Editing Technical analysis (section)

==General description==
Fundamental analysts examine earnings, dividends, assets, quality, ratios, new products, research and the like. Technicians employ many methods, tools and techniques as well, one of which is the use of charts.  Using charts, technical analysts seek to identify price patterns and [[market trend]]s in financial markets and attempt to exploit those patterns.<ref name=Murphy>Murphy, John J. ''Technical Analysis of the Financial Markets''.  New York Institute of Finance, 1999, pp. 1–5, 24–31. {{ISBN|0-7352-0066-1}}</ref>

Technicians using charts search for archetypal price chart patterns, such as the well-known [[Head and shoulders (chart pattern)|head and shoulders]]<ref>{{Cite web |url=http://primepair.com/trading-education/forex-analysis/technical-analysis#Head_and_Shoulders |title=PrimePair.com Head and Shoulders Pattern |access-date=6 January 2015 |archive-url=https://web.archive.org/web/20150106114558/http://primepair.com/trading-education/forex-analysis/technical-analysis#Head_and_Shoulders |archive-date=6 January 2015 |url-status=dead }}</ref> or [[double top and double bottom|double top/bottom]] reversal patterns, study [[technical indicator]]s, [[moving average]]s and look for forms such as lines of support, resistance, channels and more obscure formations such as [[Flag and pennant patterns#The Flag Pattern|flags]], [[Flag and pennant patterns#Pennant pattern|pennants]], balance days and [[cup and handle]] patterns.<ref>{{harvp|Elder|1993|loc=Part III: Classical Chart Analysis}}</ref>

Technical analysts also widely use market indicators of many sorts, some of which are mathematical transformations of price, often including up and down volume, advance/decline data and other inputs. These indicators are used to help assess whether an asset is trending, and if it is, the probability of its direction and of continuation. Technicians also look for relationships between price/volume indices and market indicators.  Examples include the [[moving average]], [[relative strength index]] and [[MACD]]. Other avenues of study include correlations between changes in Options ([[implied volatility]]) and put/call ratios with price. Also important are sentiment indicators such as Put/Call ratios, bull/bear ratios, short interest, Implied [[volatility (finance)|Volatility]], etc.

There are many techniques in technical analysis. Adherents of different techniques (for example: Candlestick analysis, the oldest form of technical analysis developed by a Japanese grain trader; [[Harmonics]]; [[Dow theory]]; and [[Elliott wave theory]]) may ignore the other approaches, yet many traders combine elements from more than one technique. Some technical analysts use subjective judgment to decide which pattern(s) a particular instrument reflects at a given time and what the interpretation of that pattern should be. Others employ a strictly mechanical or systematic approach to pattern identification and interpretation.

===Comparison with fundamental analysis===
Contrasting with technical analysis is ''[[fundamental analysis]]'': the study of economic
and other underlying factors that influence the way investors price financial markets. This may include regular corporate metrics like a company's recent [[EBITDA]] figures, the estimated impact of recent staffing changes to the [[board of directors]], geopolitical considerations, and even scientific factors like the estimated future effects of [[global warming]]. Pure forms of technical analysis can hold that prices already reflect all the underlying fundamental factors. Uncovering future trends is what technical indicators are designed to do, although neither technical nor fundamental indicators are perfect. Some traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions.<ref>{{harvp|Elder|1993|loc=Part II: "Mass Psychology"; Chapter 17: "Managing versus Forecasting", pp. 65–68}}</ref><ref name="Wilmott">{{cite book|first1=Paul|last1=Wilmott|author1-link=Paul Wilmott|title=Paul Wilmott Introduces Quantitative Finance|publisher=Wiley|year=2007|isbn=978-0-470-31958-1|chapter = Appendix B, esp p. 628}}</ref>

===Comparison with quantitative analysis ===
The contrast against [[Quantitative analysis (finance)|quantitative analysis]] is less clear cut than the distinction with fundamental analysis. Some sources treat technical and quantitative analysis as more or less synonymous, while others draw a sharp distinction. For example, quantitative analysis expert [[Paul Wilmott]] suggests technical analysis is little more than 'charting' (making forecasts based on extrapolating graphical representations), and that technical analysis rarely has any predictive power.<ref name="Quants">{{cite web|url=http://seekingalpha.com/article/114523-beating-the-quants-at-their-own-game|title=Beating the Quants at Their Own Game|first=Dr. Hugh|last=Akston|date=13 January 2009}}</ref><ref name="Wilmott"/>