The U.S. Department of Agriculture collects and disseminates much of this information in its crop and livestock production reports. Technical analysis involves searching for patterns in price movements that repeat over time. The objective is to recognize a pattern as it begins to develop, and to trade accordingly. The traditional method is to plot the price series on a chart and watch for patterns. Another common approach is to search for trends by comparing the latest price with a moving average of past prices.
Computers greatly facilitate the use of technical price forecasting methods.
A number of firms sell charts of daily commodity futures prices, and many books on technical analysis are available. However, the usefulness of technical analysis for commodity price forecasting is a subject of continuing debate. Because many technical price forecasting methods rely on the application of individual judgment, their performance is difficult to evaluate. The wide use of technical analysis by traders may itself introduce patterns in price movements. Any proposed price forecasting method or trading rule should be examined critically before it is used.