Theoretical basis of technical analysis of spot crude oil?
According to the red Finance Research Institute: the theoretical basis for the analysis of spot crude oil investment technology is based on three reasonable assumptions: market behavior inclusive digestion everything, the trend of price evolution, the history will repeat itself. This paper will analyze these three hypotheses.
Hypothesis two: prices evolve in a trendThe concept of "trend" is the core of technical analysis. The significance of the study of the crude oil investment platform chart is to reveal it in a timely and accurate manner in the early development of a trend, so as to achieve the purpose of trading along the trend. As a matter of fact, technical analysis is to conform to the trend, that is, to judge and follow the trend of the future.From the "price to the trend of the evolution of the way," it can be inferred that, for an existing trend, the next step is often in the direction of the existing trend continues to evolve, and the possibility of turning back is much smaller. This, of course, is the application of Newton's law of inertia. It can also be said that the current trend will continue until the reverse. Although this sentence is almost the same language repeatedly, but here to emphasize is: unswervingly adhere to a trend, until there is a sign of reverse.
As a result of the constitution, since all factors affecting the market price will eventually be reflected in the market price, then the price is enough. In fact, the chart analyst simply through the price chart and a large number of auxiliary technical indicators, let the market itself to reveal its most likely trend, rather than the analyst with his shrewd conquest of the market. All the technical tools discussed in the future are merely an aid to market analysis. Of course, know the market fluctuation of technical school must have a reason, but they think that these factors for the analysis and prediction of no importance.
Hypothesis 1: market behavior inclusive digestionAn important point in the foundation of technical analysis is that market behavior is inclusive of digestion. Unless you fully understand and accept the premise, it is meaningless to learn technical analysis. Technical analysts believe that any factor that can affect the price of a commodity is actually reflected in its price. So, what we have to do is to study the price changes. The real meaning of this premise is that the price change must reflect the relationship between supply and demand, if the demand is greater than supply, prices will rise; if the supply is too much demand, prices will fall. The law of supply and demand is the starting point of all economic forecasting methods. Turn it upside down, then, as long as prices rise, whether it is because of what specific reason, demand exceeds supply, from the economic base that must be valued; if prices fall, from the economic base that will be bearish. In the final analysis, the technical analyst simply studies the fundamentals indirectly through price changes.Pie chart usually ignore the causes of price fluctuations, and the formation of price trends in the early or when the market is at a critical turning point, people often did not know exactly why the market is so strange action. It is precisely in this crucial moment, technical analysts often a phrase. So, with your increasingly rich experience in the market, the more you encounter this situation, the market behavior inclusive digestion everything, this sentence is increasingly irresistible charm.
