Is technical analysis bullshit?

[oda.krell]

TA provides you with very important statistics about the past of the market. Projecting it onto future is fundamentally wrong. It is like predicting an outcome of dice throw based on past results. You need to have fundamental data in addition to past statistics to predict a future market.

Nonsense!
In trading, there are only 2 outcomes to price movement from the current price rather than 6 or 12 like with dice... Right there odds are more in our favor. Then we have other data like volume. This tells us where more force is being applied, up or down, plus a multitude of other methods for trying to determine what direction comes next. They aren't even close to the same thing.

I use fundamentals to say that as long as Bitcoin doesn't die, the far future should go way up, and that is it. The fundamentals don't mean shit in a mostly speculative market. $2->$1200->150 in 2.5 years is a clear example that fundamentals aren't at play here. One more example would be the numerous large-scale businesses that began accepting Bitcoin over the last year, and only sparked pump and dumps.

Note, this is not a dig at the fundamentals, only that they aren't currently important for the price discovery or used by anyone but bag holders (forced or otherwise) or long term investors (who fall into "otherwise").

Blah blah blah....

You can't extrapolate past statistical data onto future. Period.

You use the big words, but you don't really know what they mean, huh?

Whether you can extrapolate (in a loose sense) from past market data to future outcomes runs down to the question whether a market is a Markov process (or rather: can be modeled by one) or not. Some processes can be shown to be likely to satisfy that property (in which case, yes, you can't extrapolate), some processes don't, then you can go hunting for predictive factors (which take historic data as input.)

Hint: even most of mainstream economy doesn't believe markets in general satisfy the Markov property. They just think (most) markets are also efficient enough to price in the information potential almost immediately. By that interpretation (which I don't share), TA still doesn't work, but not for the reason you seem to think it doesn't.

[johnyj]

they are based on probability in fact, they don't really predict anything , it's more of a talk about the "movement"/trend

Buy and hold is much much more useful, especially for bitcoin, no amount of TA can defeat a long term buy and hold strategy

what if bitcoin die, or stay at bad value indefinitely?

I'd rather worry about fiat money die before that. Now when interest rate is going negative, it is not faraway from a mass drop in fiat money's confidence, and when that fear spread out quickly, fiat money will lose most of its value in a very short time

Fiat money and bond are all created out of thin air, the value of these things are even more intangible than bitcoin, if they can hold its value, bitcoin will definitely too

[bassclef]

What do you all define as TA?

Support/resistance?

Indicators?

Elliot Wave?

Moon cycles?

There is a lot of "TA" out there. In fact, you can invent your own and call it TA. It is a very loose definition.

[JimboToronto]

I liken TA to astrology.

Both have been practiced worldwide for a long time by many people, although astrology has been around much longer.

Both are based on sketchy "science" and could better be described as craft.

Both have an almost cult-like following.

I'll read the horoscope in the newspaper for entertainment but I won't base important decisions on it. Same goes for TA.

Just my BTC0.00000002.

[uki]

well, in all honesty, think carefully what TA is aiming to do?
To me it is to model mathematically psychology of people trading any given asset. That changes from asset to asset as there are different groups involved in each case and thus the same set of indicators that works for one may not work for the other. Recently, also most of the markets have HFT algos programmed to make the most of each market, and taking the advantage of these who stick too strictly to their charts. Also, different markets have different grade of volatility, which is another factor to take into account that make influence price behaviour. These are just some of the aspects that are involved  here, the list is definitely longer, on why it seems the TA may not to work. It does however provide you with some information on how market reacted in the past. It is up to you and your experience to evaluate the usefulness of such hints.  

[yvv]

You use the big words, but you don't really know what they mean, huh?

Whether you can extrapolate (in a loose sense) from past market data to future outcomes runs down to the question whether a market is a Markov process (or rather: can be modeled by one) or not. Some processes can be shown to be likely to satisfy that property (in which case, yes, you can't extrapolate), some processes don't, then you can go hunting for predictive factors (which take historic data as input.)

Hint: even most of mainstream economy doesn't believe markets in general satisfy the Markov property. They just think (most) markets are also efficient enough to price in the information potential almost immediately. By that interpretation (which I don't share), TA still doesn't work, but not for the reason you seem to think it doesn't.

You can fit a statistical model to data and use it for predictions, but this is already beyond TA. This is not extrapolation, this is prediction. Building a model requires to have fundamental knowledge about the system.

Some processes indeed can be predicted by simple models such as Markov model quite well.

[indiemax]

T.A. and Bitcoin

might as well toss a coin

[oda.krell]

You use the big words, but you don't really know what they mean, huh?

Whether you can extrapolate (in a loose sense) from past market data to future outcomes runs down to the question whether a market is a Markov process (or rather: can be modeled by one) or not. Some processes can be shown to be likely to satisfy that property (in which case, yes, you can't extrapolate), some processes don't, then you can go hunting for predictive factors (which take historic data as input.)

Hint: even most of mainstream economy doesn't believe markets in general satisfy the Markov property. They just think (most) markets are also efficient enough to price in the information potential almost immediately. By that interpretation (which I don't share), TA still doesn't work, but not for the reason you seem to think it doesn't.

You can fit a statistical model to data and use it for predictions, but this is already beyond TA. This is not extrapolation, this is prediction. Building a model requires to have fundamental knowledge about the system.

Some processes indeed can be predicted by simple models such as Markov model quite well.

I'd suggest not to make pretty wide ranging assumptions based on nothing but a "hunch".

Seriously though, take a quick look at the article if you feel like it. In a way, it supports your point. In another one, mine as well.

[HarmonLi]

It works worse for Bitcoin in a way, I believe. Bitcoin has pretty unique features and patterns. On the other hand, it's a pretty low market cap, still and can be influence easily. I guess it's mostly a self-fulfilling-prophecy, though!

[uki]

It works worse for Bitcoin in a way, I believe. Bitcoin has pretty unique features and patterns. On the other hand, it's a pretty low market cap, still and can be influence easily. I guess it's mostly a self-fulfilling-prophecy, though!

agree. bitcoin is realatively young market and with small market cap. thus, it is easy to manipulate at any given point of time, invalidating the TA.

[HarmonLi]

It works worse for Bitcoin in a way, I believe. Bitcoin has pretty unique features and patterns. On the other hand, it's a pretty low market cap, still and can be influence easily. I guess it's mostly a self-fulfilling-prophecy, though!

agree. bitcoin is realatively young market and with small market cap. thus, it is easy to manipulate at any given point of time, invalidating the TA.

Ah, well... I wouldn't say invalidate, but it's certainly something you have to consider and be prepared for violent jumps. People are often relying on the same indicators and lines, arrive at the same conclusions and thus act accordingly...

[Afrikoin]

More or less I would say that. They are just trying to predict price movement using analysis tools and I think the more time spent trying to understand, the more confusing it gets and most of the time it's not even accurate. I remember seeing ads about paying for the guy to teach how to analyze charts but I was thinking, why try to earn from the participants fee when the guy could game the market by himself.

because teaching TA to a willing group of buyers is not that bad either. The probability of making money from teaching TA is way better than trading volatile markets. Why not?

Check Steve Nison. trader turned tutor and he seems to do ok.

[Afrikoin]

Predicting the market is objectively impossible. TA is based around % chances of something happening. It's a bit like predicting the weather.

True, TA is a tool (sometimes highly overrated)
Fundamentals are more important, especially with something historic like Bitcoin.

I never get the debate. Why not just do both TA and fundamentals. It surely can't hurt to have more than one tool on your box?

[Afrikoin]

TA provides you with very important statistics about the past of the market. Projecting it onto future is fundamentally wrong. It is like predicting an outcome of dice throw based on past results. You need to have fundamental data in addition to past statistics to predict a future market.

Nonsense!

Blah blah blah....

You can't extrapolate past statistical data onto future. Period.

Have you heard about feedback loop mechanisms in controlled systems? Every set of new information is integrated to refine a result. The faster this happens i.e. as in real time systems, the better.

[Afrikoin]

What do you all define as TA?

Support/resistance?

Indicators?

Elliot Wave?

Moon cycles?

 

[bassclef]

What do you all define as TA?


Support/resistance

Price action

Volume

Indicators?

Elliot Wave?

Moon cycles?

fixed
 

[bri912678]

What do you all define as TA?

Support/resistance?

Indicators?

Elliot Wave?

Moon cycles?

 

The crash started a day before Friday's solar eclipse with its associated full super moon. If it had started one day later we could attribute it to the full moon and include moon cycles as TA on that list.

[uki]

The crash started a day before Friday's solar eclipse with its associated full super moon. If it had started one day later we could attribute it to the full moon and include moon cycles as TA on that list.

People, you want to discuss whether technical analysis is useful or not in case of Bitcoin, but it seems some of the basic terms are misunderstood.
Crash? what do you mean by crash? usually, in stockmarkets a correction of more than 20% is considered a crash. Which crash are you talking about? You mean the most recent correction? It is not a crash as of now.

[bri912678]

The crash started a day before Friday's solar eclipse with its associated full super moon. If it had started one day later we could attribute it to the full moon and include moon cycles as TA on that list.

People, you want to discuss whether technical analysis is useful or not in case of Bitcoin, but it seems some of the basic terms are misunderstood.
Crash? what do you mean by crash? usually, in stockmarkets a correction of more than 20% is considered a crash. Which crash are you talking about? You mean the most recent correction? It is not a crash as of now.

Technical Analysis itself is a very vague term and might even include moon cycles according to some, but not others. I consider the term crash to be a similarly vague term that might mean 20% to some, 10% to others, or simply a straight line going down to a few.

The price went down by close to $40 on March 19th and further today, which when taken as a whole I regard as a crash, especially if it continues further down.

[twiifm]

Its bullshit to people who dont use it correctly.

Its hard to predict the future.  But you can spot the same patterns often.