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Market prices, as one well-worn adage points out, are trapped in a two-dimensional world with little directional leeway. They are either climbing up, dropping down or moving sideways. And, the fact is, there is no refuting this simplistic truth.

Prices distill the complex interplay of supply and demand, the collective fear and bravado of sellers and buyers, and lay it out as up, down or sideways. The art of chart analysis lies in deducing whether a particular motion signifies that buyers' demand or sellers' supply is predominating.

Prices move up when buyers' demand is greater than sellers' supply. The early stage of a bull market begins from a price base, or support level. This is known as a period of accumulation or support, where buyers are purchasing shares, and their interest at a low price keeps it from declining.

At some point, the supply of stock for sale becomes greater than buyers' appetites. The uptrend then reverses and prices drop. This is a period of distribution or resistance. Sellers are distributing more shares than can be sold to buyers who in turn are resisting paying any more for the stock.

On a price chart, the shift from demand to supply, from accumulation to distribution, forms a topping pattern. The shift from supply to demand, from distribution to accumulation, creates bottoming patterns.

The art of chart analysis lies in deducing whether a particular motion signifies that buyers' demand or sellers' supply is predominating.

When supply and demand are approximately equal, prices move sideways on a bar chart within a price range known as a consolidation or trading range.

Normally, the shift from distribution to accumulation occurs gradually, taking several months to a year or more to complete or top out. The ensuing downtrends generally move faster because sellers feel forced to unload their declining holdings.

In either direction, price action is normally jagged. Assume prices have been dropping. At some point, low prices tempt enough buyers back into the market to reverse the trend: accumulation has set in. Prices rise until buyers, looking back on recent low-price history, get a bit skittish. Is this higher price range justified? Can it hold? Buyers back off a bit and the first uptrend "corrects," or drops momentarily. A slightly lower price entices optimistic buyers back for the possibility of a quick profit, at which point prices swing up again. The corrective sequence continues until buyer optimism finally fades, the trend tops out and prices reverse direction.

Technical traders use a battery of established chart patterns to pick impending tops and bottoms. As with any interpretive tool, it is the experience and skill of the observer that determines a pattern's reliability.