Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts use charts and other tools to identify patterns and trends in the market, with the goal of predicting future price movements.

The main premise of technical analysis is that market trends, regardless of the underlying fundamental factors, can be identified and used to make trading decisions. Technical analysts believe that historical price and volume data can provide insight into the future direction of a security, as market participants tend to repeat their behavior in similar situations.

Common technical analysis tools include trendlines, moving averages, and various chart patterns such as head and shoulders, triangles, and flags. Technical analysts also use indicators such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) to help identify potential buy and sell signals.

Critics of technical analysis argue that it is a flawed approach, as it does not take into account the underlying fundamentals of a security or the broader market environment. They also point out that technical analysis can be subjective, as different analysts may interpret the same data in different ways.

Despite these criticisms, technical analysis remains a popular method of evaluating securities, particularly in the short term. Traders and investors use technical analysis to identify potential entry and exit points for their trades, and to manage risk by setting stop-loss orders and other risk management strategies.