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The basis for all Technical Analysis is MATHMATICS.

What Does Technical Analysis Mean?
A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.
Investopedia explains Technical Analysis
Technical analysts believe that the historical performance of stocks and markets are indications of future performance.

In a shopping mall, a fundamental analyst would go to each store, study the product that was being sold, and then decide whether to buy it or not. By contrast, a technical analyst would sit on a bench in the mall and watch people go into the stores. Disregarding the intrinsic value of the products in the store, the technical analyst's decision would be based on the patterns or activity of people going into each store

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Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is "likely" to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time.

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Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is "likely" to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time.

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The basis of technical analysis can be summarized by three principles:

1. Prices fluctuate and move in patterns and trends that can be modeled using mathematical formulas. As such, technical analysis uses mathematical equations to uncover the patterns of market behaviors. For many of the already identified market patterns, there is a high probability that they will produce the expected results, and that these patterns tend to repeat themselves on a regular basis.

2. Technical analysis is only concerned with the market action (i.e. price movement and volume) and not the factors that drove the market to change. That is, the price movements are a reflection of everything that is known to the market that could have impact on the market.

3. History tends to repeat itself. That is, although the market is made up of numbers, it is traded by people with emotions and predictable behaviors. Beyond the analytical aspects of trading, there is the human psychology that has changed little over time. Thus, the same chart patterns that were identified and categorized over a century ago are still valid to this day; and the same patterns are repeated over and over again throughout the history of trading.

Source: http://www.trade.newsmonster.org

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