Assumption of Technical Analysis:
The assumption is:
- The market value of a security is related to demand and supply factors operating in the market.
- There are both rational and irrational factors which surrounds the supply and demand factors of a security.
- Security prices behaves in a manner that their movement is continuous in a particular direction for some length of time.
- The movement of security prices if going upward will continue to do so for a while barring certain minor fluctuation in stocks prices.
- Technical analyst believe that their method is simple and gives an investor a bird’s eye view on the future of the security price measuring the past moves of prices.
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