Three postulates of technical analysis

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Three postulates of technical analysis

Postby Gino_Romano » Wed Jul 14, 2010 11:28 am

The market considers everything. All of the factors influencing the price of economic, political or psychological, is taken into account by the market and included in the price. So all that is required to predict stock prices and currencies in the forex market - is to study the price chart.
Price movement trends. Tendency or trend - a fundamental in technical analysis. Because the price movement trends derive two corollaries.

The first one: the current trend will continue and will not reverse itself. This result is nothing like the first paraphrase of Newton's law of motion.

The second one: the current trend will continue for as long as the movement doesn?t start in the opposite direction.

History repeats itself. It makes sense to apply the graphical models of price changes, based on analysis of historical data, since the price change reflects a fairly stable psychology of the market crowd. And if in the past, these models work, there is every reason to believe that in future they will work, because they are based on human psychology, which over the years does not change.
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