Airlines price their seats initially with a placeholder price. The placeholder price is a little higher than the price you'd reasonably really want to pay for the seat, but if someone really wants to get their flight arrangements taken care of way in advance they might go for this option.

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The price starts being adjusted for demand about six weeks prior to the actual flight. That's when you can really start to get a sense of how the price might fluctuate. A likely scenario is that the price will gradually dip until the plane starts
to fill up, and then the prices will start to rise. At that point there's an increasing demand for a diminishing supply of seats, so the prices will jump suddenly. It's typical for there to be an automatic jump in prices two weeks prior to the flight, and it's typical for prices to jump in the days just before the flight.

Every airline's procedure is a little different and the algorithms are very complex (and not particularly transparent!) but this general principle holds as a good rule of thumb: don't buy too early (before the prices adjust for demand), but don't wait until prices spike and you've lost out on the most reasonable deals. That rule of thumb applies for monitoring any given flight's price, but you should also be checking different flights on different airlines.

I recommend using one of the flight aggregate search websites like kayak.com that poll many different vendors for the same flight. That way you can figure out not only which flight is cheapest but where to buy that particular ticket.

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