Heartily disagree. Technical analysis always works, its the trading rules that ones employs based on the analysis that fail.
Remember, Technical Analysis is only about measurement. Based on the measurement, we can then develop some if/then/else rules as to what to do. Frequently doing nothing is the best approach, however many seem to forget that standing aside is a viable option.
For example, in an uptrend, all sorts of people took to watching breakout's from resistance/trading ranges, and discovered that it was profitable for them to buy the break out. In a topping market, buying the breakout frequently means you are buying the high, and underwater the very next day.
Another example, buying the dip has been a highly workable strategy for many players, experienced or not, for some time now. If you spread your money around and bought reasonable names, chances are you'd have done very well with the strategy. Measurement (TA) told you where the dips were.
In a down trend, buying the dip doesn't work, because there's always a lower dip to follow.
Throughout the past several months its been very clear that the majority of players were beside themselves with fear/greed that they'd miss the next *great* buying opportunity. Bottom seekers everywhere looked for dips and *bottoms* to buy. Only to be sadly mistaken and disappointed.
TA is not useless, its utility remains for all time frames. Objectivity is what is required, otherwise one will not detect quickly enough that the old trading rules that were applied based on a particular technical analysis no longer apply. |
