiple instruments, and degrade gracefully (small losses) rather than spectacularly. Most successful retail traders use TA simpler than the educational material suggests — moving average crosses, basic price-action setups, disciplined risk management.