The Logic Behind Technical Analysis

Title:
The Logic Behind Technical Analysis
Word Count:
1434

Summary:
Let me first say that I do not now engage in technical analysis; nor, have I ever engaged in t

Having said that, I do not claim technical analysis has no predictive value. In fact, I suspec

Keywords:
technical analysis, fundamental analysis, investing, value investing, value investor, stocks,

Article Body:
Let me first say that I do not now engage in technical analysis; nor, have I ever engaged in t

Having said that, I do not claim technical analysis has no predictive value. In fact, I suspec

ˆ the influence of what we call analytical factors over the market price is both partial and i

I´ve seen a lot of people cite this quote, without bothering to notice what´s really being sai


Data affects prices indirectly. The market is a lot like a fun house mirror. The resulting ref

For some reason, when we talk about the market we like to use inappropriate metaphors. We talk

The Efficient Market Hypothesis does not recognize the true importance of interpretation. Sayi
The Efficient Market Hypothesis is not the only argument against technical analysis. There is

The adjective ˆrandom˜ is a very strange word. Although it is rarely the definition given, the

ˆAll things are subject to the law of cause and effect. This great principle knows no exceptio

All things are subject to the law of cause and effect; therefore, nothing is truly random. A c

If the actions of investors cause price movements, and past price movements are a partial caus

Technical analysis is logically valid. Not only is it possible that some form of technical ana
So, why don´t I use technical analysis? I believe fundamental analysis is a far more powerful
Even though I believe there must be some form of technical analysis that does have predictive


Why? Because I believe that´s the most useful model. One should adopt the most useful model no

Really, this isn´t all that strange. In science, I´m willing to pretend there are random event

I propose you do much the same in the case of technical analysis. You should recognize the log

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