Tea Leaves? Crystal Ball?
Want to insult a market technician? Ask what is seen in the crystal ball. Technical analysis cannot see into the future any more than can reading the bumps on your head. It does not predict. It is more about crowd psychology and probability. Charts simply show the current situation and the analysis lays out the probabilities for various possible outcomes.
The catchphrase for technicians has always been “history repeats.” The latest revision of this phrase is “history doesn’t repeat, it rhymes.” Events do not unfold the same way every time, but the odds of similar paths are quite high.
Applying one simple tool to the chart (see Figure 3.2), Figure 3.1, a simple trendline (essentially, a stick figure drawing of the stock’s ...
Get Technical Analysis Plain and Simple: Charting the Markets in Your Language, Second Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
