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Technical analysis Involves examining how the company is currently perceived by investors as a whole. Technical analysis is a method of evaluating securities by researching the demand and supply for a stock or asset based on recent trading volume, price studies, as well as the buying and selling behavior of investors. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts or computer programs to identify and project price trends in a market, security, fund, or futures contract. Most analysis is done for the short or intermediate-term, but some technicians also predict long-term cycles based on charts, technical indicators, oscillators and other data.
Examples of common technical indicators include Relative Strength Index, Money Flow Index, Stochastics, MACD and Bollinger Bands. Technical indicators do not analyze any part of the fundamentals of a business, like earnings, revenue and profit margins. Technical indicators are used extensively by active traders, as they are designed primarily for analyzing short-term price movements. The most effective uses of technical indicators for a long-term investor are to help him/her to identify good entry and exit points for a stock investment by analyzing the short and long-term trends.
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