Technical analysis is total bunk.

[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.

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[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