T/A revisited. Found most people fascinated by the complexity in T/A, but lacking understanding. T/A is trending. You draw a line based on two points above the curve. Then you draw a line connecting two points below the curve. This establishes the trend going up or pulling back or just flat. The gap between is the trading range; the two lines are "resistance" for the line on top; and "support" for the line on the bottom. If the price goes above the resistance line later, it is a "breakout". You will have a change from pulling back to flat, or from flat to moving up. If the price pulled back down below the support, then the trend is going from moving up to flat or from flat to moving down. Nothing mysterious. This is enough to guide you in your investments.
Moving average in so many days, just tells you the cost of the stock that people have bought. No one likes to lose money. So the cost has some bearing on the future of the stock movements. Price gets below cost by a great deal, people might average down, giving the price support. Price gets way above cost, people who fell in love with the stock will buy more, creates some time a momentum, "a nice move". Nothing myterious except what is way above and what is way below cost. You have to make that judgement. So, it is useless, if you make the wrong judgement. Stock business is, if you love the stock you buy them. If the price goes down you love them even more. This statement is an important qualification to Moving average judgement.
All other indicators are to fit special conditions in the market, most people can not fit them in any situation once. No repeatability means you are going to lose money if you do those indicators.
Paper investing by charting is a bad practice because it gives you false confidence. Your own buy and sell will change the curve, making the assumptions inaccurate. |
