| It's common for those who invest in the stock | | | | important skill to have. |
| market to stand around with their friends and | | | | As part of technical analysis, chart analysis is the |
| colleagues talking about what they would do if they | | | | practice of looking for patterns and trends in the |
| could only go back into the future a few days, | | | | price movements of current stocks. These |
| weeks or months, and buy or sell a certain stock. | | | | movements are so common they have labels that |
| Many traders wish that they could develop the ability | | | | refer to their motion, including up trends, downtrends, |
| to see into the future, but unfortunately, no one has | | | | gaps and reversals. To guide their analysis of stock |
| been able to claim this skill just yet. Although it's not | | | | market charts, technical analysts rely on three |
| nearly as useful as seeing the future before it | | | | assumptions, the most important of which is that |
| happens, chart analysis can be a useful tool for | | | | history tends to repeat itself, even in the stock |
| making education predictions about the way a certain | | | | market. Looking for patterns and trends is a great |
| stock is likely to behave in the future. | | | | way to use information observed in the past about a |
| Those who are new to the concept of chart analysis | | | | certain stock to predict the way that the stock will |
| should know that it one of the most essential | | | | behave again in the future. |
| elements of technical analysis, which is the practice | | | | As you might have suspected, there are dozens of |
| of evaluating price movements over time in an effort | | | | different patterns that you can look for during your |
| to predict whether the next price movement will be | | | | own practice of chart analysis. Even though this |
| positive or negative. Prices of stock on the market | | | | might seem like an overwhelming amount of patterns |
| are constantly moving, quickly and slowly, in both | | | | to juggle, it's important to remember that each of |
| directions. Because making a profit depends on | | | | them have been spotted over and over in the |
| choosing the right time to buy a stock, so that it will | | | | market. This means that when you become familiar |
| start earning you dividends or rise to a price where | | | | with a pattern and spot it in the charts, you'll have a |
| you can sell it for a gain, knowing whether a stock is | | | | very solid idea of what that stock's next move is |
| likely to increase or decrease in value is a very | | | | going to be. |