Law of demand & supply rules the movement of price in any market.

Based on 3 premises:

1. Market action discounts everything.

Anything that can possibly affect market price, is reflected in the market price. This means that study of market price is all that is required. Technical analysis can cover the fundamentals but the vice-versa is not true.

1. Prices move in trends.
2. History repeats itself.

Chartists vs Analysts. Difference between market analysis for futures and for stocks.

Criticisms:

1. Self fulfilling prophecy.
2. Random walk theory.

Long term charts(20 year monthly, 5 year weekly) should be used to get a larger perspective of the market. They can be used to identify key trendlines, primary trend.

Dow theory

1. Markets discount everything. Any possible factor that can affect the price is reflected in the price.
2. There are three major trends:

Primary: Last for an year or more.

Secondary: Last from 3 weeks to 3 months. They are some corrections in the primarytrend. They might correct up to 1/3rd, 2/3rd or even half of price.

Minor: This trend represents the minor fluctuations in the intermediate trend. They last for less than 2 weeks.

The analogy of tides, waves and ripples on waves can be used.