"The best way to predict the future is to invent the future." Alan Kay, computer scientist.

Are we trying to predict the future or do we influence the future ourselves by means of our own decisions? Let the philosophers and mathematicians look for answers and start with something very practical - which current techniques and tools that are needed for the forecast can be applied for price fluctuations or market movements?

The role of the technical approach to analyze and forecast the trend development at the financial markets cannot be denied nor should it be underestimated. And this is valid for all markets, no matter whether it is about global equity markets, currencies, bonds, gold or oil. Therefore you may probably already know the terms we are using here.
 
Technical analysis can be defined as nothing else than studying the market fluctuations by means of chart techniques in order to predict future price trends. We need this to make the right decisions upon trading.
 
So we need to identify the trends in the early stages of market development in order to trade in the direction of these trends then. What allows us at all to talk about trend prediction? The following assumptions are fundamentally important:

1. The market fluctuation discounts everything.

2. Prices move in trends.

3. History recurs.

Practically, this means that each price fluctuation was influenced by all kind of diverse factors. This could either be political decisions, social-psychological reasons, economic or other reasons. The current market price reflects everything. The reasons why prices rise or fall, are of no interest to us as technical analysts or chartists, as those reasons do not matter to the forecast.
 
The markets’ movements seem to act coincidentally to those who do not know the rules of the market situations. These rules exist and they are visible. This allows us to speak about regular price movements – so called trends. It is important for the forecast that a trend will be more likely to continue his movement than reverse. This probability can be calculated.


And the third most important basic requirement for prediction is the principle of repetition - the key to understand the future lies in studying the past. Or - in other words - for a chartist the future is nothing but a repetition of the past, but with certain cycles. Chart techniques can help us to recognize and calculate this cycle. Below we will explain the most important ones.