What principle states that "prices discount everything" in technical analysis?

The principle that "prices discount everything" in technical analysis refers to the idea that all available information—whether it be public data, news, market sentiment, or any other relevant factors—is already incorporated into the current prices of securities. This means that market prices reflect all that is known at any given moment, including both fundamental and technical factors. Therefore, when traders and investors analyze price movements, they are essentially looking at a summary of all available information.

This principle is foundational in technical analysis because it underlines the belief that price charts and patterns provide a comprehensive view of market sentiment and expectations, rather than focusing solely on external data or economic indicators. Technical analysts argue that by studying price movements, one can glean insights into future price behavior, as past price action is seen as a reaction to all accumulated information.

The other choices revolve around specific angles of market behavior or information but do not encapsulate this all-encompassing principle. Price randomness, the influence of current news, and the notion that fundamentals are secondary do not adequately convey the comprehensive nature of how prices are formed in the market context.