Trader Resources : Price Analysis : Technical Trading
It is hard to predict price movement with fundamental analysis. Some traders prefer to use metrics other than supply and demand. Technical Analysis involves the use of past prices, volume and open interest to predict movement and prices of futures contracts into future periods. Why would we use these factors instead of simply using supply and demand?

• It is impossible to know and understand all the fundamental factors.
• Timeliness of data on fundamental factors may not be conducive to commodity trading.
• Crowd psychology – technical traders take in the thoughts and actions of general market actors.

There is also one major advantage to technical analysis, in that it can be better for identifying trends and detecting reversals in the market.

<< Prev | Next >> | Resources Menu