For technical analysts, the art of trading starts with the chart.
Achart is a sequence of prices plotted vertically over a horizontal
time frame, with each individual price bar, or candle,
marking the open, high, low, and last price for a particular time
period: a week, a day, or an hour.
Charting and technical analysis overall are based on the
assumption that actual price action is more significant than the
information that has been reported to be the cause of that action.
We assume that all known market information already has been
deciphered by market participants and therefore is reflected in
the last price. We don’t doubt that fundamental information is
often the driving force behind price action, but speaking for
technicians, we know we will never have faster access to news
and economic releases than the financial institutions with which
we share the marketplace. If we can’t compete with them in that
regard, to be able to operate among them, we have to operate
from a different vantage point, which technical analysis provides.
This is not to say that price is always an accurate
reflection of underlying value. On the basis of the positioning
and emotions of market participants—that is, buyers and
51
3
For technical analysts, the art of trading starts with the chart.
Achart is a sequence of prices plotted vertically over a horizontal
time frame, with each individual price bar, or candle,
marking the open, high, low, and last price for a particular time
period: a week, a day, or an hour.
Charting and technical analysis overall are based on the
assumption that actual price action is more significant than the
information that has been reported to be the cause of that action.
We assume that all known market information already has been
deciphered by market participants and therefore is reflected in
the last price. We don’t doubt that fundamental information is
often the driving force behind price action, but speaking for
technicians, we know we will never have faster access to news
and economic releases than the financial institutions with which
we share the marketplace. If we can’t compete with them in that
regard, to be able to operate among them, we have to operate
from a different vantage point, which technical analysis provides.
This is not to say that price is always an accurate
reflection of underlying value. On the basis of the positioning
and emotions of market participants—that is, buyers and
51
3
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