Technical analysis is based on three assumptions:
Market action discount everything :
This principle means that all the factors that affect the movement of the market, whether economic, political or otherwise summed up in price movement, and therefore Studies of price movement sings on the follow-up of the reasons behind the price movements.
Not all news of an economic or political unable to move the price that you can follow and predict, for example, if you decided one of the officials in the country buy a large number of the shares of Mobinil at the Egyptian Stock Exchange, fundamental analyst can not continue or predict such an important event as a technical analyst can Note the presence of buying the shares of Mobinil follow through charts (charts) regardless of the source of procurement.
Prices move in trends :
This principle means that prices tend to move in trends and trend continues for long periods of time before they changed, and this is something logical economic cycles lasts a long time, between recovery and recession, so Most cases stretching price trends for long periods of time.
History repeats itself :
Attract capital markets investors of all categories, and controlled by feelings of greed to obtain profits, and fear of loss, and those emotions of greed and fear translated on the chart in the form of models can be classified and identified, and repeated these sentiments over time.
Since the behavior of investors of greed and fear, as happened in the past will happen in the future, the technical models resulting behavior as happened in the past will occur in the future, so history repeats itself.
No comments:
Post a Comment