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Technical Analysis Plain and Simple: Charting the Markets in Your Language, Third Edition by Michael N. Kahn - CMT

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5. Concepts

There are a few key concepts to understand before we can really dig into the charts. Fortunately, they are rooted in common sense.

What Is Really Going on to Form the Charts?

Patterns on the charts are not randomly generated apparitions. Although it is certainly true that computers can generate such shapes and wiggles, the patterns we see are formed when real people, acting in their individual self interests, buy and sell stocks, bonds, currencies, or commodities in the pursuit of financial gain. They act, that action is recorded, and the sum actions of all participants form the patterns we see. Period. There is no conspiracy and there is no randomness.

When information, such as a pending new product release or ...

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