Other assumptions of technical analysis include: Supply and demand is driven by both rational and irrational behavior, security prices move in trends that persist for long periods of time, and while the cause for changes in supply and demand are difficult to determine, the actual shifts in supply and demand can be observed in market price behavior.

For technical analysis to succeed, markets must have some inefficiency in order for trends to develop.

Technical analysts look for patterns and trends in securities prices to determine when to buy or sell. The approach taken by technicians varies greatly from that of fundamentalists, who try to forecast value changes by analyzing expected risk and return data. Efficient market analysts feel all available information is immediately impounded in the current security price. Thus, any new information will cause instantaneous price adjustments.

The difference between fundamental analysts, technical analysts, and efficient market analysts is the speed at which these analysts believe news is impounded into prices. Technicians believe the reaction is slow, fundamentalists feel prices adjust quickly, and efficient market hypothesis analysts feel it happens almost instantaneously.

Technicians believe that the market will respond less quickly to new information. They do not use research or financial data to estimate value. A technical analyst will look at past price movements as a guide to future price trends.