Module 7 ยท Trading, Taxes and Technicals
Technical analysis studies price charts and patterns - a tool, not a crystal ball.
Technical analysis tries to predict price moves from charts, patterns and indicators rather than company fundamentals. It is popular with traders.
It can help with timing and risk, but it does not tell you what a business is worth. Patterns are probabilistic, not guarantees, and can fail.
For most long-term investors, understanding the business and its value matters far more than chart patterns. If you use technicals, treat them as one input with clear risk limits.
Example: Titan
A chartist might study Titan's price levels and moving averages for entry timing. A fundamental investor instead asks about jewellery margins and growth. Both can be valid - but they answer different questions.
Technical analysis is best described as:
Why might a long-term investor care more about a company's fundamentals than its chart?