Technical analysis

Technical analysis is the study of past market price data to forecast the future direction of financial markets which generally includes futures, stocks, stock market indexes, bonds, currencies and commodities. Technical analysts search for levels of support and resistance where the market has previously paused or reversed. If the market is already trending up it implies that demand continues to over power supply. If the market is trending down it implies that supply is overwhelming demand. Technical traders like to follow the trend as a low risk strategy. If the market is trending down technical analysis teaches a trader to sell at resistance levels or the break of a support level to minimise risk.  

Another important idea in technical analysis is that history tends to repeat itself, mainly in terms of price movement. The repetitive nature of price movements is attributed to market psychology; in other words, market participants tend to provide a consistent reaction to similar market stimuli over time. Technical analysis uses chart patterns to analyze market movements and understand trends. Although many of these futures charts have been used for more than 100 years, they are still believed to be relevant because they illustrate patterns in price movements that often repeat themselves.