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e the prevailing trend as characterized by a series of waves with obvious peaks and troughs. It is the direction of these peaks and troughs that constitutes the market trend. Technical analysis attempts to determine the strength and direction of the trend and the change in the trend direction. 10 The building blocks of any technical analysis system include ?Price charts and ?Technical indicators, ?Both are merely mathematical representations of market patterns and behaviors. ?Forecasting models usually include at least one type of indicator in relation to a particular type of price chart and look for divergence or continuity between indicators and price to determine the validity of a trend. 11 Some of the price charts used in technical analysis: ?Chart patterns are hills and valleys, shapes and curves that develop over time on a chart which often indicate changes in price direction. ?Candlestick pattern are like bar charts patterns. It can be used to forecast the market. Because of their colored bodies, candlesticks visually represent greater detail in their chart patterns than bar charts. ?Point and figure patterns are essentially the same patterns found in bar charts but transposed on charts with no time scale 12 13 Head and Shoulders are a reversal pattern consisting of three price peaks, the middle being the largest. It39。s potential in the opposite direction is measured by the distance from top of middle (head) to the base (neckline). This price distance is extrapolated from neckline at the point of breakout. 14 Double tops and double bottoms are reversal patterns consisting of two peaks with a price valley. T