InvestorQ : Does technical analysis only rely on past price as an indicator of future price or there is more to it?
Abhi Yadav made post

Does technical analysis only rely on past price as an indicator of future price or there is more to it?

Answer
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Abhisha Yadav answered.
1 year ago


That would be putting it too simplistically. There are a lot of inbuilt checks and balances to ratify your view, but broadly the thinking is correct. The past price performance is taken as the most important trigger for future price performance. That is why it is said that past trends are at the core of technical analysis! Technical traders believe that current or past price action in the market is the most reliable indicator of future price action.

Technical analysis is not only used by technical traders. Many fundamental traders use fundamental analysis to determine whether to buy into a market, but having made that decision, then use technical analysis to pinpoint good, low-risk buy entry price levels. The reason even fundamental investors use technical analysis is that it helps you to fine tune and identify the right price level of entry and exit in the market.