Technical analysis relies on comparing the present price trend to prior trends and uses price charts to identify potential moves. Choose the best description:

• A. True; it relies on price trends and chart patterns to predict near-term moves.
• B. False; it relies on earnings reports and assets.
• C. True; but only for long-term projections.
• D. False; it uses macroeconomic indicators exclusively.

Answer: (A)

Technical analysis focuses on price action, comparing the current price trend to past movements and using price charts to spot potential moves. The best description is that this approach is true and aims to predict near-term moves based on price trends and chart patterns. Chart patterns, trendlines, and volume are all used to interpret likely short- to mid-term direction, rather than evaluating a company’s fundamentals.

Why the other ideas don’t fit: earnings reports, assets, and fundamentals drive long-term value, not the price-action approach of technical analysis. Saying it’s only for long-term projections misses that traders use chart patterns to forecast short-term moves as well. Relying exclusively on macroeconomic indicators ignores the core tool of technical analysis—price data and patterns on charts.