How does technical analysis differer from fundamental analysis?
Fundamental analysis concentrates on the underlying numbers that can affect investment decisions. These include profit and loss accounts, balance sheets, cash flow statements, net asset values, price earnings ratios, returns on equity and various other ratios used to evaluate the health of a company. Market and economic trends are also included in the analysis.
Technical analysis covers a wide spectrum of techniques for analyzing past price movements. The use of charts is the most basic and widely-used form of technical analysis. Adherents of the system believe that patterns that can be discerned in past price movements will identify probable future trends and key buying or selling opportunities - that is, history repeats itself.