l Since its emergence in the 19th century, the technical analysis method has been continuously enriched, improved and developed, and has gradually formed a rather complex system. However, the theoretical basis supporting this system is the following three assumptions or Prerequisites:

ØMarket behavior is inclusive of everything.

ØPrices evolve in a trend manner.

ØHistory will repeat itself.

Market behavior is inclusive of everything

l "Market behavior is inclusive of everything" is the cornerstone of technical analysis.

lTechnical analysts believe that any factors that may affect the prices of stocks and futures markets - basic, political, psychological or other - are actually reflected in their prices, and price changes Must reflect supply and demand.

lIt is enough for technical analysts to only study price changes without having to study the internal factors that cause price changes.

lThe reason why tools such as charts used by technical analysts work is because these tools themselves faithfully describe the behavior of market participants, allowing us to grasp the reaction of market participants to the market, thereby Grasp the future trends of the market.

Price evolves in a trend way

lThe concept of "trend" is the core of technical analysis.

lTechnical analysts believe that the market does have trends to follow, and The current market trend has momentum or inertia, and only when it reaches the end of the trend will it turn around and reverse.

lThe whole point of studying price charts is to identify the early patterns of trend development. In order to trade in accordance with the trend, in fact, most technical analysis theories are essentially to follow the trend, that is, to determine and follow the established trend of the market.

History will repeat itself.

lTechnical analysis and market behavior are related to human psychology. Securities investment is just an act of pursuing profits. This purpose will not change whether it is yesterday, today or tomorrow.

lIn this case. Under the psychological state, market trading behavior will tend to a certain pattern, which will lead to the repetition of history, that is, the price trends and changes that have occurred in the past will continue to appear in the future.

l Because these chart patterns will continue to appear in the future. If it has performed well in the past, we assume it will perform equally well in the future. Investors can then analyze past price changes to predict future price trends.