Another tenet is that history repeats itself, such that markets move in fairly predictable, or at least quantifiable, patterns. These patterns, generated by price movement, are called signals. The goal in technical analysis is to uncover the current market's signals by examining past market signals. Another tenet is that prices move in trends. Technicians typically do not believe that price fluctuations are random and unpredictable.
Prices can move in one of three directions, up, down or sideways.
Once a trend in any of these directions is in effect it usually will persist. The market trend is simply the direction of market prices, a concept which is absolutely essential to the success of technical analysis. It is the direction of these peaks and troughs that constitutes the market trend. Technical analysis attempts to determine the strength and direction of the trend and the change in the trend direction. The building blocks of any technical analysis system include price charts and technical indicators, which are merely mathematical representations of market patterns and behaviors.