Technical Analysis

We have often heard about Technical Analysis or simply TA.
What is it actually?

According to Investopedia at http://www.investopedia.com, it is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.

Furthermore, Investopedia says, Technical analysts believe that the historical performance of stocks and markets are indications of future performance. In a shopping mall, a fundamental analyst would go to each store, study the product that was being sold, and then decide whether to buy it or not. By contrast, a technical analyst would sit on a bench in the mall and watch people go into the stores. Disregarding the intrinsic value of the products in the store, his or her decision would be based on the patterns or activity of people going into each store.

Well said. Basically the main key points are:
1. Stock market is ultimately about supply and demand. Technical Analysis (TA) is used to measure this supply and demand theory.
2. Tech analysis (TA) is a method to MEASURE the PYSCHOLOGY of the market. Purely from SUPPLY and DEMAND point of view.
3. Its main assumption is that HISTORY REPEATS ITSELF

In my Learning Journey article, I mentioned the key contents which I identified as branches of TA. They are:
1) Candlesticks
2) Patterns
3) Indicators
4) Market Timing

Candlesticks.
The popular hot dog chart originated from Japan has now become a key element in charting. However, the basic candlestick has now evolved to many versions. For example, the Heiken-Ashi Candles, The Renko Chart and etc.
Candlesticks have the ability to foretell a reversal of trend.

Patterns
I believe this is originated from the West. But then I could be wrong.
For example, the Head and Shoulders pattern are also known as the Buddha pattern.
Patterns is a breakout system with the ability to give the practitioner the technical targets of the breakout.

Indicators
This I am pretty sure came from the West with the exception of later developments or discoveries. The Japanese were however, I think, the first to use Moving Averages and its crossovers.
Very often, many people think TA refers to Indicators alone.
I beg to differ. In my opinion, Indicators are a part of TA but not the whole of TA.
Indicators have the ability of indicating whether the particular counter would likely move to the breakout and the possibilities of a retracement.

Market Timing
Originated from the Dow Theory, Elliott Wave and Gann Analysis come into the picture. This is not a simple analysis which one could do. There are many pitfalls to avoid. For beginners, its best to avoid this complex theory.
If used correctly, this is the ultimate tool which could time the market - capturing all fluctuations.

At Fusion Trader, we aim to combine all these four methods for our learning process.