The problem is that too many people are using technical analysis and believing in it. Even Cramer and CNBC have jumped on the wagon. Probably by the end of this year, they will be well shaken and burnt out of those theories. I am going to use sentiment indicators until I see people posting on their blogs about it, then I will ditch that and go to something else.
Why do you say that? Everyone reads out of the same TA 101 textbook, and just about 'Everyone' (90-95% of retail traders?) get reamed regularly by the markets. Understanding what 'They' are doing is key to unlocking certain truths about how the markets actually work.
These are uncharted waters....and TA is out the window as is everything else. Sure, maybe a self-fool-filling move may happen, which is good if your fast on the draw and get in and out. But to think that any move to the upside is sustainable...watch out. A bounce, we just had one this AM. Question is, does this mini up day hold? TA is pointless on its own. TA is a measuring tool combined with other indicators....
I disagree with the above point. TA is EVERYTHING. But problem is very few understand CONTEXT. If you understand the markets for what they are - a vehicle for cleansing the pockets of the majority of participants - and not for what you want them to be - a representation for some subjective view of reality in the form of some 'fundamental' outlook - then you are on the right track.
If making money was as easy as reading a book and putting theory to work, then why isnt everyone doing it by now? I think TA is most effective when no one is looking at it. Right now there are too many blogs, news programs, etc. focusing on it. When Cramer starts using technical analysis after opining for the last 5 years that it doesnt work, then its time to get back to simple observations and gut thinking. Many a blogger has been made a fool after putting up hundreds of charts and spending many hours on technical analysis. Looking at how popular some of these so called technical analysis blogs are I bet that it might be another couple years to flush it out. TA will become effective again in say 3-5 years when the last TA blog goes under.
TA is always successful. Maybe you are not (not you personally, but the trader) or maybe the conception of TA that you have may not be working, but TA in the broad form is just various tools of analyzing price, time, volume etc. To say "TA is meaningless" doesn't mean anything unless we all have clear definition of what TA means; if you say in the standard sense - yes i agree, usually most methods produce no statistical advantage in backtests. Does that mean TA is meaningless? No, b/c all the tests don't account for CONTEXT.
Yep, TA is everything. NOT! Lets see where this "BOTTOM" is. FED just pulled the rug from under the Markets.
Once again. TA is mean's nothing in and of itself. You have to use TA with a variety of "Indicators". TA is nothing but "Back statistics" and numbers that the "Majority" agree on. There are a million TA numbers on Pivots, bottoms, tops.....there is no method other than the "MAJORITY" agreeing on the popluar TA target. So, TA by its self, an indicator of odds on what the SHEEPOLE will do...IMHO