This approach to price prediction is based on the premise that price movements follow consistent historical patterns. Those who engage in technical analysis study charts or statistics that measure price movements and try to find repetitive patterns. They start with the basic bar chart that plots high, low and closing prices of a futures contract over the life of the contract.
Current activity is watched carefully for familiar patterns of price movement.
The uptrend, downtrend and sideways trend patterns experienced in the past can alert a chartist to such a movement forming in the current market. These numbers are used to assess the strength of a trend. As the days during the life of a futures contract pass, the chartist watches for price reversal patterns and price continuation patterns. Complex strategies involve patterns such as the head and shoulders and symmetrical triangle . Don't be put off.