Technical Analysis of the Financial Markets

Technical analysis is the study of price movements and market trends using charts, volume, and statistical indicators. Instead of focusing on a company’s balance sheet or financial statements, technical analysis examines market behavior and tracks how prices and volume interact to signal future potential moves.

By identifying patterns and analyzing momentum, technical analysts can better anticipate market shifts and make data-driven investment decisions. Whether you’re a day trader or a long-term investor, technical analysis offers a structured approach to navigating the market with confidence.

Fundamental Analysis vs. Technical Analysis

When evaluating investments, two primary approaches dominate: fundamental analysis and technical analysis. These two tools take very different paths to generating market insights and understanding how they differ is key to building a well-rounded strategy.

• Fundamental Analysis: This approach digs deep into a company’s financial health and long-term prospects. Analysts examine metrics such as revenue growth, profit margins, earnings reports, debt levels, and industry trends. External factors like interest rates, inflation, and overall market conditions are also considered. The goal is to determine a stock’s intrinsic value—a fair estimate of what the company is worth—so you can spot when it’s undervalued (a potential buying opportunity) or overvalued (a signal to be cautious). Fundamental analysis is often favored by long-term investors who prioritize value and stability.

• Technical Analysis: Rather than evaluating a company’s balance sheet or income statement, technical analysis focuses on the market itself, including price, volume, and patterns. By studying historical charts, trendlines, and indicators, technical analysts look for repeatable behaviors that can help forecast future price movements. This method is rooted in the idea that markets move in patterns influenced by human psychology—fear, greed, and momentum. Technical analysis is particularly valuable for determining when to buy or sell, making it popular among traders and active investors seeking to capitalize on shorter-term price swings.

For many traders and investors, technical analysis isn’t just a complement to fundamentals—it’s the primary lens through which they view the market. Fundamentals may highlight what to trade, but technicals answer the more critical question: when. This timing advantage makes technical analysis indispensable for those seeking to capture opportunities as they unfold, rather than reacting after the fact.

Chart Patterns and Technical Analysis

Recognizing patterns is essential in life and in the market. Just as our brains are wired to spot routines and predict outcomes in everyday situations, technical analysis applies the same principle to price behavior. By identifying repeatable formations on charts, traders can anticipate potential price movements and make decisions that are structured, disciplined, and backed by data rather than emotion.

At the core of this approach are chart patterns, which act as a visual roadmap of market psychology. These patterns form because human behavior—fear, greed, optimism, and hesitation—tends to repeat itself over time. When traders learn to recognize these formations, they gain the ability to interpret shifts in supply and demand dynamics before they fully play out in price action.

Some of the most widely used patterns include:

• Head-and-Shoulders: Signals a potential reversal after a trend has run its course. When identified early, it helps traders prepare for a shift in direction before it becomes obvious to the broader market.

• Double Tops and Bottoms: Indicate strong areas of resistance or support. These patterns help traders anticipate whether a price is likely to bounce or break through a key level.

• Flags and Pennants: Suggest periods of consolidation within a trend, often preceding a continuation of the current direction. These are particularly valuable for timing entries during strong momentum moves.

The true strength of technical analysis lies not just in spotting these patterns, but in combining them with context—volume analysis, trendlines, and momentum indicators—to build a complete picture. This layered approach allows investors to act with confidence, making decisions grounded in historical evidence and market behavior, rather than speculation or gut instinct.

By mastering these formations and understanding the psychology behind them, traders can shift from reacting to market movements to anticipating them—transforming uncertainty into opportunity.

Example: NVDA Technical Analysis

A great example of technical analysis in action is Carter Worth’s breakdown of NVIDIA (NVDA) — a stock that has been the focus of countless investor questions and market conversations over the past year. With its explosive growth and ongoing volatility, NVDA has become a favorite among traders looking for high-potential opportunities, but also one that requires a disciplined approach to analyze effectively.

Using trendlines, price channels, and volume analysis, Carter demonstrated how NVDA’s chart signaled multiple phases of consolidation followed by strong breakout moves. By identifying key levels of support and resistance, as well as patterns forming in real time, his analysis offered investors a clear roadmap of potential entry and exit points.

This disciplined, pattern-driven methodology showcases the strength of technical analysis in high-growth, fast-moving stocks. While fundamentals can explain why a stock like NVDA is growing — driven by factors such as AI demand and data center expansion — technicals help traders answer the more critical question: when to buy, hold, or sell.

For investors navigating a stock as closely watched and actively traded as NVIDIA, Carter’s approach highlights how reliable chart reading can turn market noise into actionable insight.

Technical Analysis Course Videos

Carter Worth shares his deep expertise through in-depth videos exclusively available to Worth Charting subscribers. These timely updates break down real-world market setups, analyze specific stocks, and highlight actionable chart patterns as they develop. By explaining key levels, trend dynamics, and potential scenarios, Carter gives subscribers the insight needed to make confident, well-timed decisions in fast-moving markets.

In addition to subscriber-only content, Worth Charting also offers free technical analysis course videos on its website. These tutorials take a step back from individual stock coverage and dive into Carter’s technique and methodology — explaining the principles of technical analysis, the importance of pattern recognition, and how to apply these concepts consistently. Whether you’re a beginner or an experienced trader looking to refine your skills, these videos provide a clear foundation for understanding Carter’s disciplined, pattern-driven approach.

Take Your Analysis Further

Unlock detailed market insights, expert commentary, and actionable strategies with Worth Charting.
Subscribers gain access to Carter Worth’s exclusive technical analysis, educational videos, and in-depth market breakdowns to help you navigate the financial markets like a pro.

Subscribe today and gain the edge you need to make confident, informed investment decisions.