Basically, although there are several other factors, TA works when there is a real market, as in the NYSE. Another significant contributing factor includes substantial and consistent volume.
A NAZ small cap (such as RECY) which is drifting toward the land of the pink sheets is a free for all for market makers, Canadian shorters, etc.. When these types of manipulations are possible, TA is a myth. TA works fine for a $30 or higher stock, which has options, which has an average daily volume of at least half a million shares, which because of its number of share holders, sizable institutional holders, market cap, etc. etc. has patterns uninfluenced by speculators and manipulators.
It's OK, anyone can see RECY is in a downtrend. If that stops for six weeks or more and stays in a predictable trading range, maybe there's a base, but because of its low price, maybe not. And if the price moves up over a six week period or longer, with higher highs and higher lows, it's probably an uptrend. "You don't need a weatherman to know which way the wind blows." Subterranean Homesick Blues (Robert Zimmerman)
Most sub-$3 stocks significantly violate their MAs (all of them) over a year's period. How can there be TA if MAs are meaningless? They're a basic criterion.
Good luck,
Ed |
