Technical Analysis

It is an instrument intended for short-medium term oriented investors consequently taking higher risks. Those employing this type of analysis usually speculate the behavior of market operators, using price charts to forecast the likeliest future trend of a price. To do this- support thresholds (lows of past periods), resistance levels (highs of past periods), and moving averages on several time intervals should be set, along with a number of derived indicators. It is advisable to determine the indicators used over a time interval comparable with the investment’s time span.

Technical analysis leaves the company’s financial situation aside, being quite frequent the cases when one might earn capital gains with the stock of a company that is incurring losses.

As a matter of fact, these two types of analysis are somewhat complementary. For example, an investor who prefers the fundamental analysis might use the technical one for optimizing entry and exit points, and a player who mainly uses the technical analysis might employ fundamentals to determine the likeliest price trend if charts do not pinpoint a definite tendency.