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starbucks4ever (99.49)

Now you too can be a technical analyst

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July 09, 2010 – Comments (5)

In this short communication I will try to outline a simple method of carrying out technical analysis that is accessible to anyone. The power of the method is in its simplicity.

There is a resistance level some 2% above from where we are now. Todaywe will either break that resistance or, you guessed it, not break this resistance. If we break this resistance, we'll go up, but if we don't break this resistance, we'll go down. If we go up, there will be another resistance level and if we break it, we'll go up but if we don't break it we'll go down. If we go down, there will be a support level. If the support holds, we'll go up, but if the support doesn't hold, we'll go down. If we go up, we will again retest the resistance level and go either up or down. If we go down, we will retest the next support level and go either up or down. You can continue this analysis for as many steps as you like. The further you take it, the greater chance you  will have to overwhelm your audience with your TA skills, but this is strictly optional since the choice of the starting point and the endpoint is purely arbitrary. Even if you pursue my method for 3-4 steps only, you will not come up with different conclusions. When you finish this thoughtful analysis, you'll come up with this profound insight: the market will be moving in a sequence of steps where each step will be either up or down. Now, TA trading is easy, is it not?  

5 Comments – Post Your Own

#1) On July 09, 2010 at 9:49 AM, russiangambit (29.98) wrote:

Ha-ha, yes it is that simple. Working hard to ignore the obvious sarcasm I tell you this, -  it is very easy to program a computer according to these rules you just outlined. Just wait 1-2 points for confirmation of the break/ hold and then pile in the said direction. A computer can execute these trades in a matter of seconds , and a computer doesn't get bored or tides, doesn't take coffee breaks or TV breaks. This is what it does all day long.

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#2) On July 09, 2010 at 9:51 AM, anticitrade (99.65) wrote:

Very easy.....  So if I understand correctly: 

If the market doesn't go up, then it went down like we predicted...  If the market doesn't go down, then it went up like we predicted. 

Does this logic overwhelm any audience?

To be fair, I conceed that there is something to TA.  Obviously there are multiple users with excellent scores..  The real non-easy part must be picking those resistence levels.

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#3) On July 09, 2010 at 10:05 AM, outoffocus (24.47) wrote:

You forgot the embedded charts...

But seriously, we've been in a "traders market" for the past 3 years.  Thats why you see many of the people in the top 100 in CAPS are techies.  Eventually we will be done with this techie crap as fundamentals re-enter the market. In the meantime, enjoy the ride.

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#4) On July 09, 2010 at 6:12 PM, mickeyc21 (31.14) wrote:

You don't like TA. Very original. No one has ever posted that on this site before.

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#5) On July 09, 2010 at 8:26 PM, starbucks4ever (99.49) wrote:

 mickeyc21,

Your point is well taken. But then again, it's hard to make every Caps post original. One doesn't come up with an original idea every weak or even every month or year. I am afraid that many bloggers will never have even one original idea in their lifetime. That's just the way it is. I don't think I have any original things to say here.  

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