SO, can someone explain to me why people say technical analysis doesn't work and that it is a 'meme'
Going over the chart, with Bitcoins recent downtrend, you can see clearly that it dips down to the exact uptrend line, and then bounces off the exact downtrend line (the arrows).
Is this just a coincidence?
What happens when the lines meet?
>SO, can someone explain to me why people say technical analysis doesn't work and that it is a 'meme'
There is no hard evidence that it works nor reason to believe it does
>Going over the chart, with Bitcoins recent downtrend, you can see clearly that it dips down to the exact uptrend line, and then bounces off the exact downtrend line (the arrows).
Survivorship bias. You look at cases where it looks like TA worked but ignore all the cases where it didn’t.
You will have to wait until April 1st to find out.
I think the only thing that will make it break above the downtrend line is insane news. Something that means bitcoin will come more mainstream.
Thank you, you seem wise. Do you have an answer for the fact that there are a lot more cases where TA works than where it doesn't
Even a dead whore is warm for two days.
Why would it work?
If everyone trades based on TA, then people know when to buy and sell. It's a self fulfilling prophecy. Actually think about it.
???
Veeky Forums is retarded, TA isn't about being 100% right with meme lines its about finding safe entry and exit points to trade better than just hodling. Also you can just jump in the pumps n dumps traders make if you understand why they are happening.
If you need everyone to use TA when trading, then it doesn't work.
Yeah TA is more about trying to be safe. It's not a guarantee like everyone else tries to make it out to be.
angry alligator formation incoming
Dick and balls formation forming
>if you understand why they are happening.
Why are they happening?
>Is this just a coincidence?
Short answer: No, but even so, TA doesn't predict, it analyses. In this case, it was most likely that we would be rejected on the downtrend line, but there was still a good chance we could break through.
Long answer:
>SO, can someone explain to me why people say technical analysis doesn't work and that it is a 'meme'
It isn't, Veeky Forums is just a horde of brainlets who don't know what they're talking about. They think TA predicts, but it doesn't, it analyses. TA lets you identify support and resistance points, and a common idea (that is often proven in practice) is that when a historically significant resistance/support is broken, its role reverses to the opposite ("role reversal", support becomes resistance when broken). This alone lets you reason much more easily about markets.
Support can be any price point, for example a major support point for BTC right now is $9300 because, for whatever reason it was psychologically significant for traders and have acted as strong resistance 3 times in the past on daily charts. The price point remains psychologically significant for traders now, despite the fact that we've broken above it, and this is why we've kept bouncing off $9300, despite there not being a trend line to justify it. Its role reversed.
Trend lines are often points of support and resistance, as your chart demonstrates too. In an uptrend, it often acts as support should the price begin to go down temporarily, and it bounces off it. In a downtrend, like we see here, it's psychologically significant again for traders and acts as very strong resistance, and a breakthrough is rejected. Other interesting support/resistance points: 25/50/100/200 (E)MA, lines on bollinger bands.
(1/2)
When you have identified these points of resistance and support, you can also begin to reason more effectively about a market. Suddenly, bear and bull flags are a thing, you can draw channels, ascending/descending wedges appear, rising/falling triangles etc. are all basic patterns that tell you a lot about what's likely that the market will do next. You still have to take volume, market sentiment, price action etc. into consideration when determining the likely outcome.
Note that TA doesn't actually predict anything, it just lets you reduce an infinite number of possible market movements into a manageable number of 4-10. From then on you can take very educated guesses about what's likely to happen, and while some things are more probable than others, you still can't truly predict what will happen.
Consider the recent run to $11500. We saw some patterns there. First, we saw an inverse head and shoulders, suggesting that we were going on a strong uptrend for the foreseeable future. As the uptrend continued and we got up into $10000 area, a rising wedge started to form, a bearish signal. Given that we were closing in on a very strong point of resistance (downtrend line), it was highly likely that we would see a trend reversal. While this is exactly what happened, it was still possible that we would break the downtrend line and confirm a breakout of the general downtrend. If that had happened, we would likely slow down for a bit and go on an even higher bull run.
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>There is no hard evidence that it works nor reason to believe it does
Again, you misunderstand TA. It doesn't predict anything, it just reduces an infinite number of possible market movements to a reduced set you can assign probability to.
>Survivorship bias. You look at cases where it looks like TA worked but ignore all the cases where it didn’t.
It always works if you actually use it as the tool it is. If you want to find entry and exit points, and you want to manage risk intelligently, there isn't a better tool for it.
>It's a self fulfilling prophecy. Actually think about it.
To a large extent, it is, but there is *a lot* of bad TA out there, which is why Veeky Forums thinks it's a meme.
Focus on the long term and it will fall into place. You're not getting rich off this quick unless you put all of your savings into it. It will take time. Looks like return to mean and the next chapter of what to happen.
You just have to do one quick Google of T.A backtesting and then you will learn that yes; people did test T.A on years of stock market data and no, you don't outperform the market with it; in other words; you might just as well flip a coin to decide if you buy in or not;
because 80-90% of Veeky Forums is dumb as shit, and when they don't understand something they jump to the conclusion that it's bullshit and will harass anyone that disagrees with them because of an illusory sense of superiority.
its not for outperforming the market its for deciding which way the market is going
Moving averages are better indicators than trendlines thb.
Here's the real redpill. You are not supposed to use TA as a predictive tool, this is what everyone insists on doing and it disappoints if used that way, but it can inform you or where good trade opportunities exist measured against their risk. You place an entry near strong support and put a stop loss behind it. Now you are much better protected against volatility than doing it blind. You find a pattern, wait for confirmation and then ride it until you're satisfied. The guy that FOMOed before you made more money and that's fine. And of course, there are fakeouts that exactly fuck your stop losses and turn good trades into bad trades. It turns out that when you use it that way you don't even need to guess correctly half the time. The other important thing is don't try to use TA as a way to justify action caused by fundamental factors. This doesn't mean that fundamental analysis is less important or that it shouldn't affect your trades, but that all you're looking at is price on a chart, pointing the cause behind it is not its task. And yes, it does work even if it wasn't developed for cryptomarkets, but try to be aware that some things do indeed work differently, this shit moves blazing fast and trades happen 24/7.
>It doesn't predict anything, it just reduces an infinite number of possible market movements to a reduced set you can assign probability to.
> It doesn't predict anything
> It just predicts things
Wut? You are literally saying it has predictive power, of course it's supposed to fucking predict things. That it is literally it's whole reason for existing.
What you mean is that it doesn't predict any one thing with absolute certainty, and no one would say it does. The question is, though, whether it predicts anything with greater-than-chance reliability.
Do you have any recommendations on how to learn TA?
god, idiots thinking TA 'works' and 'doesn't work' it's all about increasing your probability of being right
if you think a certain fib level or trendline is gonna hold but it doesn't, it doesn't mean you were "wrong" that just means you rechart and look at more indicators to see what to do in order to prevent losses or increase profits. idiot, it's not a yes/no
>Wut? You are literally saying it has predictive power, of course it's supposed to fucking predict things. That it is literally it's whole reason for existing.
Well yeah, some limited predictive power, but it's still just probability.
>What you mean is that it doesn't predict any one thing with absolute certainty, and no one would say it does.
Yes. You can analyse the possible outcomes and make a plan for each of them, and in many other cases the outcomes aren't clear, but you have identified critical points that you can watch closely and base your decision on what the market does then.
The correction at $11500 was a special case, because it was extremely probable it would happen. In other cases, for example today, I personally find it probable that we'll enter a bear market because I don't think the volume or market sentiment is there to give us a bullish breakout of this descending wedge here. Despite that, it's still very possible that we can have a bullish breakout. I can't say anything for certain and don't feel extremely confident.
Babypips. Additionally, I would seriously advice that you also just try to do your own TA for a while too. You will learn a lot from the many times your TA will be way off if you just pick it up. Just don't ever trust your own TA until you feel confident in it, and don't look at it as a predictive tool
>god, idiots thinking TA 'works' and 'doesn't work' it's all about increasing your probability of being right
Depends on what you mean by "works". When I say it works, I mean that it works as an analysis tool that helps you make better judgements, or inform you of how long to hold off your decision.
>if you think a certain fib level or trendline is gonna hold but it doesn't, it doesn't mean you were "wrong" that just means you rechart and look at more indicators to see what to do in order to prevent losses or increase profits. idiot, it's not a yes/no
Completely agreed here.
There is a simple mechanism why support becomes resistance is this: in downtrend, people who bought at support realize that they have been JUST'd (bought overpriced BTC) and put in sell orders at the level they bought hoping to get their money back. So when the price shoots back up, all these orders have to be filled.
Why resistance can be downtrending forming a channel? Simple, if a normie bought BTC at 10'000 and his sell order at 10'000 is not filled by the next day, then he will move the sell order to 9'900. The second day he will move it to 9'800 and so on.
What about support? Works exactly the same, except that support is formed by people who sold at that level and want to get back in, but don't want to pay a higher price.
>serious post
The only serious post I can think of is “TA is glorified astrology”.
I like this one and this one though.
>TA doesn't work
This brainlet COPE, because they can't even understand this literal basic of basic math. It's Dunning–Kruger effect on steroids
thx bro jsut bought 100k
There's a lot of magical thinking behind TA. It's just research - you should also be reading articles, getting the pulse of the market, being aware of upcoming events and changes (good and bad), and combining it into an educated guess. That's what it all boils down to, the position you choose is either reactionary, like closing a bid out of a downtrend, or en educated guess where the market moves to in the future. It's the same on Wall Street - you do your homework, pick a stock or bond or ETF, and hope for the best, and have an exit strategy.
Everyone's an expert, after the fact. Most TA I see is usually wrong, or so vague or broad that part of it is most likely going to happen, but for the most part, because crypto isn't driven by things like the Fed making changes to interest rates, or crop failures, or OPEC pressure, you have no real way of knowing what the market will do, except for large trend movements. Too many people here focus too small, and don't zoom out, and think they can call the market 24 hours from now, which is silly. Bitcoin is so emotionally and psychologically driven right now, it's impossible to predict the herd, except on the 3 month chart.
TA isn't useless. It's mostly to make people feel better over their educated guess. I'd bet throwing darts would get about the same results as the majority of the so-called TA here.
I think the most honest answer is, someone is going to draw the right lines that "predict" the future, but it was just pure luck. Then they use that one-time lucky event to convince themselves and others that they can predict the future. It's all wishful and magical thinking, it's the same thing that makes a high roller think his medallion is "lucky" at the craps table. It's all in his head. If someone could predict the market accurately and consistently, they'd be making a fortune selling that info to other traders, or making money for a large firm, not posting it on Veeky Forums.
>In this case, it was most likely that we would be rejected on the downtrend line, but there was still a good chance we could break through.
THis literally translates as "It can go up, and if it doesn't, it will go down." You could literally have said that, and not bothered with charts and explainations and all that. "It will go up, or down" is all you needed. That's not TA, that's flim flam.
>THis literally translates as "It can go up, and if it doesn't, it will go down." You could literally have said that, and not bothered with charts and explainations and all that. "It will go up, or down" is all you needed. That's not TA, that's flim flam.
Yeah, wow, good insight lad. Except you miss the part that you determine when and where it will "go up or down" and what the likelyhood of these two outcomes are.
In the case I'm talking about there, it was hugely likely that we'd be rejected and have a trend reversal. It was just possible to break through, not very likely.
Oh, you mean the part that is literally smoke and mirrors? You should stop at "It will go up, or down", you look less foolish that way.
But you pick this hill to die on, see how it works out for you.
TA is a self fulfilling prophecy. If enough people are drawing the same meme lines they are all gonna react in the same way.
anatomy of aaaaahhhhh
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he looks mad. Thanks, just sold 100k