Technical Analysis can be defined as an art and science of forecasting future prices based on a examination of the past price moment. TA is based on analysing current demand-supply of commodities, stocks, indices, futures or any trad-able instrument.

What Is Technical Analysis ?

Technical Analysis involves putting stock information like price, volumes and open interest on a chart and applying various patterns and indicators to it in order to access the future price moments. Time frame in which technical analysis is applied may range from intraday ( 1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly ), daily, weekly or monthly price data to many years.

The primary premise of Technical Analysis are followed by price moment. By focusing only on price action, technicians focus on the future. The price pattern is considered as a lead indicator and generally leads the economy by 6 to 9 months. To track the market, it make sense to look directly at price moments. More often than not, change is subtle beast. Even though the market is prone to sudden unexpected reactions, hints usually develop before significant moments. You should refer to periods of accumulation as evidence of an impending decline.

Weaknesses Of Technical Analysis.

Analyst Bias

Technical Analysis is not a science. It is subjective in nature and your personal bias can be reflected in the analysis.If the analyst is a bull then his bullish bias will reflect in the analysis and vice-verse.

Open To Interpretation

Technical Analysis is a combination of science and a art and is always open to interpretation. Even though there are standards, many times two technicians will look at the same chart and paint two different scenarios or see different patterns. 

Too Late

Lateness is a particular criticism of Technical Analysis. By the time trend is identified, a substantial move is already made. From that point the reward to risk is not great.

Always Another Level

Technical analysis always wait for a level to break . Even though a clear trend is identified technicians wait for breaking the trend before taking a call.

Trader's Remorse

An array of pattern and indicators arises while studying technical analysis. Not all signals work. For instance : A sell signal is given when the neckline of a head and shoulder pattern is broken. Even though this is a rule, it is not steadfast and can be subject to other factors such as volume and momentum. In same manner what works for one stock may not work for other.