The stock market and stocks are unpredictable. If there is nothing else that can be guaranteed about stocks, or the stock market, it can be guaranteed that there are no guarantees.
No amount of studying, training, or experience can make a human being, or a computer for that matter, consistently predict changes in the market or stocks. The stock market is essentially driven by human behavior and human emotion, both of which are largely unpredictable. One can anticipate, but cannot predict. Also, no one can predict world and economic events, or the human reactions to them. Similarly, corporate events and news can be inaccurate or intentionally misleading and therefore should not be trusted.
However, stocks and markets often continue in trends that can last weeks, months or sometimes even years. When placed on a price chart stocks, and the stock market, form identifiable patterns. This is mainly because humans react to patterns and actions in repeatable ways. For example, people often trade off of support or resistance levels or at new highs or lows, causing a buying or selling wave to occur at such areas. Similar behavior can be seen at round numbers, or at previous highs or lows as traders anticipate these actions and reactions.
By understanding where and when these waves will occur, we can greatly increase our odds of anticipating the moves in the market, and as such our probability for stock trading success. That is known as technical analysis of the stock market, and that will be the focus of this blog, Learning Technical Analysis.
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