Technical Analysis
The study of past price and volume data in order to describe market behaviour and frame trading decisions.
How it is identified
Test: the conclusion is drawn from price, volume and derived series alone, without reference to the issuer's financial statements
Unit
qualitative
In depth
Technical analysis rests on three assumptions: that price already reflects available information, that price moves in identifiable tendencies, and that patterns recur because participants behave similarly. Each is contested, and the academic evidence for most named chart patterns is weak once transaction costs and data-mining bias are accounted for. Its defensible use is descriptive and procedural — defining where a thesis is wrong, sizing a position against volatility, and imposing exit discipline — rather than predictive. This dictionary describes what practitioners mean by each term; it does not endorse any pattern as a forecast, and no entry here predicts the direction of any price.
Worked example
A trader defines a plan: enter at ₹500, exit if price closes below ₹480, target ₹545. Whatever the chart suggested, the durable content of that plan is the ₹20 of defined risk against ₹45 of intended reward, which is a risk decision rather than a prediction.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Technical Analysis” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.