If it looks like a duck.....Then there is that little thing...

If it looks like a duck.....



Then there is that little thing called the Golden Cross.

THE OTHER SIDE OF THE CAVE: a bats perspective

Charts aren't about lines, they are about the meaning of the things that lines are drawn over and on, like candles, volume, and other indicators, if it be candles that you use, and the forces that determine those indicators. The candle shows more than price movement, it also indicates traders sentiment. The Doji is a representative https://www.investopedia.com/terms/d/doji.asp

One candle is a picture of a days trading (or relevant time frame). Lots of candles are individual events, but together they make a picture. Say a pennant, for example. Big price rise, big matching candle. But no follow through, reduced prices, reduced volumes, smaller and smaller candles until the pointy end. Stabilization. Then, big rise, or breakdown.

Charts represent the collective will of buyes and sellers, built from lots of data, just as Google searches accumulate the collective thinking of millions, and therefore can become predictive.

Some traders distinguish absoluetly between FA and TA, like they are unrelated........ "a major news event will blow the chart out of the water...." is a common retort. Today's candle was caused from a news event, yet belongs on the chart. It could have been otherwise though, but to assume therefore that the existence of an otherwise possibility defeats technical analysis, is not to appreciate how a chart is formed. Those who hold little respect for TA generally have been overly influenced by the technical aspects rather than the underpinning logic.

Charts are the graphical picture of trading. A coin may have its price on one side, but it doesn't exist without the other side.

Prices move on sentiment: buys or sells based on personal views of the asset, not withstanding those occassions when trades are influenced by an unrelated motive, like, I need to pay my car insurance. Sentiment, generally speaking, is the underpinning force of price movement, and as charts graphically represent the price movement, they graphically represent sentiment. The collective will of traders.

That is why reading charts is a lot more than drawing lines, and is why such lines and other TA skills can become unsettling to many traders if one is not 'technically' inclined, whereas the real significance in the chart is reading the collective will.

Moving averages are good to see the collective will of traders as they are calculated on formulae of trades over periods of time.

When a 50 day moving average moves north of a 200 day ma - a Golden Cross - then we know that the asset price has first, been dwindling (because a shorter period of trades is lower than a longer period of trades), but now the collective will of new trades is becoming bullish. Because the shorter period of 50 days, which is not as fickle as say, 5 days, has become bullish over the much longer 200 day period, it means that sentiment is well and truly on the rise, but in periods long enough to have gained a bullish collective will, rather than the fickleness of just a few days.

Charts are not infallible because the will of peolpe can be quite fickle, and unforseen events can arise unexpectantly. But as charts represent the collectve will of traders, rather than just a few, the power of big data - the collective will - holds predictive power.

Time to exit the cave. Summer time. Ripe mangoes.