Underlying assumptions of of technical analysis 
•Technical analyst base trading decisions on examination   of prior price and volume of data to determine past market trends from which they predict future behavior of market as a whole and for individual securities. Certain aspects of these assumptions are controversial, leading fundamental analysis and advocates of efficient markets to question their validity. We have initialed those aspects on our list…..
•1-The market value of any goods or services is determine solely by the interaction of supply and demand.
•2- supply and demand are governed by numerous rational or irrational factors. included these factors are those economic variables relied on the fundamental analyst as well as opinions, moods, and guesses. The market weights all factors continually and automatically.
•3- disregarding minor fluctuations, the price for individual securities and the overall value of the market tend to move in trends,which persist for appreciable length of time.
•4-prevailing trends change in reaction to shift in supply and demand relationships. The shifts, no matter why they occur, can be detected sooner or later in the action of the market itself.

Advantages of technical analysis
•Most technical analyst admit that a fundamental analyst with a good information, good analytical ability, and a keen sense of information requires qualification.
•According to technical analysts, it is important to recognize that the fundamental analysts can experience superior return only if they obtain new information before other investors and process it correctly and quickly.
•The technical analysts claim that major adv of there is that it is not heavily dependent on financial statements, the major source of information about the past performance of the firm or industry.
•The technician contends that there are several problems with accounting statements:

1-the lack of great deal of info needed by security analysts, such as a info related to sales, earning, and capital utilized by product line and customers.

  PPL Weekly Historical Stock Prices

2-according to GAAP corporations may choose among several procedures for reporting expenses, assets, or liabilities.

3- many psychological factors do not appear in financial statements. Investor attitude could be important when investors become concerned about the risk from restrictions or taxes on products such as a tobacco or alcohol and political risk .

CHALLENGES to Technical trading Rules 

•Those who doubt the value of technical analysis for investment decisions question the usefulness of this technique in two areas.
•1- challenges on basic assumptions
•2- challenges on specific technical trading rule
•The major challenges to technical analyst is based on the results of empirical tests of the efficient market hypotheses. The technical trading rules to generate superior risk adjustment after taking account of transaction cost, the market would have to be slow to adjust prices to the arrival of new information; that is , it would have to be inefficient.
•An obvious challenge to technical analysis is that the past price  pattern or relationships b/w specific market variables and stock prices may not be repeated. The result, a technique that previously work might miss subsequent market turns. This possibly leads most technicians to follow several trading rules and to seek consensus of all of them to predict to future market pattern.

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