Technical Analyst

What is a technical analyst?

A technical analyst (also called a chartist or market technician) evaluates securities by studying past market prices, trading volume, and chart patterns to identify trends and trading opportunities. Rather than focusing on a security’s intrinsic fundamentals, technical analysts infer the balance of buyers and sellers from price action and use that information to forecast likely short- to medium-term movements.

Key takeaways

• Technical analysts use price charts, volume, and technical indicators to identify patterns and signals.
• Their approach emphasizes market sentiment and supply-and-demand dynamics over fundamental valuation.
• Common professional credentials include the Chartered Market Technician (CMT) and, for broader investment roles, the CFA; licensing may be required depending on employer and duties.

How technical analysis works

Technical analysis is based on the idea that historical price behavior and trading activity reflect all relevant information and investor psychology. Practitioners use:

• Price charts (candlesticks, bars, line charts)
• Volume analysis
• Technical indicators (moving averages, RSI, MACD, Bollinger Bands, etc.)
• Chart patterns (head-and-shoulders, triangles, support/resistance levels)
• Statistical and rules-based trading systems to generate and confirm signals

Most analysts combine several indicators and techniques to confirm a hypothesis before acting. There is no single universally accepted method; experienced technicians typically develop a personalized toolkit and trading rules over time.

Tools and work environment

Technical analysts often work on the buy side (asset managers, hedge funds) or sell side (brokerages, research firms) and may also trade independently. Tools commonly used include brokerage-provided charting platforms and specialized third-party software that offer advanced pattern recognition and backtesting capabilities. Many technicians engage in short-term trading and intraday strategies, while others apply technical methods to longer-term investing.

Certification and licensing

Requirements vary by role and employer. Key credentials and regulatory points include:

• Licensing: Certain positions require FINRA or equivalent licensing, typically obtained through employer sponsorship.
• Chartered Market Technician (CMT): The leading professional designation specific to technical analysis; emphasizes market behavior, quantitative methods, and rules-based system design.
• Chartered Financial Analyst (CFA): Broader investment credential that some technical analysts hold to complement their technical expertise.
• Other associations: National and international technical analyst organizations offer education, resources, and recognition.

Earning credentials like the CMT demonstrates mastery of technical analysis concepts and systematic approaches to market risk and trading.

Typical responsibilities

Technical analysts may be responsible for:

• Monitoring and interpreting price action and volume to generate trading ideas
• Developing, testing, and implementing quantitative trading systems and indicators
• Preparing and presenting technical research internally (trading desks, portfolio managers) and externally (clients, seminars)
• Collaborating with fundamental analysts to produce integrated research reports
• Managing risk and position sizing according to rules-based strategies

Conclusion

Technical analysts apply charting techniques, indicators, and systematic trading rules to read market sentiment and predict price movements. While their methods differ from fundamental analysis, many firms combine both approaches to produce more comprehensive investment research. Professional certifications and practical experience are central to developing reliable methods and credibility in the field.