Nothing works 100% of the time. This isn't about certainty, it's about probability. Charts are a visual representation of price movement. Price movement is created by an imbalance between buyers and sellers. This imbalance is created by many different factors, but it ultimately comes down to sentiment. TA isn't about lines on a chart, it's about studying past behavior to predict future movement. “History doesn't repeat itself, but it often rhymes.” - Mark Twain.
It's not a terrific bait if someone specifically states that they use fundamentals with technical analysis. The issue is that you'll see retail traders thinking they can do the same with technical analysis alone and are willing to go bankrupt while trying to put 100% emphasis on TA...nothing else with the error belief they're trying to trade like that other guy that's honest enough to say he doesn't use only TA. We use to have a guy here at the forum by the name of marketsurfer that had the same type of questions and debates here at ET...he didn't believe TA worked while at the same time promoting the use of TA and defending it at other online locations. He did these types of threads for the pure fun of it...prove it to me. The guy actually had indicators on his charts (yeah he used charts) and would state that the indicators on his chart plays no role in his trade decisions. The fact that he used charts should have been a big hint to many that he uses some form of Technical Analysis. Those that argue that they don't use TA...shouldn't be using charts to help them make trade decisions. My point, the thread starter (OP of this thread) could be using TA and succeeding with it while using something else with it (e.g. fundamentals, risk management, insider tips, cartel trading, dice rolling) and we wouldn't be the wise of it while he promotes TA or bashes TA. People just have not wised up to the games played by others online in threads like this. wrbtrader
14day rsi is a weak signal of short term reversal, better signal is actually std of pct difference between a stock and its peer group, compared against newsflow of peers. Short term reversal factor is primarily driven by investor positioning and attention (lots of studies on this, I recommend looking it up). Across a large n study reversals tend to occur every 2-4 weeks but you can improve the signal by using the aforementioned approach. From what I’ve seen on desks is: a big change in price that is not driven by revisions/major info can be faded. Price volume cointegration means it’s not a one-for-one but rather tends to occur “generally”. Prices tend to mean revert in low volume because of how the order book is distributed across limit prices and that interaction with market orders. It’s useful in that there is some correlation between price and volume, though lead-lag is not clear (sometimes price leads volume and vice versa). Ultimately, these tools aren’t useful by themselves and are only helpful to support a fundamental view on a security. Without that there’s no real edge once you factor in transaction costs and slippage.
"Prove to me that Technical Analysis Works." Why do you think elite traders owe it to you to prove anything?
Like I already said, technical analysis (study of the stockcharts) is not the same as trading indicators (measurement of price). Much like comparing a bull to a dog. It is that kind of ignorance that guarantees failure.