|  MAY 1983

The Head and Shoulders Formation by JESSE H. THOMPSON/Technical Analysis staff writer

The Head and Shoulders Formation by JESSE H. THOMPSON/Technical Analysis staff writer Technical analysis as it is applied today to the anticipation and projection of impending price movement of stocks or futures markets might be broken down into three major areas of study. These are: 1) The study of price activity itself 2) the study of derivatives of price and 3) the study of internal indicators. The study of price activity itself is generally of older vintage. The book, ""Technical Analysis of Stock Trends"" by Edwards and Magee is a study of market formations and trends within this area. Many of the methods employed by technical speculators around the turn of the century, involved the study of price activity. Identifying market formations, point and figure methods and swing charts are examples of tools used in the study of price activity. The study of derivatives of price as a method of technical analysis is currently very popular due to the availability of mechanical calculation devices such as the microprocessor. This area includes the use of moving averages, oscillators, momentum indicators, etc. This is a relatively new field of technical analysis.

by Jesse H. Thompson