Technical Analysis vs. Fundamental Analysis
There are two types of ways to analysis the price of a stock, fundamental analysis, and technical analysis. Fundamental analysis is used to gauge the price of a stock based on the fundamental attributes of the stock, such as price/earnings ratio, Return on invest, and associated economic statistics. Technical analysis deals more with the psychological component of trading a stock and is influenced for the most part on emotionalism. The technical analyst is seeking to answer the question “how are other traders viewing this stock, and how will that affect the price in the immediate future”. As you will see, the candlestick chart is the most effective way to gauge the sentiments of other traders.