The oldest theory in this technical analysis holds that price can fully reflect all existing information, and the knowledge available to participants (traders, analysts, portfolio managers, market strategists and investors) has been transformed in pricing behavior. Currency fluctuations caused by unpredictable events such as providence will be brought into the overall trend. The purpose of technical analysis is to study price behavior and draw conclusions about future trends.

The Dow Jones theory, which focuses on the average line of the stock market, holds that prices can be interpreted as waves with three amplitude types-dominant, auxiliary and secondary. The relevant time period ranges from less than 3 weeks to more than 1 year. This theory can also explain the flyback mode. Anti-galloping mode is a normal stage when the trend slows down the movement speed, and the levels of this anti-galloping mode are 33%, 50% and 66%.

(2) Fibonacci's prevention of dancing phenomenon

This is a widely used phenomenon group, based on the numerical ratio produced by natural and man-made phenomena. This phenomenon is used to judge the degree of rebound or backtracking between the price and its potential trend. The most important levels of the phenomenon are 38.2%, 50% and 6 1.8%.

(3) Elliot wave

Eliot scholars classify price trends through fixed wave patterns. These models can represent future indicators and reversals. The wave moving in the same direction as the trend is called push wave, and the wave moving in the opposite direction is called correction wave. Eliot's wave theory divides the push wave and the correction wave into five kinds and three main trends respectively. These eight trends constitute a complete wave cycle. The time span ranges from 15 minutes to decades.

The challenge of Eliot's wave theory is that 1 wave period can be composed of eight sub-wave periods, and these waves can be further divided into push waves and correction waves. Therefore, the key to Eliot's waves is to be able to identify the environment in which a particular wave is located. Elliott also used Fibonacci's reversal phenomenon to predict the peaks and valleys of future wave periods.

Three hypotheses

First, market behavior is all-encompassing.

"All-encompassing market behavior" is the cornerstone of technical analysis. Any factors that may affect the prices of stock and futures markets-basic, political, psychological or other-are actually reflected in their prices, and price changes must reflect the relationship between supply and demand. It is enough for technical analysts to study only price changes, not the internal factors that cause price changes. The tools used by technical analysts, such as charts, are effective because they describe the behavior of market participants truthfully, so that we can grasp the reaction of market participants to the market and thus grasp the future trend of the market.

Second, prices evolve in a trend manner.

The concept of "trend" is the core of technical analysis. The market does have a trend to follow, and the current market trend has potential energy or inertia. Only at the end of the trend will it turn around and reverse. The whole significance of studying the price chart is to identify the early form of the trend development, so as to comply with the trend for trading. In fact, most technical analysis theories are essentially in line with the trend, that is, judging and following the established trend of the market.

Third, history will repeat itself.

Technical analysis and market behavior are related to people's psychology. Securities investment is only an act of pursuing profits, and this purpose will not change yesterday, today or tomorrow. In this psychological state, the market trading behavior tends to a certain pattern, which leads to the repetition of history, that is, the price trends and changes that have appeared in the past will continue to appear in the future. Since these chart types have performed well in the past, we assume that they will perform equally well in the future. Investors can predict the future price trend by analyzing the past price change data.