/biz/ - Business & Finance

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Fundamental analysts study the actions of the Federal Reserve, follow earnings
reports, examine crop reports, and so on. Major bull and bear markets reflect fundamental changes in supply and demand. Still, even if you know those factors, you
can lose money trading if you are out of touch with intermediate- and short-term
trends, which depend on the crowd’s emotions.

Technical analysts believe that prices reflect everything known about the market,
including fundamental factors. Each price represents the consensus of value of all
market participants—large commercial interests and small speculators, fundamental researchers and technicians, insiders and gamblers.

Technical analysis is a study of mass psychology. It is partly a science and partly
an art. Technicians use many scientifc methods, including mathematical concepts of
game theory, probabilities, and so on. They use computers to track indicators.

Technical analysis is also an art. The bars or candles on our charts coalesce into
patterns and formations. The movement of prices and indicators produces a sense of
flow and rhythm, a feeling of tension and beauty that helps us sense what is happening and how to trade.

Individual behavior is complex, diverse, and difcult to predict. Group behavior
is primitive. Technicians study the behavior patterns of market crowds. They trade
when they recognize patterns that preceded previous market moves