So what do we do? What I do and teach people to do is study price action - not price patterns - looking for basic factors such as what is the trend or what is momentum. There are only three possible answers: Up trend, down trend or no trend (sideways with no momentum). Fundamentals cannot tell us this, only looking at a chart, technical, can help us establish momentum and trends.
As step one, a technical trader must decide if their style is to: a) trade with the trend b)trade against the trend or c) trade range bound or sideways markets. With that established they look at other factors to add to their trading strategy. I am a trend trader, meaning I look for momentum and trade with it. This is a bit like a rower deciding if they will paddle downstream, with the water's momentum, or if they will take the much more difficult and challenging route upstream.
Price trend/momentum is very simple to learn and recognise AND is the single most import tool in a technical trader's arsenal. Everything else becomes secondary. In second place of importance is to locate support and resistance levels. These are again very simple yet very significant.
They are points on a chart where on multiple occasions historically, price has either approached the level from below and failed to go higher (resistance) or approached from above and failed to go lower (forming support). That's it, so simple to recognise and use to our advantage since levels that have provided significant support/resistance levels in the past, have increased probability to do so again in the future.
When we combine these predetermined levels with strong trend momentum, we start to form the basis of a trading strategy. Then we continue to add more technical layers on top to increase our odds as much as possible on any given trade. But "there is no guarantee this will work" says the doubters and I remind them that "technical trading is based on increasing probability, NOT providing certainty". If you need certainty then you should be an accountant instead - the books will eventually balance. Trading shares no such traits.
All we are doing is trying to stack the odds in our favour and I've highlighted very basic theory behind a couple of the most important technical tools for studying price action.
This is not a 'tea leaves' predict-the-future-from-the-patterns profession. It is the study of price behaviour to look at what is actually happening in the market, what has happened before and how can we use this information to put extra probability in our favour towards what is more likely happen next.
Traders tend to pore over hundreds of charts before finding one with enough probability to decide we have a trade worth taking. We do not look at every chart and pretend to know where it is going next; perhaps 99 per centof the time we don't have a clue so we do not place a trade.
Comparing technical trading to fundamental trading, fundamentals tell you what should be happening but the charts tell you what is actually happening. How many fundamental traders/analysts/economists have you heard for the last five years telling us all that major stock indices are overvalued and 'should be' going down?
I can't make money by trading what markets fundamentally 'should be' doing. I can only make money by trading what is actually happening. That is what technical trading is about, studying the price momentum looking for places to join the trend. It also clearly shows me where there is no trend and therefore where to stand aside.
Nick McDonald is a New Zealander teaching everyday people how to trade the worlds markets via his company Trade With Precision. 
