Is TA a self-fulfilling prophecy?

[Cnut237]

I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.
However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?

[1713857486]

1713857486

[mk4]

The thing is, people mostly misunderstand what TA actually is. Some people think TA is actually accurately predicting what's going to happen with the prices, but the truth is, TA is just being used to look at the odds, and using the odds to your favor by correctly assessing the risks:reward ratio.

But to answer your question: it can be. Especially when were talking about multiple big name YouTubers saying that it's likely for the prices to increase, then this would cause their respective watchers/subscribers to FOMO in.

[hugeblack]

Technical analysis may lead to logical results if it takes these factors into account:

 - mempool: tx/day.
 - Analysis of the behavior of current and future news.

Otherwise, the technical analysis is a prediction that may or may not be true but will not change the price.
The reason for this is that many will lose trust in these analyzes as soon as they start to lose & thus reduces its impacts.

[milewilda]

Possible to happen but not at all! Why? because not all traders are depending on TA's. There might be some but not generally a thing where market manipulators would consider to use it on making their move.

TA's isnt a reliable thing for us to depend on making order positions and im pretty sure that most traders do aware that this unpredictable market do corresponds with fundamentals too and not only with TA's.

[carter34]

Or is everything I've said complete nonsense?

  Nope, you ain't saying nonsense. You have said what I think many TA traders would say. Plus I like the title, you would have gained a merit from me 

In fact, when TA fulfills certain market order, I become astonished. If you are a follower of TA, all that is needed is patience and the prophecy will come around... Cheers!

[dothebeats]

TA is somewhat useless in highly volatile markets like bitcoin whereas in Forex and stocks, TA is an amazing tool, yet even then one shouldn't rely fully on such analysis. Anyway, I think TA has its own merits given that most traders are using it for their positions in the market, creating a hive-mind that makes normal market movements seem like a pattern that is followed by most people resulting into some predictions being correct. Since someone have started keeping 'patterns' of the market, anyone who reads it will take note of it and when that pattern appears, they'll know what to do and how to react. But yeah, it could work on relatively stable markets but not in cryptocurrencies at all time, given that the said market is young and a lot of people are doing different things at a given time.

[harizen]

I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.
However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?

Technical analysis are designed to give references for the next strategy. Yes, a set of possible outcome which may lead to success.

Since they are "references", obviously no way people should solely rely on that. No one knows what will happen next. We all know that market behaviour in crypto is way different in stocks. Just imagined that most TA's are being spoiled in stocks so what's more in crypto?

I have seen lots of crypto traders who are really good in chart reading but ended up always being busted. That's because their TA's doesn't include the outside factors and just rely on indicators. Again, TA's are good references as we can speculate the possible outcome, but here in cryptos, we need to add other variants on our set of TA's in order to increase our winning chances.

[exstasie]

I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.

The liquidity issue certainly affects TA. It becomes less and less reliable as you apply it to thinner and thinner altcoin markets. It's perfectly applicable to Bitcoin though.

However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.

What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?

It's impossible to know the answer to this. Personally, I don't think TA is self-fulfilling, or at least that's not the primary impetus for price movement. I think good TA often works because it specifically looks for imbalance in supply and demand. Eg when a breakout occurs, sellers are pressured to buy back to cut losses. It's only logical to then try to ride that wave, knowing that new buying pressure and momentum exists.

Surely contrarian traders try to fade the market like you're saying. Sometimes it works and sometimes it doesn't. Trading chart setups is never a fool-proof thing. Markets are still inherently unpredictable.

[Kemarit]

I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.

Of course we need to factor out that this market is prone to manipulation. That's why anti TA says that it's not applicable specially in a thin market such as altcoins.

However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?

I would say that not all the time TA works in Bitcoin market, but I guess its good if you have something to back up your decision either to sell or to buy, and not just your emotions. Although this market can be manipulated, at least a good TA will indicate that something is wrong in the ecosystem right now and it's up to you to make that 'logical' decision and not just base on your feeling or hunch (which, unfortunately, most of us do.)

[--DarkSecrets--]

I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.
However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?

For my experience well i am a breakout trader i can say from my technical analysis and using my knowledge to predict i can make 3-4 wins in a 5 trades. It is a very big help to predict where the trend is going and what possible ways how any coin can dump using other indicators. Your belief in trading using technical analysis can be different but more on traders earn from using it.

[gantez]

I do believe that TA is more effective for forex traders. The volatility rate might be one reason the same might not be wholly said for crypto. My view is that , TA is not necessarily fulfilling the prophecy because it can't only be instrumental to a trader. There are market emotions or sentiment, news/fuds too.

[Theb]

People who have knowledge with Technical Analysis are somehow more prepared than newbies who doesn't have any kind of market knowledge at all. Why? Because there is more to it besides the studyung of charts, candles, moving averages, and volume as in TA you will also learn entry and exit points, the market's psychology, and overall a clear sense of the market which newbies don't have. So if you think you won't have an advantage from TA you should know that the knowledge you will gain will be really helpful in the crypto market.

[KualaBit]

I believe Technical Analysis would be efficient if paired with Fundamental Analysis.  This two get along very well together.  In case of cryptocurrency, as stated on the early reply:

TA is somewhat useless in highly volatile markets like bitcoin whereas in Forex and stocks, TA is an amazing tool, yet even then one shouldn't rely fully on such analysis. Anyway, I think TA has its own merits given that most traders are using it for their positions in the market, creating a hive-mind that makes normal market movements seem like a pattern that is followed by most people resulting into some predictions being correct. Since someone have started keeping 'patterns' of the market, anyone who reads it will take note of it and when that pattern appears, they'll know what to do and how to react. But yeah, it could work on relatively stable markets but not in cryptocurrencies at all time, given that the said market is young and a lot of people are doing different things at a given time.

TA alone will lead us nowhere in this cryptocurrency market.

[avikz]

I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.
However a lot of people do have faith in TA, and use it to influence their trading decisions. Since it is common knowledge that some people use TA, does this then become self-fulfilling, and so lead to increased market manipulation because if for example TA says a rise is coming, bears can wait for the inevitable fomo from TA traders and then dump en masse to short the coin and force prices back lower again... and then wait for the next TA 'signal' and repeat.
What does everyone else think? Is TA in crypto self-fulfilling in this way, and does that in turn lead some traders to exploit it in a sort of meta-TA? Or is everything I've said complete nonsense?

Technical analysis is really vast and can't be correctly described within a scope of this thread. However, technical analysis really works in the real world stock market because these markets are heavily regulated, so the chance of manipulation is very less!

On the other hand, crypto market is nowhere close to regulated so manipulation happens everywhere for personal gain. That's the reason why the correct market sentiment can't be captured by TA in crypto market. So I won't say TA is useless, but it just doesn't work in crypto market!

[Mpamaegbu]

I've long been of the opinion that technical analysis shouldn't really work with crypto markets, which are generally very thin - and for smaller coins quite easily manipulated.

You're right about that observation with TA on cryptocurrency. It's really difficult to get it to work because the crypto industry is easily influenced by unscrupulous whales. A lot of pumps and dumps without the faintest indication of news (FA) happen here and this defiles TA.

Or is everything I've said complete nonsense?

Nope, you aren't nonsensical. On the contrary, you made a valid observation.

[leowonderful]

TA's better than just putting in a trade and hoping the market moves towards you, but as others have mentioned, manipulation can and will happen in crypto, though you shouldn't blame your losses solely on manipulation.

Risk management's also important in crypto, perhaps slightly more so than TA alone, especially when many traditional indicators don't work as well in cryptocurrency. You can have a very good success rate reading charts but lose money compared to someone else who is worse at reading charts but is good at managing risk. Never rely on indicators and reading charts alone.

[Mahanton]

TA's better than just putting in a trade and hoping the market moves towards you, but as others have mentioned, manipulation can and will happen in crypto, though you shouldn't blame your losses solely on manipulation.

Risk management's also important in crypto, perhaps slightly more so than TA alone, especially when many traditional indicators don't work as well in cryptocurrency. You can have a very good success rate reading charts but lose money compared to someone else who is worse at reading charts but is good at managing risk. Never rely on indicators and reading charts alone.

You are right.I would rather use up Technical analysis rather than blindly making any orders without any basis or simply making trades blindly.It might not be precise but atleast
you do have the target basing on what you analyze but as said it isn't really enough for it for you to rely since there are other factors as well which would be needed or crucial to make your
analysis more effective or on higher possible chances of profitable positions.

[rizkyhiw]

TA's better than just putting in a trade and hoping the market moves towards you, but as others have mentioned, manipulation can and will happen in crypto, though you shouldn't blame your losses solely on manipulation.

Risk management's also important in crypto, perhaps slightly more so than TA alone, especially when many traditional indicators don't work as well in cryptocurrency. You can have a very good success rate reading charts but lose money compared to someone else who is worse at reading charts but is good at managing risk. Never rely on indicators and reading charts alone.

You are right.I would rather use up Technical analysis rather than blindly making any orders without any basis or simply making trades blindly.It might not be precise but atleast
you do have the target basing on what you analyze but as said it isn't really enough for it for you to rely since there are other factors as well which would be needed or crucial to make your
analysis more effective or on higher possible chances of profitable positions.

Indeed, I also believe that technical analysis is very useful for most people who use it properly and correctly because I think it can determine investment activities in the future, rather than just following the hype without knowing what really happened, investing success depends on how You manage and care for everything you buy, so don't underestimate any analysis because it's very good for all investors rather than innocent without increasing knowledge.

[miropp]

I have always believed that technical analysis does not work properly. Crypto is very unpredictable and I do not know how the chart can predict which way its price will go. I think it's more important to use other factors here.

[exstasie]

I have always believed that technical analysis does not work properly. Crypto is very unpredictable and I do not know how the chart can predict which way its price will go.

All markets are unpredictable, not just crypto.

Charts do not predict the future.

These are two things that everyone should understand. Non-traders often have a very limited understanding of what TA is useful for. Most importantly, it informs a trader of entry and exit points and risk/reward. It cannot predict the future, ie tell us for sure what's going to happen.

At best, a good trading system recognizes a chart setup that completes 60-80% of the time. TA is about managing risk in probability-based scenarios. It's not a crystal ball. Any good trader gets it wrong 30-50% of the time. TA is what keeps us alive to profit another day by minimizing our losses and maximizing our gains.