What does technical analysis focus on?

Technical analysis focuses on analyzing price movements and trading volume of stocks. This approach is primarily concerned with historical price data and market psychology reflected in the price patterns, as well as volume trends. Technical analysts use charts and various indicators to identify potential future price movements based on past patterns. This method is distinct from other forms of analysis that might take into account broader economic factors, company performance metrics, or industry-specific trends.

While macroeconomic indicators, company fundamentals, and industry trends are essential components of fundamental analysis, they do not play a central role in technical analysis. Technical analysis relies solely on market data to forecast future price movements, making it a unique discipline within the field of securities analysis. This focus on price and volume allows traders to make decisions based on market behavior rather than underlying business performance.