Final answer:
Technical analysis studies past trends in stock prices and volume to forecast future movements, but unpredictability due to future expectations and news events remains a challenge.
Step-by-step explanation:
The type of analysis that focuses on studying past trends and patterns in a stock's price and volume history is known as technical analysis. This approach anticipates future stock price movements based on historical data, although it can be challenging due to the unpredictable nature of the market. Stocks tend to follow what is known as a "random walk with a trend", meaning that while daily price movements are unpredictable, the overall trajectory over time is upward.
It is crucial to recognize that stock prices are influenced by future expectations of profits, and these are subject to change due to unforeseen news and events. Consequently, analysts who engage in stock predictions must consider not only current perceptions of a company's prospects but also how these perceptions might shift unexpectedly.