When you use any technical method to analyze stocks, it is generally thought to be based upon a few assumptions. Some assumptions include: that the price moves of stocks are completely dependent upon supply and demand for that stock, or for any stock; that human trading behavior is observable and repeatable over time; that important technical indicators and rules of when to buy and sell have been tested over many market periods; and that the historical price movements have a similar shape and form, indicating what might happen in the future to a security’s price.