Technical Analysis of Stock Trends by Edwards and Magee is as close to the sacred book of technical analysis as it gets. In it, one can find such gems as:
1. The market value of a security is determined solely by the interaction of supply and demand.
2. Supply and demand are governed at any given moment by many hundreds of factors, some rational and some irrational. Information, opinions, moods, guesses (shrewd or otherwise) as to the future combine with blind necessities in this equation. No ordinary man can hope to grasp and weigh them all, but the market does this automatically.
3. Disregarding minor fluctuations, prices move in trends that persist for an appreciable length of time.
4. Changes in trend, which represent an important shift in the balance between supply and demand, however caused, are detectable sooner or later in the action of the market itself.
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