"Technical analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends." John J. Murphy, Technical Analysis of the Futures Markets (New York Institute of Finance, 1986), page 1.

In its purest form, technical analysis considers only the actual price behavior of the market or instrument, based on the premise that price reflects all relevant factors before an investor becomes aware of them through other channels.

Technical analysis is widely used among traders and financial professionals, and some studies say its use is more widespread than is "fundamental" analysis in the foreign exchange market. Academics such as Eugene Fama say the evidence for technical analysis is sparse and is refuted by the efficient market hypothesis, Griffioen, id=566882" target="_blank">Technical Analysis in Financial Markets yet some Federal Reserve and academic studies include evidence that supports technical analysis. Osler, Karen (July 2000). "Support for Resistance: Technical Analysis and Intraday Exchange Rates," FRBNY Economic Policy Review (abstract and paper here). MIT finance professor Andrew Lo argues that "several academic studies suggest that…technical analysis may well be an effective means for extracting useful information from market prices." Lo, Andrew W., Harry Mamaysky and Jiang Wang (2000). "Foundations of Technical Analysis: Computational Algorithms, Statistical Inference, and Empirical Implementation," Journal of Finance, v. 55 (abstract and paper here), pp. 1705-1765. _Burton Malkiel argues, "Technical analysis is an anathema to the academic world." He further argues that under the weak form of the efficient market hypothesis, "...you cannot predict future stock prices from past stock prices." Burton Malkiel, A Random Walk Down Wall Street pp. 118, 139, 165