History, Philosophy, Basic Tenets of Technical Analysis

Technical Analysis is a study of the past price action to predict the future price trends. This means that the price of a share tells us as to how the share is going to move in the future and any reasons, let it be Fundamental or Technical, that could lead to a rise or a fall in the share prices is reflected in the price of that share. Technical factors viz. the law of demand and supply can lead to sharp movements in the share prices. These factors work on mass psychology and are closely linked to human mind. Under a given set of circumstances all minds tend to work in the same direction. The theories of Technical Analysis are based on this concept and hence the share price movements can be predicted more often than not based on these theories. 

To sum it up Technical Analysis: 

• A study of price charts i.e. past prices in conjunction with the present.
• Works best in stocks that have a mass following.
• Is based on the law of demand and supply.
• Depicts the mindset of masses i.e. mass psychology.

Hence Technical Analysis is a subject which can successfully identify the beginning of a sharp rise or fall in the share prices. However it is incorrect to say that Technical Analysis can predict the share movements correctly all the times, as at certain times the markets itself are undecided. 

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