It can be of great importance to know exactly what stage the market is in. You'll find that different strategies have varying degrees of success depending upon where the market is in a bigger time frame. Analysis of a strong uptrending market will show that basing patterns are frequently broken to the upside forming a "stair-step" pattern. This is a strong chart pattern in a strong market. However the same trader who continues to use this pattern without recognizing that the market has now lost momentum and is in a basing phase will not have the same success. Traders will find that breakouts do not carry as far and that many breakouts start to fail and become losses.

Price

Price is Everything.

Technical analysis is the study of historical price performance in an effort to predict future price performance. Price is the only accurate measure of investor sentiment -- it is the intersection of supply and demand. Investor sentiment is at least and possibly a more important determinant of price than fundamental factors like earnings, revenues and profit margins.

Technical analysis is the study of price and the factors that determine price and thus Fundamental analysis does play a role in shaping investors perception of value. The technical analyst believes that all perceptions of value are encapsulated in one statistic, price.

There are three important principles that govern all technical analysis. First, price is NOT random, second, price anticipates fundamental change and third, the relationship between price and time is linear.

                                                                                                »   Accumulation/Distribution

Trend

In its simplest form, a security's price can be doing only one of three things: trending up, trending down or trading in a range. An uptrend is established when a security forms a series of higher highs and higher lows. A downtrend is established when a security forms a series of lower lows and lower highs. A trading range is established if a security cannot establish an uptrend or downtrend. If a security is in a trading range, an uptrend is started when the upper boundary of the range is broken and a downtrend begins when the lower boundary is broken.

                                                                                                  »   Support and Resistance   

Volume.

Volume should follow the trend.

In a bullish phase volume should expand on rallies and contract on declines. In a bearish phase volume should expand on declines and contract on rallies.

In an uptrend an increasing number of buyers are required to thwart pent-up and natural selling pressures. The higher a stock moves in price the more likely it is that those that bought the stock at lower prices will want to sell. For the rally to continue these shares need to be absorbed by new buyers. If price advances quickly buyers may step back creating temporary weakness but these periods should be characterized by weak volume if the trend is strong.

In a bearish trend, when the outlook is poor, volume should expand on declines because buyers are overwhelmed by sellers. If the stock sinks quickly some sellers will refuse to sell, choosing to wait for a small rally in price. This temporary absence of sellers creates a small vacuum that should lead to a light volume rally. When the stock rallies sufficiently sellers that failed to exit ahead of the first major decline begin selling and once again volume should expand.

                                                                                                               »   Volume in trends


Moving averages

Moving averages are one of the most popular and easy to use tools available to the technical analyst. They smooth a data series and make it easier to spot trends, something that is especially helpful in volatile markets. They also form the building blocks for many other technical indicators and overlays.

The two most popular types of moving averages are the Simple Moving Average (SMA) and the Exponential Moving Average (EMA).

Moving averages smooth out a data series and make it easier to identify the direction of the trend. Because past price data is used to form moving averages, they are considered lagging, or trend following, indicators. Moving averages will not predict a change in trend, but rather follow behind the current trend. Therefore, they are best suited for trend identification and trend following purposes, not for prediction.

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