It would stand true except you dont account for Herd mentality.
I listen and take in as much facts as I can, so I can predict what I think the herd will do, and when they will do it.
if there are 5million investors worldwide using TA on the ASX.. and I can know their moves as their doing them, I can make money.
GAPS are a self-fulfilling prophecy in my view -> People fear the gap down, so they sell, this selling brings the stock closer to the gap, so more sell, this continues until the GAP is closed, because you are now at minimum fear of closing the next GAP down and thus people see reason to buy.
The fear of the GAP closed the GAP.
Similarily, in GAP ups (downtrending stock), people see the GAP and think it "has" to be closed, so people buy in thinking it will go up. the closer it gets, more people buy, when it hits the GAP, the initial buyers sell as it reached their "has to reach" SP, and thus the stock stops rising because people are selling again and resumes its downward trend (based on FA).
Just IMO why TA happens, herd mentality.
FDM Price at posting:
$1.28 Sentiment: LT Buy Disclosure: Held
