Introduction

Technical analysis (TA) regroups a set of tools and methodologies in order to trade profitably in the market. Unlike fundamental analysis (FA) which studies the economic and financial factors related to a company, technical analysis studies the historical evolution of the price of a security, working with patterns and tools that rely on past market data.

In order for technical analysis to work, we must make the following assumptions:

• The evolution of the price of a security can be forecasted using past prices (as such technical analysis does not support the random walk hypothesis).

• Prices move in trends, where current trends can be influenced by past trends.

The following pages contain various tools and methodologies commonly used by technical analysts.