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432 sats \ 1 reply \ @kurszusz 1 Feb \ on: Are Technical Analysts Just Fortune Tellers? bitcoin
Nope, technical analysts (the GOOD technical analysts) are not fortune tellers.
Technical analysys is based on probabilities, and on past statistics (for exemple what happened if price was rejected from a resistance, etc)... In this way was formed the patterns (every pattern have their sense), and peoples learned about how it works "usually".
And it is a most dose of psychology :) If a lot of peoples (a lot of capital) think the same thing, and start to make actions on this direction (short or long), the price is obligated to follow this, because of the supply / demand ecuation...
The problem is when a bigger capital think to "trap" these "smallest capitals", and make a big order in other direction (bull trap / bear trap). These are the whales (in crypto usually the big institutions).
This is the cause, that technical analisys is never 100% sure, and a normal trader / analyst never say you, that is sure price will go up / down...The correct affirmation is, that "we have 80% to price increase, but never can exclude the opposite"
The problem is when a bigger capital think to "trap" these "smallest capitals", and make a big order in other direction (bull trap / bear trap).
TA has signals which can reveal those traps, too, and tools to try to minimize its effects (cut of losses, etc.)
This is the cause, that technical analisys is never 100% sure, and a normal trader / analyst never say you, that is sure price will go up / down...The correct affirmation is, that "we have 80% to price increase, but never can exclude the opposite"
And not only that, of course, but also which is the most likely appropriate reaction depending of the actual price movement.
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