What technical analysis is, why it works, how it differs from fundamental analysis, and the core tools every chart reader uses.
In this lesson you'll learn
What technical analysis is and its core assumptions
How TA differs from fundamental analysis
The three main chart types and when to use each
Why volume is the most important confirming indicator
What is technical analysis?
Technical analysis (TA) is the study of historical price and volume data to forecast future price movements. Rather than asking "Is this company profitable?" (fundamental analysis), a technical analyst asks "What is the chart telling me about supply, demand, and sentiment right now?"
Technical analysts believe three things:
Price discounts everything
All publicly known information — earnings, news, analyst views — is already baked into the current price. You don't need to analyze the fundamentals separately; the market has already done it for you.
Prices move in trends
Once a trend is established, it's more likely to continue than to reverse. Identifying the prevailing trend early is the single most powerful edge in technical analysis.
History tends to repeat
Because human psychology — fear, greed, hope, panic — is consistent, the chart patterns these emotions create tend to recur. Learning to recognize them gives you a statistical edge.
Technical analysis vs. fundamental analysis
Both approaches aim to make profitable investment decisions — they just use different information and operate on different time horizons.
Fundamental Analysis
•Reads earnings, revenues, cash flow
•Focuses on intrinsic value vs. market price
•Suits long-term investors (months to years)
•Answers: 'Is this stock worth buying?'
•Less useful for timing entries and exits
Technical Analysis
•Reads price charts and volume data
•Focuses on supply/demand and momentum
•Suits active traders (minutes to months)
•Answers: 'When should I buy or sell?'
•Excellent for timing entries and exits
The most powerful investors use both: fundamental analysis to decide what to buy, and technical analysis to decide when to buy it. We cover both approaches at BriMindInvest.
The three main chart types
Charts are the foundation of TA. Most platforms offer three main types — each shows price differently.
Line chart
Connects closing prices with a single line. The simplest view — great for seeing the broad trend but loses most intra-period information. Best for quick overviews.
Best for: Big-picture trend identification
Bar chart (OHLC)
A vertical bar represents the high and low of the period. A left tick marks the open; a right tick marks the close. Shows all four data points but can look cluttered.
Best for: When candlesticks aren't available
Candlestick chart
The most popular chart type. A colored rectangular body shows the open-to-close range; thin wicks extend to the high and low. Green (or white) = close above open; red (or black) = close below open.
Best for: Daily analysis, pattern recognition — this course's default
Time frames: which chart period to use
The same stock looks very different on a 1-minute chart versus a weekly chart. Your time frame should match your holding period.
1-min / 5-min
Day traders
Intraday noise dominates; patterns are short-lived
15-min / 1-hour
Active traders
Useful for fine-tuning entries within a daily setup
Daily (1D)
Swing traders
The most widely watched time frame for TA setups
Weekly (1W)
Position traders
Filters noise; shows major trends lasting months
Monthly (1M)
Long-term investors
Big-picture context; useful before zooming in
Pro tip: always look at a higher time frame first. Before trading a 1-hour setup, check the daily chart. Before swing trading the daily, check the weekly. Trading with the higher-time-frame trend dramatically improves your odds.
Volume: the most important confirming indicator
Volume is the number of shares (or contracts) traded in a given period. It tells you how many market participants are behind a price move — in other words, how much conviction there is.
↑
Price rises + high volume
Strong buying conviction. Bullish move is well-supported.
↓
Price falls + high volume
Strong selling conviction. Bearish move is well-supported.
⚠
Price rises + low volume
Weak move — few participants. Possible trap or false breakout.
→
Price falls + low volume
Weak selling pressure. May be a healthy dip rather than a trend reversal.
Volume doesn't generate signals on its own — it confirms or questions the price signal. Never trade a breakout without checking volume. It's the difference between a genuine move and a head-fake.
Who uses technical analysis?
Technical analysis is used across a wide spectrum of market participants — each with a different purpose and time horizon.
Day traders
Enter and exit within a single trading session using intraday charts
Swing traders
Hold positions for days to weeks, using daily charts to find setups
Position traders
Hold for weeks to months, using weekly charts to ride major trends
Long-term investors
Use TA to time entries into fundamentally sound stocks at better prices
Quick Knowledge Check
3 questions · test what you've just learned
1
What is the core assumption that underpins technical analysis?
2
A candlestick chart displays four pieces of information for each time period. Which set is correct?
3
A stock makes a strong 5% upward move but on volume that is 70% below its 30-day average. What does this most likely suggest?
✓ Key takeaways from Lesson 1
Technical analysis studies price and volume to forecast future moves — it does not analyze company fundamentals.
The three core assumptions: price discounts everything, prices move in trends, and history repeats.
Candlestick charts are the most information-rich and widely used chart type — the foundation of this course.
Always match your chart time frame to your holding period. Check higher time frames first.
Volume confirms price. A move without volume is a warning sign — always check it.
See live charts on BriMindInvest
Pull up any stock's price chart to see the candlestick, volume, and indicators we'll cover in this course — applied to real stocks in real time.