CHAPTER 14Technical analysis

Technical analysis is the study of the past price movements of an individual share, a market sector or the market as a whole to gain an insight into where the price might go.

Charts convert a table of data into an easy-to-interpret graph. Take the example of figure 14.1 (overleaf): is it easier to tell the share’s recent price history by looking at the table or the graph? The graph provides a quick snapshot of how the company’s share price has travelled.

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Figure 14.1: table of data versus line graph

To understand where technical analysis fits in, let’s examine the objectives of both fundamental and technical ...

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