Introduction

For ages, it is the desire of the man, that he knows what is going to happen in future. Well, the same is for the securities too. All types of traders whether investors or speculators are looking for a hint for their entry or exit in any of the desired stocks. To predict the future price movement of the stock, there is a lot of analysis involved on the traders' end. This analysis which is either done by the investors themselves or by the stock brokers on their behalf is known as Technical Analysis.

In simple words, technical analysis can be described as the study of supply and demand of the security trading on the Stock Exchange. With the help of technical charts and tools, we can predict the future price movement of the security easily.

Technical Analysis of any security or sectoral index is basically analysing the past price movement of the same and predicting their future movement. Technical Analysis is based on Dow Theory. Before proceeding further, understanding the two basic assumption of Dow Theory is very important. The assumptions are:

1. The market discounts all news: This means that the market incorporates all the positive and negatives of the news as soon as it is released.
2. Price changes are not random: The price movement of any security is not purely random in nature, rather they move in an identifiable pattern. By knowing the pattern, traders can predict the future price movement. 

Technical Analysis is one of two analysis of the security to maximise your returns on the investment. The other  being Fundamental Analysis.

This is just an introduction to the Technical Analysis to get the feel what Technical Analysis is all about.