Final answer:
Technical analysis is a method used in finance that evaluates securities by analyzing statistics generated by market activity, such as past prices and volume, to predict future price movements.
Step-by-step explanation:
Technical analysis focuses on using past market data, primarily price and volume, to forecast future price movements of securities such as stocks. This practice is rooted in the belief that stock prices are determined by the collective expectations of investors about a company's future performance. Rather than looking at fundamental aspects of a company such as earnings, technical analysis delves into charts and statistical indicators to predict shifts in stock prices based on changing market sentiment and historical trends. Analysts and investors who master this technique can gain an edge by identifying securities that are presently undervalued but have the potential to rise in value, becoming what some describe as a 'shining star.'