: The central idea is that all known information—economic, political, or psychological—is already reflected in the price chart.
The text meticulously categorizes tools into distinct stages of market analysis: Dow Theory: : The central idea is that all known
Triangles (symmetrical, ascending, descending), flags, pennants, and wedges. Indicators & Oscillators: Moving Averages: They help confirm what the charts are showing
Indicators are math formulas based on price and volume. They help confirm what the charts are showing. They never do
"The math changes," Elias said, finally looking at his colleague. "But the people behind the math? They never do."
John J. Murphy’s insights remain relevant because they focus on human psychology, which never changes. While algorithms and high-frequency trading have speeded up market execution, the visual footprints left by buyers and sellers on charts look exactly the same today as they did decades ago.
Tools like the Relative Strength Index (RSI), Stochastic Oscillator, and Moving Average Convergence Divergence (MACD) are highlighted to evaluate market momentum and identify overbought or oversold conditions. 4. Volume and Open Interest