The first trend theory stipulates that an uptrend remains intact as long as each successive intermediate
is higher than those preceding it and that each reaction stop is at a higher point than earlier reactions did. Conversely, a downtrend prevails when each intermediate decline carries price falling short of
earlier rallies.

• Uptrend - series of successively higher peaks and troughs
• Downtrend - series of declining peaks and trough
• Sideways - horizontal peaks and troughs

Support and resistance levels are unquestionably among the most important of all technical considerations. They are areas, which prices are expected to have difficulty moving beyond and they therefore deserve especially careful considerations in buying and selling decisions. Support and resistance levels on candlestick charts can be divided into three basic categories:

• Congestion areas;
• Areas at which previous advances and declines were turned back;
• Transformed support and resistance levels
  (former highs that have been penetrated and thereby turned into support levels).

The basic idea behind resistance and support theory is simply that price levels that were significant in
the past will have significant impact on price action in the future.

Price level or area on the chart where buyer interest is sufficiently strong enough to overcome or digest selling pressure and a price decline is turned back up again.

Price level or area over the market where selling pressure overcomes or digests buying pressure and a price advance is turned back.

• The longer the trendline has been intact, the more significant the trendline.
• The more the number of times the trendline has been tested, the stronger the trendline.
  

• The price filter used is a 1% or 3% penetration criteria to eliminate whipsaws. A closing price penetration beyond the trendline is more significant than just an intra-day penetration.
• The time filter requires that prices close beyond the trendline for 2 successive days.
  

The parallelogram and triangle formations that sometimes form after a rapid vertical move indicates
that another similar move is likely to follow. Technicians often follow the flags that mark the half way point of a price move, measuring from the level of decisive break away from the previous formation.
Many chartists consider flags and pennants among the most dependable signals, particularly with reference to the direction of the impending move.

Triangles can be continuation or reversal patterns, but seem to fall on the former category more often. They appear when there are simultaneous short-term uptrend and downtrend lines which intersect. The conventional chart interpretation holds that triangles signal impending large move with the direction of the move likely to be in the direction of the steeper trendline. An Ascending Triangle is likely to breakout in either direction. Subjectively, triangles appear to be fairly reliable indicators, especially when no more than three of four oscillations occur before the breakout.

Gaps are simply areas within the boundary of activities where no actual trading occurred. Technicians generally place gaps into one of these four categories:

• Common Gaps are blank areas between two consecutive days trading ranges, within which
  activity takes place in the recent past. They are usually considered tops and have meaning.
• Break Away Gaps occur when prices suddenly explode out of a considerable length of time
  (or in which no trading has ever taken).
• Run Away Gaps appear following an already substantial price move.
• Exhaustion Gaps are supposed to make the final stages of a major move.