As a way of investment analysis, chart analysis is based on three assumptions, namely:
The price reflects everything in the market;
2. The price will advance in a certain direction;
3. History will repeat itself.
According to the first hypothesis, technical analysis does not need to pay attention to why the price changes, but only to how the price changes.
The second hypothesis is to borrow the first law of Newton's mechanics, "Without any external influence, an object will move at a constant speed in a certain direction", and the price, like a tangible object, will move in a certain direction until it is affected by external factors. History will repeat itself, which reflects the psychological reaction of market participants.
fundamental principle
The price is determined by the relationship between supply and demand;
The relationship between supply and demand of commodities is determined by various reasonable and unreasonable factors;
3. Ignoring the small price fluctuation, the price change will show a certain trend in a period of time;
The changing trend of price will change with the change of market supply and demand. The basic method of technical analysis is to examine future or potential investment opportunities according to the track of past investment behavior.
In the foreign exchange market, charts commonly used for chart analysis include K-line chart, trend line, moving average line and graphic analysis.