Reversal Patterns by Melanie F. Bowman and Thom Hartle
Market prices, as one well-worn adage points out, are trapped in a two-dimensional world with little directional leeway. They are either climbing up, dropping down or moving sideways. And, the fact is, there is no refuting this simplistic truth.
Prices distill the complex interplay of supply and demand, the collective fear and bravado of sellers and buyers, and lay it out as up, down or sideways. The art of chart analysis lies in deducing whether a particular motion signifies that buyers' demand or sellers' supply is predominating.
Prices move up when buyers' demand is greater than sellers' supply. The early stage of a bull market begins from a price base, or support level. This is known as a period of accumulation or support, where buyers are purchasing shares, and their interest at a low price keeps it from declining.