I remember a professor of economics taking de-identified historic charts - no price or commodity/stock shown - blinded and asking 'chartist' staff to have a go at forecasting.
When the 'future' price action was overlaid it was obvious that the chartists were no better than 50:50 at guessing the real price action that followed.
These days because some traders and computer programs are looking for these patterns and trading based on them I think one can see some correlation to price action because of the herd effect of chartists/programs all creating short lived self fulfilling chart trading based action.
Long term it's all noise"
I really wanted to have a crack at it when you posted this two months ago, so I did
Seems I can't read a naked chart.
I predicted downside, but there was a bit of both, and 2 months later, it's almost 10% higher than when I looked at it (with a 20% drop occurring during that time as well).
The only thing I find silly about the whole exercise is that a chartist will be watching daily, even minute by minute and every move builds a clearer picture on what price is doing, giving different signals to the analyst. I mean, sure, read the chart. Get a picture of what you think comes next, then a sudden very strong bar (up or down) comes and you surely have to add that to your analysis on what's suddenly happening at the time which will influence the longer term view again.
