Why Technical Analysis Doesn't Work

Technical Analysis of Chart Patterns

Technical analysis of chart patterns has become a widely practiced "science". I used quotes around the word science because that's what most people believe technical analysis of chart patterns to be. However, many take the opposite view - that technical chart analysis is really an art form.

At its best, technical analysis puts the odds slightly in your favor. At its worst, it is totally unreliable!

For example, how many times has so-called "support" and "resistance" been broken through? How many times has your MACD or Stochastic or CCI or moving average failed to provide the expected result?

Why is this?

Simply put, it's because they only work while they're working.

Go back and read that last sentence again...

You see, I believe that most of the technical indicators in popular use create a self-fulfilling prophecy. Because so many traders and investors are using them (mostly in the same way) there is heavy trading done at the common signal points, which in turn causes the market to act "as expected" -- some of the time.

Why Doesn't Technical analysis of Chart Patterns Work Consistently?

I'll tell you why.

It's because the big players -- the market movers and the market makers -- use the same technical analysis for their chart patterns as you do. The difference is that they use them to slaughter you!

If you want to know how you can use this information to your advantage, contact me.