Technical analysis is the study of the markets’ behavior using diagrams so as to predict their future actions. It is the study of the result and not of the cause, so the investor should focus on "What's Happening" and not on "Why It Happens". Technical Analysis is governed by the following basic principles:
• The price includes all available information, expectations, and emotions.
• We can identify a trend in the price which we can spot early and take advantage of it.
• History is repeating itself, which means that investors behave in the same way they did in similar situations in the past.
• The price depends on the law of supply and demand, as determined by the expectations of buyers and sellers. By using diagrams, we try to find out when the above balance has changed.