Course: The foundations of technical analysis
Lesson Insights
One of the key assumptions of technical analysis is that all available information about a security is reflected in its current market price. This is known as the efficient market hypothesis, and it states that the market is constantly processing new information and incorporating it into the current market price. Technical analysts believe that because all information is reflected in the market price, it is not necessary to analyze a company's financial statements or other fundamental data in order to make informed investment decisions. Instead, they rely on past price and volume data to make predictions about future price movements.
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