What is the definition of 'technical analysis' in finance?

Technical analysis in finance refers to a method used by traders and investors to evaluate securities by analyzing statistical data generated by market activity. This approach focuses on historical price movements and trading volumes to identify patterns and trends that may indicate future price behavior. By using charts and various technical indicators, practitioners of technical analysis aim to forecast price movements based on past market data rather than fundamental analysis, which examines a company's intrinsic value through its financial statements and overall economic conditions.

The essence of technical analysis lies in the belief that market sentiment and behavior can be gauged through the analysis of price and volume data. This method is particularly popular among short-term traders, who rely on these insights to make quick and informed trading decisions.