Technical analysis is not an exact science... Even more... we may say that when it comes to trading on the market and forecasting future price movement, nothing an exact science. And when it is not an exact science a lot of depends on the experience. Not all technical indicators, studies and theories work the same for every instrument traded and for each trader. One indicator may have excellent performance and buy and sell signals while another indicator may simply not work for you at all. It takes a lot of experience to master trading and it is up to each individual trader to find those indicators and develop those strategies that would fit his or her specific investments needs.
There are various theories and strategies as when to buy and when to sell a stock. Many professional and institutional investor only buys when there is a SALE going on, especially during the panic sell off by grabbing from the uninformed crowd stocks at discount price. As a rule these institutional traders have enough money, and even the stock decline further, they will be buying again at even cheaper price. Then they wait and in a month or two when the stocks generally rebounds they are already in the market waiting to sell at profit when new fools who come into the market attracted by rising prices buy the stocks at the all time high.
Indicators and charts are the core of technical analysis. However, as was already mentioned above, technical analysis is an art which require a lot of experience. It it would be easy then everyone would be a winner. There are hundreds of indicators and many of them could be used in the market successfully. The art is to spot the reversal before anyone else does, plus be always on the alert and adjust your trading in time to changes in the market behavior, plus not to get into emotion and not to lose what was previously earned.
The main purpose of technical analysts is to identify current price trends in stock markets and to made an attempt to forecast most possible future patterns. Technicians use various tools and methods, indicators and charts, price and volume data. Many technical analysts also analyze and follow investors' psychology (use sentiment indicators).
The final step technicians is to build trading system based on the forecast of price future trend. If trading system does not deliver stable and profitable results over the long run then then technical analysis failed to provide the system with liable results.
There are number of popular schools of technical analysis. As an example: Dow Theory, Fibonacci numbers, Pivot Points, candlestick charting, Elliott wave theory, volume analysis, breadth analysis and etc. But, in reality majority of the investors use a combination of schools which could greatly differ from trader to trader.
Very often technical analysis is compared to fundamental analysts that study of economic factors influencing stock and markets trends. Majority of traders use technical or fundamental analysis, while some investors use combination of both types to make trading decisions.
"The trend is your friend" is the logo of technical analysis.