Technical analysis is total bunk.

[tripper22]

I spent many years learning and using TA. Squiggly lines from the past will never predict what price will do in the future.

How many "technical analysts" trading bitcoins have lost out on profits because of a crossover or divergence in any number of indicators? Large traders that can move the market, will buy and sell when they feel it benefits them or their organization. It's not because of some squiggly lines on a chart. The squiggly lines only tell you what has happened, not what's going to happen. Technical analysts are a lot like problem gamblers. They always talk about their wins but they never talk about their loses. This is especially true of any TA subscription service. Avoid them and save your money / bitcoins.

PRICE and only PRICE should dictate your actions as a trader.

[Luno]

The point of learning TA is that some believe in it, like astrology! Price action is the sum of praying and nerves.

We are trading minds here, you are absolutely right.

[humanitee]

I think there is some legitimacy in it, in that it gives you a mathematical framework with which to analyze the market. It's not perfect and you'd be foolish to rely on it alone, but it does give some insight into price and volume fluctuations that price data alone cannot give.

[Crypt_Current]

The point of learning TA is that some believe in it, like astrology! Price action is the sum of praying and nerves.

We are trading minds here, you are absolutely right.

https://bitcointalk.org/index.php?topic=75955.0

[humanitee]

Astrologically, Bitcoin does seem to be as significant as a second coming of a resurrected christ.

LOL

[Ichthyo]

I think there is some legitimacy in it, in that it gives you a mathematical framework with which to analyze the market. It's not perfect and you'd be foolish to rely on it alone, but it does give some insight into price and volume fluctuations that price data alone cannot give.

Not sure about this.

Math, yes. You need a bit of mathematical training.
And most importantly, you need a fair dose of common sense.

But I can't see anything substantial that the so called "Technical Analysis" would add on top of this.

Of course you'd need to look on the volume and the temporal pattern as well as on the price.
But isn't that just common sense? Do we really need formulas and graphs to arrive at such a basic insight??

[smoothie]

@OP,

Anything ABSOLUTE in trading techniques (even calling TA as total bunk)....is TOTAL BUNK.

TA works a certain percentage of the time.

TA doesnt work a certain percentage of time.

[Grinder]

TA works a certain percentage of the time.

TA doesnt work a certain percentage of time.

So does flipping a coin.

[Luno]

Technical analysis has it's merits, however it is also a tool that works best in large markets where any single traders sudden impulse get's averaged out.

TA is certainly capable of spotting larger covert trading operators and judge general sentiment but it's easily manipulated by the same people that have the money to move the market.

If Technical Analysis was applied to a natural phenomenon, could be ocean levels the past billion years, it would be a lot easier to agree on the right way to use such a tool. Nature is not trying to fool the scientist. If the scientist is wrong it's always the scientists fault.

Economics is not a science, anyone trying tell you that is either a fool or trying to fool you. However, evolution has taught us to see patterns everywhere, in clouds, you girlfriends way of kissing you good night, etc. So even without TA, you tend to see patterns everywhere. If the price rises you want to buy.

Imagine someone invents a technical indicator and is'nt telling anyone about it. It works really well and the guy makes good money.

The moment he writes a scientific article other traders start to use it and it works even better. Everybody think this guy is revalation to the jungle of economics.

The catch however, is that the second the method is published, it stops being science. Just the market knowing about this new method makes it work better than it possible can, and after a while, traders start taking advantage of the kind of trading this new analysis makes possible, and the brilliant guys method breaks!

Technical analysis is too well known to be of any use. The reason it works partially, is because some believe it works!

Do I use it myself, well yes and no for the above mentioned reasons.

[smoothie]

TA works a certain percentage of the time.

TA doesnt work a certain percentage of time.

So does flipping a coin.

Yeah my point, if you missed it, was that nothing in trading is absolute...maybe aside from paying exchange trade fees.

[Puppet]

you would be 110% correct if it werent for one important oversight: self fulfilling prophecy. If enough people believe the tea leave readings some people sell as analysis, then the predictions based on it will more often be right than wrong. Of course tea leaves or horoscopes would work just as well as drawing lines on a chart, at least as people look at the same leaves or horoscopes and use similar metrics.

[humanitee]

I think there is some legitimacy in it, in that it gives you a mathematical framework with which to analyze the market. It's not perfect and you'd be foolish to rely on it alone, but it does give some insight into price and volume fluctuations that price data alone cannot give.

Not sure about this.

Math, yes. You need a bit of mathematical training.
And most importantly, you need a fair dose of common sense.

But I can't see anything substantial that the so called "Technical Analysis" would add on top of this.

Of course you'd need to look on the volume and the temporal pattern as well as on the price.
But isn't that just common sense? Do we really need formulas and graphs to arrive at such a basic insight??

I only mean it in the sense that it allows you to measure some functional quantity on the market. Averages are used in TA, and you can't deny that an average is a useful quantity when looking at the market. The same with the other indicators. It just gives you some reference with which to compute volatility and other market components.

[xxjs]

I think the point with TA is that in a company, someone always knows, and their actions will move the price. Using TA, you may be able to spot those actions early, and take a profit before everybody else.

[tripper22]

I think the point with TA is that in a company, someone always knows, and their actions will move the price. Using TA, you may be able to spot those actions early, and take a profit before everybody else.

You just proved my point. No TA is required. The price tells you all you need to know at any given time. Trade what you see. Don't let TA distract you from the realities that prices are providing. No subscription required.

[xxjs]

I think the point with TA is that in a company, someone always knows, and their actions will move the price. Using TA, you may be able to spot those actions early, and take a profit before everybody else.

You just proved my point. No TA is required. Price tells you all you need to know at any given time. Trade what you see. Don't let TA distract you from the realities that prices are providing.

In most cases I agree, and for bitcoins TA is useless.

[arepo]

ahhh i was waiting for this thread...

The squiggly lines only tell you what has happened, not what's going to happen.

you're quite wrong. read on.

Avoid [TA subscriptions] and save your money / bitcoins.

this i can agree with because of the conflict of interest between making truthful calls and leading lemmings for personal profit.

PRICE and only PRICE should dictate your actions as a trader.

this shows how inexperienced of a 'trader' you are. volume is just as important, as are price momentum and moving averages and plenty of other pieces of data to lesser extents.

I think there is some legitimacy in it, in that it gives you a mathematical framework with which to analyze the market. It's not perfect and you'd be foolish to rely on it alone, but it does give some insight into price and volume fluctuations that price data alone cannot give.

+1

Of course you'd need to look on the volume and the temporal pattern as well as on the price.
But isn't that just common sense? Do we really need formulas and graphs to arrive at such a basic insight??

can you visualize the derivative of f(x) = x^3 +2x^2 + 1? of course not.

but we know mathematically that it is f'(x) = 3x^2 + 4x. and we can graph this. and then we can visualize it.

price is a very, very complex function and graphs are extremely useful at visualizing the relationship between different sets of data.

you would be 110% correct if it werent for one important oversight: self fulfilling prophecy.

while this does come into play, TA works even without this mechanism.

how? you might ask.

technical analysis in general is just applied calculus. as a rule the momentum of the price changes before the price does. this is equivalent to saying that the derivative of an increasing function begins decreasing before the function itself does, and vice versa (which answers the question of how can past performance 'predict' future results).

in other words, get your heads out of your asses. you don't need to understand stochastic calculus to understand TA (most algorithms are algebraic transforms of price and volume), so go to chart school and stop shitting on our parade.

[notme]

ahhh i was waiting for this thread...

The squiggly lines only tell you what has happened, not what's going to happen.

you're quite wrong. read on.

Avoid [TA subscriptions] and save your money / bitcoins.

this i can agree with because of the conflict of interest between making truthful calls and leading lemmings for personal profit.

PRICE and only PRICE should dictate your actions as a trader.

this shows how inexperienced of a 'trader' you are. volume is just as important, as are price momentum and moving averages and plenty of other pieces of data to lesser extents.

I think there is some legitimacy in it, in that it gives you a mathematical framework with which to analyze the market. It's not perfect and you'd be foolish to rely on it alone, but it does give some insight into price and volume fluctuations that price data alone cannot give.

+1

Of course you'd need to look on the volume and the temporal pattern as well as on the price.
But isn't that just common sense? Do we really need formulas and graphs to arrive at such a basic insight??

can you visualize the derivative of f(x) = x^3 +2x^2 + 1? of course not.

Quite easily...

but we know mathematically that it is f'(x) = 3x^2 + 4x. and we can graph this. and then we can visualize it.

price is a very, very complex function and graphs are extremely useful at visualizing the relationship between different sets of data.

you would be 110% correct if it werent for one important oversight: self fulfilling prophecy.

while this does come into play, TA works even without this mechanism.

how? you might ask.

technical analysis in general is just applied calculus. as a rule the momentum of the price changes before the price does. this is equivalent to saying that the derivative of an increasing function begins decreasing before the function itself does, and vice versa (which answers the question of how can past performance 'predict' future results).

in other words, get your heads out of your asses. you don't need to understand stochastic calculus to understand TA (most algorithms are algebraic transforms of price and volume), so go to chart school and stop shitting on our parade.

[arepo]

Quite easily...

and the award for completely sidestepping valid points goes to........

you. not me.

hint: how many algebraic terms do you think one would need to construct a polynomial function that estimates price?

[tripper22]

ahhh i was waiting for this thread...

The squiggly lines only tell you what has happened, not what's going to happen.

you're quite wrong. read on.

Avoid [TA subscriptions] and save your money / bitcoins.

this i can agree with because of the conflict of interest between making truthful calls and leading lemmings for personal profit.

PRICE and only PRICE should dictate your actions as a trader.

this shows how inexperienced of a 'trader' you are. volume is just as important, as are price momentum and moving averages and plenty of other pieces of data to lesser extents.

I think there is some legitimacy in it, in that it gives you a mathematical framework with which to analyze the market. It's not perfect and you'd be foolish to rely on it alone, but it does give some insight into price and volume fluctuations that price data alone cannot give.

+1

Of course you'd need to look on the volume and the temporal pattern as well as on the price.
But isn't that just common sense? Do we really need formulas and graphs to arrive at such a basic insight??

can you visualize the derivative of f(x) = x^3 +2x^2 + 1? of course not.

but we know mathematically that it is f'(x) = 3x^2 + 4x. and we can graph this. and then we can visualize it.

price is a very, very complex function and graphs are extremely useful at visualizing the relationship between different sets of data.

you would be 110% correct if it werent for one important oversight: self fulfilling prophecy.

while this does come into play, TA works even without this mechanism.

how? you might ask.

technical analysis in general is just applied calculus. as a rule the momentum of the price changes before the price does. this is equivalent to saying that the derivative of an increasing function begins decreasing before the function itself does, and vice versa (which answers the question of how can past performance 'predict' future results).

in other words, get your heads out of your asses. you don't need to understand stochastic calculus to understand TA (most algorithms are algebraic transforms of price and volume), so go to chart school and stop shitting on our parade.

I agree that you can use volume with price. But price is the boss.You don't know anything about me or my level of trading experience. I have seen you spouting your TA nonsense all over these forums. Make some TA predictions in advance so we can be in awe of your future predicting abilities. It's easy, all you have to do is say up, down or trade in a range and there will be a good chance that you will pick the right one. 1 of 3. TA is bunk. If it's not, prove it.

[humanitee]

He's calling down here: https://bitcointalk.org/index.php?topic=144565.msg1533460#msg1533460

[tripper22]

He's calling down here: https://bitcointalk.org/index.php?topic=144565.msg1533460#msg1533460

And his call might be right. This time. But TA is the same as flipping a coin. Sometimes you guess correctly. It's not because the squiggly lines predicted the future. It's not because you are a TA guru. You just guessed correctly. This time.

[notme]

Quite easily...

and the award for completely sidestepping valid points goes to........

you. not me.

hint: how many algebraic terms do you think one would need to construct a polynomial function that estimates price?

That's because I agree with your points about calculus, volume, and momentum.

It depends on how much information you have.  If you knew everything you could likely reduce it to a very small number of variables (ie big players).  If you are trying to tease it out of a bunch of noisy signals, quite a few.  Your example was just a quadratic shifted linearly.  I've seen those before.

[arepo]

Make some TA predictions in advance so we can be in awe of your future predicting abilities. It's easy, all you have to do is say up, down or trade in a range and there will be a good chance that you will pick the right one. 1 of 3. TA is bunk. If it's not, prove it.

He's calling down here: https://bitcointalk.org/index.php?topic=144565.msg1533460#msg1533460

And his call might be right. This time. But TA is the same as flipping a coin. Sometimes you guess correctly. It's not because the squiggly lines predicted the future. It's not because you are a TA guru. You just guessed correctly. This time.

whoa, are you going to let me try to prove it or are you going to stick stubbornly to your assumptions? if nothing i say will change your mind, i'm not going to waste my time. but since my reputation is on the line...

this was a good one,

and this bearish divergence predicted the flattening of prices (=trading within a range, as opposed to continuing the trend).

and i may be wrong in my new call. but that doesn't disprove TA either. it obviously can't predict the future because markets are anti-inductive and some irrational or large players or big news events can add additional pressures to the underlying market forces. but the fact is, we're overdue for a correction. the indicators all agree.

and it's certainly better than 50/50 though, i can tell you that. you do need to understand stochastic calculus for that point, though.

also, are you going to respond to any of my points? do you understand the basic principle that momentum changes before price, at least?

[arepo]

Quite easily...

and the award for completely sidestepping valid points goes to........

you. not me.

hint: how many algebraic terms do you think one would need to construct a polynomial function that estimates price?

That's because I agree with your points about calculus, volume, and momentum.

It depends on how much information you have.  If you knew everything you could likely reduce it to a very small number of variables (ie big players).  If you are trying to tease it out of a bunch of noisy signals, quite a few.  Your example was just a quadratic shifted linearly.  I've seen those before.

i'm glad we agree on something

im not sure if your formulation would work though. i'm talking about a function that traces the actual path of the price, which could be estimated by a function of only one variable with a really, really large taylor expansion (c1 x^n + c2 x^(n-1) + c3 x^(n-3) ... + cn x + C) rather than one which solves for price given multiple parameters f(n, V, N) where n= number of large players, V=daily volume, n=good news or something like that.

the beauty of taylor approximations is that they're possible. any differentiable function of one variable can be estimated by a polynomial to any arbitrary precision.

but that's besides the point. the original example was a mixed cubic. its derivative was a mixed quadratic. good on you that you know that it has a basic cup-shaped graph but you wouldn't be able to, for instance, immediately tell me what its intercepts and minimum value were without a little bit of math. if you have the graph in front of you, these things are immediately obvious.

but this explanation is mostly for other readers anyway, as it seems we are in agreement as to why representing the data graphically is advantageous.

[notme]

Quite easily...

and the award for completely sidestepping valid points goes to........

you. not me.

hint: how many algebraic terms do you think one would need to construct a polynomial function that estimates price?

That's because I agree with your points about calculus, volume, and momentum.

It depends on how much information you have.  If you knew everything you could likely reduce it to a very small number of variables (ie big players).  If you are trying to tease it out of a bunch of noisy signals, quite a few.  Your example was just a quadratic shifted linearly.  I've seen those before.

i'm glad we agree on something

im not sure if your formulation would work though. i'm talking about a function that traces the actual path of the price, which could be estimated by a function of only one variable with a really, really large taylor expansion (c1 x^n + c2 x^(n-1) + c3 x^(n-3) ... + cn x + C) rather than one which solves for price given multiple parameters f(n, V, N) where n= number of large players, V=daily volume, n=good news or something like that.

the beauty of taylor approximations is that they're possible. any differentiable function of one variable can be estimated by a polynomial to any arbitrary precision.

but that's besides the point. the original example was a mixed cubic. its derivative was a mixed quadratic. good on you that you know that it has a basic cup-shaped graph but you wouldn't be able to, for instance, immediately tell me what its intercepts and minimum value were without a little bit of math. if you have the graph in front of you, these things are immediately obvious.

but this explanation is mostly for other readers anyway, as it seems we are in agreement as to why representing the data graphically is advantageous.

If you're going past x^4 and you don't have a damn good reason you are overfitting.  Why would you try to model price like that?

[arepo]

If you're going past x^4 and you don't have a damn good reason you are overfitting.  Why would you try to model price like that?

i wouldn't. i was contrasting a taylor expansion-style price estimator with a function that takes multiple parameters.

[notme]

If you're going past x^4 and you don't have a damn good reason you are overfitting.  Why would you try to model price like that?

i wouldn't. i was contrasting a taylor expansion-style price estimator with a function that takes multiple parameters.

Can you give me an example of what a taylor expansion-style price estimator is?  I understand taylor expansions, but I have no clue how to use that to "estimate price".  I also don't see how building an equation to guess the price is not modeling the price, but maybe your example can clear that up too.

[arepo]

i dont want to derail the thread. but let me clarify:

you suggested a formulation that might take a parameter like "number of large players". i am more in favor of a (mental) model of the price that looks like a taylor expansion and which acts like a polynomial with local minima and maxima that can be anticipated by tracking the derivative, or rate of change (price 'momentum' in trader terms). it wouldn't actually be a good method to try to model price as far as fitting of a curve.

in other words, it was merely an example to show that the idea of tracking the derivative of a much simpler polynomial can be applied to tracking the momentum of the 'price function'. a thought experiment, if you will.

[ciphermonk]

Technical analysis is based on one assumption:  that there exists time-correlations in market prices.

If someone manages to formally prove the existence of these correlations, that would settle it for me.

I've seen very complex attempts at extracting these correlations, through artificial intelligence algorithms such as high-dimensional support vector methods. These algorithms can find extremely complex correlations in the data that would be very hard for us humans to grasp, or completely unintuitive. If these methods fail at detecting correlations, I have a hard time with the credibility of "toy functions" used in classical TA.

My 2 bitcents. I could be completely wrong and thats fine.

(note: finding correlations amounts to predicting the price better than random. Of course, random can be right sometimes, but it's predictive power is useless.)

[Piper67]

Even Proudhon is right twice a day... TA is just so much snake oil, as the number of unknown variables is greater than 1.

[piramida]

Yeah, TA is the same as a coin toss - but only if the coin would generate similar results for everybody tossing at the same time. So what Puppet said - instead of being 50% random, TA gives the edge of knowing when to enter / exit the market because of herd mentality, markets are all about herds actually.

Not always right, but even more than 50% is good enough.

[KTE]

PRICE and only PRICE should dictate your actions as a trader.

I'm sorry but that's a ridiculous statement and unfortunately does show inexperience in financial analysis. Price is a completely arbitrary metric, and has zero effect on trading decisions. Market cap is what is relevant, and as a trader even that is only relevant if you can estimate the future perceived market cap of what you're trading.

[xxjs]

TA promoters should be aware of the fact that the value of a bitcoin was zero from the time of genesis, so the appreciation of one bitcoin (in percent or fraction) is always infinite. You can therefore not go too far back in time with your formulas. Personally I think the crash of 2011 is not relevant any more, too much have changed.

[arepo]

Yeah, TA is the same as a coin toss - but only if the coin would generate similar results for everybody tossing at the same time. So what Puppet said - instead of being 50% random, TA gives the edge of knowing when to enter / exit the market because of herd mentality, markets are all about herds actually.

Not always right, but even more than 50% is good enough.

technical analysis works in ways other than simple herd behavior. this point has been addressed in this thread already. in fact, the most objective comment is by far this one:

Technical analysis is based on one assumption:  that there exists time-correlations in market prices.

If someone manages to formally prove the existence of these correlations, that would settle it for me.

I've seen very complex attempts at extracting these correlations, through artificial intelligence algorithms such as high-dimensional support vector methods. These algorithms can find extremely complex correlations in the data that would be very hard for us humans to grasp, or completely unintuitive. If these methods fail at detecting correlations, I have a hard time with the credibility of "toy functions" used in classical TA.

My 2 bitcents. I could be completely wrong and thats fine.

(note: finding correlations amounts to predicting the price better than random. Of course, random can be right sometimes, but it's predictive power is useless.)

i also added my own 2 cents about the relationship between technical analysis and calculus, which i believe is why it is effective.

[Zangelbert Bingledack]

TA ain't bunk, but there is also the maxim: "Just because something is true doesn't means it's always useful."

Provided you believe in Bitcoin's potential, trying to trade on volatility in this market, even with the advantage TA can provide, strikes me as incredibly piggish. 1000% growth every 18 months not good enough for ya? There's such a thing as being too smart for your own good.

[arepo]

@OP

[snip]

Make some TA predictions in advance so we can be in awe of your future predicting abilities. It's easy, all you have to do is say up, down or trade in a range and there will be a good chance that you will pick the right one. 1 of 3. TA is bunk. If it's not, prove it.

[snip]

since my reputation is on the line...

this was a good one,

and this bearish divergence predicted the flattening of prices (=trading within a range, as opposed to continuing the trend).

and i may be wrong in my new call. but that doesn't disprove TA either. it obviously can't predict the future because markets are anti-inductive and some irrational or large players or big news events can add additional pressures to the underlying market forces. but the fact is, we're overdue for a correction. the indicators all agree.

and it's certainly better than 50/50 though, i can tell you that. you do need to understand stochastic calculus for that point, though.

also, are you going to respond to any of my points? do you understand the basic principle that momentum changes before price, at least?

i just want to thank you for the spectacular timing of this post. i can now add my most recent call to the above list. even if technical analysis is bullshit -- which it is not -- you really put your foot in your mouth with this one.

[arepo]

TA ain't bunk, but there is also the maxim: "Just because something is true doesn't means it's always useful."

Provided you believe in Bitcoin's potential, trying to trade on volatility in this market, even with the advantage TA can provide, strikes me as incredibly piggish. 1000% growth every 18 months not good enough for ya? There's such a thing as being too smart for your own good.

holy hindsight bias, batman!

-facepalm-

[Zangelbert Bingledack]

TA ain't bunk, but there is also the maxim: "Just because something is true doesn't means it's always useful."

Provided you believe in Bitcoin's potential, trying to trade on volatility in this market, even with the advantage TA can provide, strikes me as incredibly piggish. 1000% growth every 18 months not good enough for ya? There's such a thing as being too smart for your own good.

holy hindsight bias, batman!

-facepalm-

Not hindsight: note the bolded text. If you're not investing because you think you'll be able to buy a house with a single bitcoin in the future, the statement doesn't apply to you.

[tripper22]

It's nice to see a lot of back and forth on this topic. I enjoy the reading all the varied opinions.

[tripper22]

@OP

[snip]

Make some TA predictions in advance so we can be in awe of your future predicting abilities. It's easy, all you have to do is say up, down or trade in a range and there will be a good chance that you will pick the right one. 1 of 3. TA is bunk. If it's not, prove it.

[snip]

since my reputation is on the line...

this was a good one,

and this bearish divergence predicted the flattening of prices (=trading within a range, as opposed to continuing the trend).

and i may be wrong in my new call. but that doesn't disprove TA either. it obviously can't predict the future because markets are anti-inductive and some irrational or large players or big news events can add additional pressures to the underlying market forces. but the fact is, we're overdue for a correction. the indicators all agree.

and it's certainly better than 50/50 though, i can tell you that. you do need to understand stochastic calculus for that point, though.

also, are you going to respond to any of my points? do you understand the basic principle that momentum changes before price, at least?

i just want to thank you for the spectacular timing of this post. i can now add my most recent call to the above list. even if technical analysis is bullshit -- which it is not -- you really put your foot in your mouth with this one.

You have to do better than 1 correct call. In a previous post I said that there was a chance you could be correct. Let's see how your future calls pan out. I'm not holding my breath.

[Nesetalis]

Until that Analysis can tell you that such and such group is going to announce bitcoin tomorrow to a few million people... its always going to be imprecise. It is trying to predict an unpredictable path.  To be able to predict it, you need every single datapoint involved with the situation, because all it takes is one single announcement, or one single guy deciding "today is the day I cash out." and it will throw everything completely off course.

However A technical analysis is great at plotting history.

[arepo]

You have to do better than 1 correct call. In a previous post I said that there was a chance you could be correct. Let's see how your future calls pan out. I'm not holding my breath.

three. three correct calls. but i'm not holding my breath as far as winning you over because you've already demonstrated that you weren't actually looking for evidence and it won't affect your predetermined opinion anyway.

as for

Until that Analysis can tell you that such and such group is going to announce bitcoin tomorrow to a few million people... its always going to be imprecise. It is trying to predict an unpredictable path.  To be able to predict it, you need every single datapoint involved with the situation, because all it takes is one single announcement, or one single guy deciding "today is the day I cash out." and it will throw everything completely off course.

However A technical analysis is great at plotting history.

i've already written a response for this:

this is a terrible misconception that just about everyone has. charts are not meant to predict the influence of news, but rather make observations about market forces like the behavior of an asset that is overbought.

as price goes up, the incentive to take profit goes up. if an asset were incredibly overbought and an influx of new money began flowing into it, market forces may prevent the 'obvious' rally from happening because selling pressure would increase in proportion.

kind of like what is happening right now, in spite of the reddit announcement.

charts will never predict single movements by large actors, or anything like that, and no one is claiming that they have the power to.

[KTE]

Wait a minute, are you saying that today's brief dip was a correct call for the correction you predicted? I thought you said that the dip before the weekend was supposed to be smaller temporary dip and today we were supposed to have a real correction to a lower level.

[arepo]

Wait a minute, are you saying that today's brief dip was a correct call for the correction you predicted? I thought you said that the dip before the weekend was supposed to be smaller temporary dip and today we were supposed to have a real correction to a lower level.

yes, i suspect that this move is far from over and that the 'real' correction is starting. we should settle into a downtrend and continue until we bounce off of a strong support like $21.

but tripper gave me very simple criteria:

[snip]
Make some TA predictions in advance so we can be in awe of your future predicting abilities. It's easy, all you have to do is say up, down or trade in a range and there will be a good chance that you will pick the right one. 1 of 3. TA is bunk. If it's not, prove it.

i called down. the next move was down.

[tripper22]

Wait a minute, are you saying that today's brief dip was a correct call for the correction you predicted? I thought you said that the dip before the weekend was supposed to be smaller temporary dip and today we were supposed to have a real correction to a lower level.

yes, i suspect that this move is far from over and that the 'real' correction is starting. we should settle into a downtrend and continue until we bounce off of a strong support like $21.

but tripper gave me very simple criteria:

[snip]
Make some TA predictions in advance so we can be in awe of your future predicting abilities. It's easy, all you have to do is say up, down or trade in a range and there will be a good chance that you will pick the right one. 1 of 3. TA is bunk. If it's not, prove it.

i called down. the next move was down.

I am watching. If I am proven wrong I will admit it here in the forum. I believe that TA has no value and you believe that it does. My point in the earlier post was that it is easy to pick one of three options and have a good chance of being right. I respect that you will stand up for and explain why you think TA has value. I haven't followed your previous calls. Are you saying that your analysis is suggesting to you that we will have a correction to the $21.00 level? Can you explain how you have come to this conclusion?

[Piper67]

Wait a minute, are you saying that today's brief dip was a correct call for the correction you predicted? I thought you said that the dip before the weekend was supposed to be smaller temporary dip and today we were supposed to have a real correction to a lower level.

yes, i suspect that this move is far from over and that the 'real' correction is starting. we should settle into a downtrend and continue until we bounce off of a strong support like $21.

but tripper gave me very simple criteria:

[snip]
Make some TA predictions in advance so we can be in awe of your future predicting abilities. It's easy, all you have to do is say up, down or trade in a range and there will be a good chance that you will pick the right one. 1 of 3. TA is bunk. If it's not, prove it.

i called down. the next move was down.

That means you have about a 50 percent chance of being right. The evidence you talk about isn't evidence at all. For a 50/50 call, you'd have to be right something like 20-30 times in succession, uninterruptedly, for it to constitute any sort of evidence.

And your down seems, at best, to be a bit of a down, a bit of an up, a bit sideways, and a jiggle.

[arepo]

And your down seems, at best, to be a bit of a down, a bit of an up, a bit sideways, and a jiggle.

geez, you guys are hard to please.

before my call, the price was above $27. now it is below $27. furthermore, the very next action after my call was straight down. if this doesn't count, i don't know what does.

That means you have about a 50 percent chance of being right. The evidence you talk about isn't evidence at all.

try 11%, as this would be my third consecutive correct call, and Tripper already defined the simplistic criteria of up, down, sideways [(1/3)^3 or (1/9)]. i already posted about this, and then quoted it again later because everyone kept ignoring it.

regardless, correct calls don't count as evidence. you're right. we went over this point already, also. but that means making incorrect calls doesn't count as counter-evidence either. you can't have it both ways.

the "evidence" for TA is that time correlations do actually appear in the charts. it's just stochastic, not deterministic. this means that, for instance, if an indicator is saying 'overbought', the price is more likely to move down than up (given that the indicator has been shown to 'work' for that market. that is, the indicator properly captures some hidden information about the price behavior), not that this move will definitely happen.

for a beautiful example of time correlations in price behavior, i can point you to a recent 'correct prediction' i made, this one calling the first knife that stalled the rally:

the last time we re-entered the overbought (red) after crossing the centerline but not reaching blue, there was a significant correction.

you were warned.

-===-

do you see how that works?

and @Tripper, as for further analysis about where i think the downtrend will stop ($21 was really just a guess), i'm waiting for the tremors to die down a little from that last big movement (DOWN, by the way ) to reassess. the data is too noisy right at this moment. you can follow along in my 'reversal' thread which has the rest of the analysis as well, as that's where i will be updating.

thanks for being open-minded, at least

[humanitee]

for a beautiful example of time correlations in price behavior, i can point you to a recent 'correct prediction' i made, this one calling the first knife that stalled the rally:

Yeah that giant green candle was totally a "stall." 

[tripper22]

The chart above speaks for itself. What do you guys see?

[odolvlobo]

I know that TA is bunk for two reasons.

First, if it weren't bunk then it would be easy to find information on how and why it works. Oh, there are plenty of principles and generalizations and magic numbers, but nothing concrete. And there are lots of information on how to do TA, but nobody explains how it works. If it were for-real, this information would exist everywhere, since it is so fundamental to the religion. For example, in TA when two moving averages cross, that is a "signal". I challenge any believer to explain the math behind this. Even the TA bible, Technical Analysis of the Financial Markets by John C. Murphy, spends 20 pages on the "philosophy" of TA and 500 pages on how to do the computations.

Second, as I have pointed out in a previous thread, the moving average is a fundamental part of TA, yet it is a lagging indicator, not a leading indicator. That is, a moving average tells you what happened in the past, not what is happening now, and certainly not what will happen in the future. The information in a moving average that is calculated today is already out-of-date. In an attempt to get around this fundamental flaw, TA believers shift the graphs into the future. That's why you never see the averages line up with the actual prices. Furthermore, when they compare moving averages (MACD, for example), they shift them by different amounts and this creates noise, which they interpret as signals.

[jl2012]

And your down seems, at best, to be a bit of a down, a bit of an up, a bit sideways, and a jiggle.

geez, you guys are hard to please.

before my call, the price was above $27. now it is below $27. furthermore, the very next action after my call was straight down. if this doesn't count, i don't know what does.

That means you have about a 50 percent chance of being right. The evidence you talk about isn't evidence at all.

try 11%, as this would be my third consecutive correct call, and Tripper already defined the simplistic criteria of up, down, sideways [(1/3)^3 or (1/9)]. i already posted about this, and then quoted it again later because everyone kept ignoring it.

regardless, correct calls don't count as evidence. you're right. we went over this point already, also. but that means making incorrect calls doesn't count as counter-evidence either. you can't have it both ways.

the "evidence" for TA is that time correlations do actually appear in the charts. it's just stochastic, not deterministic. this means that, for instance, if an indicator is saying 'overbought', the price is more likely to move down than up (given that the indicator has been shown to 'work' for that market. that is, the indicator properly captures some hidden information about the price behavior), not that this move will definitely happen.

for a beautiful example of time correlations in price behavior, i can point you to a recent 'correct prediction' i made, this one calling the first knife that stalled the rally:

the last time we re-entered the overbought (red) after crossing the centerline but not reaching blue, there was a significant correction.

you were warned.

-===-

do you see how that works?

and @Tripper, as for further analysis about where i think the downtrend will stop ($21 was really just a guess), i'm waiting for the tremors to die down a little from that last big movement (DOWN, by the way ) to reassess. the data is too noisy right at this moment. you can follow along in my 'reversal' thread which has the rest of the analysis as well, as that's where i will be updating.

thanks for being open-minded, at least

Look at the daily RSI chart. In the last month, a crash comes the following day if and only if RSI reaches 89. A pattern repeating 3 times in a row is more convincing to me. I'll probably unload a little bit the next time and try to catch the knife.

[arepo]

for a beautiful example of time correlations in price behavior, i can point you to a recent 'correct prediction' i made, this one calling the first knife that stalled the rally:

Yeah that giant green candle was totally a "stall."  

the green candle after the warning knife was an overcorrection. this led to a deep consolidation -- a flattening of price in a familiar triangle pattern. it did indeed stall the rally.

The chart above speaks for itself. What do you guys see?

i see, after said warning knife, a "bullish" triangle that defies expectation and breaks out downside [marked below].

do you just see the overall trend? because if you missed the significance of the recent action, your eyes aren't sharp enough. also, price data by itself isn't very elucidating. this is where other indicators come in.

-===-



-===-

if you notice, there was another such downside breakout after a "bullish" triangle around the first of February [not market] after which the trend did resume, but the reversal signals weren't so strong then.

-=-

I know that TA is bunk for two reasons.

First, if it weren't bunk then it would be easy to find information on how and why it works. Oh, there are plenty of principles and generalizations and magic numbers, but nothing concrete. And there are lots of information on how to do TA, but nobody explains how it works. If it were for-real, this information would exist everywhere, since it is so fundamental to the religion. For example, in TA when two moving averages cross, that is a "signal". I challenge any believer to explain the math behind this. Even the TA bible, Technical Analysis of the Financial Markets by John C. Murphy, spends 20 pages on the "philosophy" of TA and 500 pages on how to do the computations.

this is rife with preconceived bias. you treat technical analysis like a religion, and in some ways it is. here's an analogy: what makes buddhists less annoying than christians? they make fewer blatantly scientifically false claims.

like the man-in-the-sky view of god, elliot waves and candlestick interpretation is ruined by bias and is barely scientific. buddhism, however, is much more subtle, like the calculus involved in tracking the momentum of price.

magic numbers and generalizations are not good analysis. the above chart is a perfect example; standard triangle pattern rules state that an ascending triangle consolidation during an uptrend tends to break out upside, continuing the trend. this failed to happen. these general rules fail because they are not sensitive to the nuanced context of markets. are we overdue for a correction? has there been good/bad news recently? is it the weekend?

price behaves stochastically, not deterministically. any rule that says "for this price pattern, this happens" is bound to fail. i think the key issue with your point here is that many so-called "believers" of technical analysis aren't very good at it at all, and don't understand why it works. this is why there is so little information regarding this particular matter. you really need a good understanding of stochastic calculus to intuitively grasp price behavior, and very very few people do. i barely understand it, but i understand its principles and i use them to separate the 'good' TA from the bunk.

i will concede, however, that there is a LOT of bunk. but there are a few good apples amongst the fermenting mass

also, markets are anti-inductive. this prevents any well-recognized 'rule' from being exploited. this may also contribute to the lack of documentation for concrete, well-defined, provably successful techniques. i would also advise the use of proprietary indicators for any serious analysis for this reason.

Second, as I have pointed out in a previous thread, the moving average is a fundamental part of TA, yet it is a lagging indicator, not a leading indicator. That is, a moving average tells you what happened in the past, not what is happening now, and certainly not what will happen in the future. The information in a moving average that is calculated today is already out-of-date. In an attempt to get around this fundamental flaw, TA believers shift the graphs into the future. That's why you never see the averages line up with the actual prices. Furthermore, when they compare moving averages (MACD, for example), they shift them by different amounts and this creates noise, which they interpret as signals.

this point has been addressed before. i even used the MACD as an example:

by your definition, all indicators are lagging indicators. the MACD goes 'up and down' as an echo to price but there's more to it. sometimes the price makes new highs but the MACD fails to. other times, the opposite happens. the crossovers of the slower and faster moving averages also represent information about the rate of change in price compared to its historical rate of change. these are all very important observations. indicators do much, much more than mimic price movement.

in other words, the value of the moving average is a lagging value but its graphical representation is rich in information comparing historical momentum to present momentum, which is useful data.

-=-

Look at the daily RSI chart. In the last month, a crash comes the following day if and only if RSI reaches 89. A pattern repeating 3 times in a row is more convincing to me. I'll probably unload a little bit the next time and try to catch the knife.

good! this is technical analysis. i'm glad you identified a time-correlation in price. they are quite useful.

[tripper22]

for a beautiful example of time correlations in price behavior, i can point you to a recent 'correct prediction' i made, this one calling the first knife that stalled the rally:

Yeah that giant green candle was totally a "stall."  

the green candle after the warning knife was an overcorrection. this led to a deep consolidation -- a flattening of price in a familiar triangle pattern. it did indeed stall the rally.

The chart above speaks for itself. What do you guys see?

i see, after said warning knife, a "bullish" triangle that defies expectation and breaks out downside [marked below].

do you just see the overall trend? because if you missed the significance of the recent action, your eyes aren't sharp enough. also, price data by itself isn't very elucidating. this is where other indicators come in.

-===-



-===-

if you notice, there was another such downside breakout after a "bullish" triangle around the first of February [not market] after which the trend did resume, but the reversal signals weren't so strong then.

I disagree. I see strength with the dips being bought. A continuation of the trend is what I expect. My eyes are sharp enough. 20/20 I believe. No indicators required.

[odolvlobo]

Second, as I have pointed out in a previous thread, the moving average is a fundamental part of TA, yet it is a lagging indicator, not a leading indicator. That is, a moving average tells you what happened in the past, not what is happening now, and certainly not what will happen in the future. The information in a moving average that is calculated today is already out-of-date. In an attempt to get around this fundamental flaw, TA believers shift the graphs into the future. That's why you never see the averages line up with the actual prices. Furthermore, when they compare moving averages (MACD, for example), they shift them by different amounts and this creates noise, which they interpret as signals.

this point has been addressed before. i even used the MACD as an example:

by your definition, all indicators are lagging indicators. the MACD goes 'up and down' as an echo to price but there's more to it. sometimes the price makes new highs but the MACD fails to. other times, the opposite happens. the crossovers of the slower and faster moving averages also represent information about the rate of change in price compared to its historical rate of change. these are all very important observations. indicators do much, much more than mimic price movement.

in other words, the value of the moving average is a lagging value but its graphical representation is rich in information comparing historical momentum to present momentum, which is useful data.

My two key points are that the information provided by a moving average is out-of-date on the day it is computed, and that when comparing two moving averages shifted by different amounts, the result is just noise.

On the other hand, if you compute the MACD without shifting the averages, you would get exactly the information you wrote about above, but it would still be out-of-date and no longer useful. Actually, I don't think this is completely true because it assumes there is no "momentum", which has been shown to exist. Anyway, my suggestion to TA adherents is to fix the moving average, throw out all the current nonsense, and try again.

[KTE]

yes, i suspect that this move is far from over and that the 'real' correction is starting. we should settle into a downtrend and continue until we bounce off of a strong support like $21.

But now we just broke the initial downturn price.

[tripper22]

yes, i suspect that this move is far from over and that the 'real' correction is starting. we should settle into a downtrend and continue until we bounce off of a strong support like $21.

I'm still waiting for the 'real' correction that your indicators were indicating. How long until we can say that you were wrong on that one? My price only chart with no squiggly lines seems to be correct for the time being.

[Nesetalis]

c'mon price.. drop back down to maybe 10 or 20$... I wanna buy some more cheaply!

[sgbett]

three. three correct calls.

as the old saying goes... three swallows make a summer!

[arepo]

My two key points are that the information provided by a moving average is out-of-date on the day it is computed, and that when comparing two moving averages shifted by different amounts, the result is just noise.

On the other hand, if you compute the MACD without shifting the averages, you would get exactly the information you wrote about above, but it would still be out-of-date and no longer useful. Actually, I don't think this is completely true because it assumes there is no "momentum", which has been shown to exist. Anyway, my suggestion to TA adherents is to fix the moving average, throw out all the current nonsense, and try again.

[emphasis mine]

can you explain why you think historical data is useless?

also -- PRICE AND VOLUME ARE LAGGING INDICATORS THE EFFICIENT MARKET HYPOTHESIS IS TRUE MOMENTUM DOESN'T EXIST TRUE RANDOMNESS IS THE NEXT MARKET ACTION.

this is all i hear in this thread, and, let me tell you, that's bunk.

-=-

@Tripper, things aren't looking good for my prognostications, i do concede. i still believe we need a significant correction but my timing was off. most of the indicators did indeed plummet, but then bounced right off of the zero-line instead of going negative, which points to much, much stronger support than i had accounted for.

i'm not surprised though. like i pointed out above, the last time we had a downside breakout after a triangle consolidation it didn't spark a downtrend either. the market just consolidated and kept going up. by the time i last did analysis, the downward pressure was tapering and i downgraded the reversal risk to "medium" in my thread. we hadn't broken out of any trendlines and the selloffs weren't causing panic. and then we jumped another dollar and a half.

so good on you. you made a correct prediction, yourself! after the triangle you called trend continuation. keep up the good analysis, whatever techniques you're using

[piramida]

so good on you. you made a correct prediction, yourself! after the triangle you called trend continuation. keep up the good analysis, whatever techniques you're using

It's called a rocket analysis; whenever you see a rocket with BTC logo you can be certain that it will only go straight up...




...until it explodes mid-way

[stillfire]

so good on you. you made a correct prediction, yourself! after the triangle you called trend continuation. keep up the good analysis, whatever techniques you're using

So the score is 2 correct for arepo and 1 for tripper22?

[nrd525]

Are there any studies that prove that technical analysis works?

There are a small number of traders that make money trading.  However, the smaller this number gets - the more likely it is due to luck.  If you have 1/32 or more of traders making money in a zero-sum (or negative sum after the fees) market for five years in a row - then that would be evidence that analysis can work.

Whether or not I believe in technical analysis, there are other people who do and it will affect their actions and thus affect the market.  Now where it gets tricky is that you don't know what indicators people are following, so I stick to fundamentals (aka value).

[Piper67]

Are there any studies that prove that technical analysis works?

There are a small number of traders that make money trading.  However, the smaller this number gets - the more likely it is due to luck.  If you have 1/32 or more of traders making money in a zero-sum (or negative sum after the fees) market for five years in a row - then that would be evidence that analysis can work.

Whether or not I believe in technical analysis, there are other people who do and it will affect their actions and thus affect the market.  Now where it gets tricky is that you don't know what indicators people are following, so I stick to fundamentals (aka value).

Even in that case, it's well within the realm of possibility. Try getting a hold of Leonard Mlodinow's book " The Drunkard's Walk, How Randomness Affects Our Lives". There's an entire chapter devoted to day traders/TA people... and it's bunk 

[notme]

Are there any studies that prove that technical analysis works?

There are a small number of traders that make money trading.  However, the smaller this number gets - the more likely it is due to luck.  If you have 1/32 or more of traders making money in a zero-sum (or negative sum after the fees) market for five years in a row - then that would be evidence that analysis can work.

Whether or not I believe in technical analysis, there are other people who do and it will affect their actions and thus affect the market.  Now where it gets tricky is that you don't know what indicators people are following, so I stick to fundamentals (aka value).

Even in that case, it's well within the realm of possibility. Try getting a hold of Leonard Mlodinow's book " The Drunkard's Walk, How Randomness Affects Our Lives". There's an entire chapter devoted to day traders/TA people... and it's bunk 

There is money to be made in market making, but large risk as well.  TA can help identify when to step out of the way.  Additionally, it is much easier to do market making in code than manually.  But the TA can tell me when to turn my not off.

[arepo]

Are there any studies that prove that technical analysis works?

There are a small number of traders that make money trading.  However, the smaller this number gets - the more likely it is due to luck.  If you have 1/32 or more of traders making money in a zero-sum (or negative sum after the fees) market for five years in a row - then that would be evidence that analysis can work.

Whether or not I believe in technical analysis, there are other people who do and it will affect their actions and thus affect the market.  Now where it gets tricky is that you don't know what indicators people are following, so I stick to fundamentals (aka value).

Even in that case, it's well within the realm of possibility. Try getting a hold of Leonard Mlodinow's book " The Drunkard's Walk, How Randomness Affects Our Lives". There's an entire chapter devoted to day traders/TA people... and it's bunk 

there are many cases against it. but the trick is that one has to prove the absence of time-correlations in price data. proving a negative is notoriously difficult.