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THE MARKET WHISPERER 12 3

Chart Formations: Mirrors of
Fear and Greed

The Basis

Technical analysis is a simple technique as long we don’t try to make it
complicated. Technical analysis, unlike fundamental analysis, ignores a
company’s value and focuses wholly and solely on the movement of its
price, which is an outcome of supply and demand. The main influences on
supply and demand are the human emotions of fear and greed, and market
players take advantage of both.

Human emotions can be analyzed psychologically. Technical analysis is
nothing more than a mirror of human psychology. Using technical analysis
cleverly lets the trader predict buyers’ and sellers’ moves and take an
educated guess at price direction on the basis of its past behavior.