Technical Analysis

There is more than one way to analyze whether an investment can be good or not, or when it is better to buy or sell. The overall market, economic data, financial statements or fundamentals are all beneficial factors to eventually examine when looking at a new investment.

But one of the major ways traders and investors determine potential good investments is by using Technical Analysis.

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Deeper on the subject:

Technical Analysis is a discipline used to predict the direction of prices through the study of trends gathered from trading activity, such as past price movement and volume. The theory behind the validity of Technical Analysis is the idea that the collective actions – buy and sell – of all the investors in the market reflect all relevant information pertaining to a traded security, and therefore, continually assign a fair market value to the investment.

Is for that reason that technical analysts firmly believe that it's possible to identify the major trends in the market, riding bull markets and avoiding bear markets. 

Today, Technical Analysis is based on three main theories:

1 The market discounts everything
The analyst believes that all the fundamental, political, and psychological factors that have determined a trend are already priced into a stock. Consequently, the study of price movements is the only thing that is required for a Technical Analysis. [1]

2 Price moves in trends

Technical analysts believe that prices move in short, medium and long-term trend. In other words, a stock price is more likely to continue a past trend than turn the tide. Most technical trading strategies are based on this assumption. [1]

3 History repeats itself
Technical Analyst believes that history tends to repeat itself. The repetitive nature of price movements is often attributed to market psychology, which tends to be very predictable based on emotions like fear or enthusiasm. Technical Analysis uses chart patterns to analyze these emotions and subsequent market movements to understand trends. While many form of Technical Analysis have been used for more than 50 years, they are still believed to be relevant because they illustrate patterns in price movements that often repeat themselves. For that reason, to understand the future, it is necessary to study the past because the future could be a repetition of it. [1]
How to use Technical Analysis 

Technical analysis aims to forecast the price movement of virtually any tradable instrument that is generally subject to forces of supply and demand, including stocks, bonds, futures, currency and cryptocurrencies. Technical analysis most frequently applies to price changes, but some analysts track numbers other than just price, such volume.
Across the context there is a large number of patterns and signals that have been developed by academics to support technical analysis trading. Technical analysts have also developed numerous types of trading systems to help them trade on price movements. Some indicators are focused mainly on identifying the current market trend,  while others are focused on determining the strength of a trend and the chance of its continuation. Commonly used technical indicators and charting patterns include for exaple: trendlines, channels and moving averages.
Our approach to Technical Analysis
We firmly believe that the study of historical price charts and market statistics can give a competitive advantage useful for trading and investing management. Technical analysis can be used on any security with historical trading data. This includes stocks, futures, commodities, currencies, and other securities.
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[1]  Technical Analysis of the Financial Markets - 1999 by John J. Murphy - italian Version - Pages 2, 3.

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