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Technical Analysis of the Financial Markets: a plain-English Murphy summary

It's thick, it's thorough, and many traders keep it on the desk for years. The trick is knowing which few chapters to read first.

Beginner guide · 6-minute read · Updated 2026-10-21

The book in one line

Technical Analysis of the Financial Markets is by John J. Murphy, published in 1999 by the New York Institute of Finance. It grew out of his earlier book, Technical Analysis of the Futures Markets, and widened it to stocks, currencies and more.

It's a reference book. It covers trends, chart patterns, moving averages, momentum tools, candlesticks, and how different markets affect each other.

The 5 ideas worth keeping

1. Price already includes what's known

Murphy starts with a core belief of chart reading: the price on the screen already reflects what buyers and sellers know and expect. So the chart is a summary of everyone's views.

You don't have to believe this fully to use it. It simply explains why chart readers focus on price first and opinions second.

2. Prices tend to move in trends

The second idea: once a move starts, it tends to carry on more often than it suddenly reverses. A trend has a direction, and it has turning points along the way.

That's the root of our own method: mark the places price turned around, and look for higher highs and higher lows (or the reverse). See how to identify a trend and higher highs and higher lows.

3. Floors and ceilings matter

Murphy gives a lot of space to Support and Resistance: prices where buying or selling stepped in before. He also explains how an old ceiling can become a new floor once it breaks.

These are the first lines worth drawing on any chart. Our support and resistance guide covers the simple, zone-based version.

4. Indicators come after price, not before

The book explains many tools: moving averages, RSI, MACD and more. Murphy treats them as helpers that confirm what price is already showing, not as signals on their own.

A useful habit for beginners: one or two tools at most. Every extra line competes for your attention. Our guide to moving averages is a good first tool to learn.

5. Markets are linked

Murphy is known for "intermarket" analysis: how bonds, the dollar, commodities and stocks tend to push on each other. For example, a big change in interest rates can ripple through all of them.

You don't need this on day one. But it explains why a jobs report or a Fed day can move a chart you thought was unrelated. Our guide on how interest rates affect stocks is the plain version.

How to use it as a beginner

Don't read it cover to cover at first. Treat it like a dictionary with pictures. A simple plan:

1. Read the chapters on trends and on support and resistance first.
2. Skip the long sections on less common patterns and indicators for now.
3. After each chapter, open a real chart and find one example of the idea.
4. Practise spotting it on past charts with bar replay, before you ever trade it.

Come back to the other chapters when a question comes up. "What is this pattern?" "What does this indicator measure?" That's when a reference book shines.

Who it's for, and who should skip it

It's for you if you want one trusted book that explains nearly every common chart idea, and you like to look things up.

Skip it (for now) if you want a short, guided path. Its size can feel like too much at the start. A step-by-step guide such as how to read stock charts is a gentler first move.

One honest point: the book explains what chart readers believe and do. Some economists, like Burton Malkiel, doubt that chart reading gives any lasting edge. Hearing both sides makes you a sharper reader.

Read it with…

• Japanese Candlestick Charting Techniques: the deep dive on candles that Murphy's book only touches on.
• The New Trading for a Living: adds psychology and money rules to the chart tools.

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