Technical Analysis Assumptions:
Technical analysts base their buy and sell decisions on the charts they prepare of recorded financial data
1. Market value is determined by the interaction of supply and demand.
2. Supply and demand are governed by numerous factors, both rational and irrational.
3. Security prices tend to move in trends that persist for an appreciable length of time, despite minor fluctuations in the market.
4. Changes in a trend are caused by shifts in supply and demand.
5. Shifts in supply and demand, no matter why they occur, can be detected sooner or later in charts of market transactions
6. Some chart patterns tend to repeat themselves.