Many security price forecasters use technical analysis, sometimes referred to as charting. However, they opt to reject the efficient markets hypothesis (EMH) altogether. The efficient markets hypothesis (EMH), also called the Random Walk Theory, is the idea that current securities prices accurately reflect the information about the firm’s value. Therefore, it is impossible to make excess profits using this information, or gains that are greater than the overall market.
On the contrary, technical analysis disregards the EMH and is only interested in the price and volume behavior of the market as a basis for price prediction. A technical analysis pattern called the bull flag is a recognized price pattern and is thought to indicate that a price increase is about to occur.
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