In contrast, technical analysis makes little to no use of fundamental commodity data, but instead relies on technical indicators about the price action in the market to project prices. This chapter discusses some of the basic elements of technical analysis which can help make hedging and forward pricing decisions. One of the most basic pieces of information used in technical analysis is the bar chart. Bar charts give you a seismograph to measure the hidden forces going on in a market. Since price resolves all market pressures, no market moving information can go unhidden in a price chart.
Many traders buy and sell based totally on charts.
By examining bar charts, traders hope to pick-out significant market trends, look for market turning points, and develop price forecasts. This type of analysis is referred to as technical analysis. This is in contrast to fundamental analysis which utilizes supply and demand information to forecast price direction. Just as a good carpenter utilizes a wide variety of tools to master his craft, we too rely on a wide array of both technical and fundamental methods to develop our price projections and make marketing decisions. For technical analysts, the bar chart is probably the most valued tool for commodity futures trading.