Goldtent TA Paradise

Staying Alive

1. Karl says:

   February 14, 2020 - 6:25 am at 6:25 am

   Your chart is interesting. I have a couple of misgivings. Here is one. This misgiving is one that applies to many charts I see from many people. It applies to many charts that I myself tend to look at (such as many ratio charts). Nevertheless I will articulate it here. I may articulate another misgiving.

   Many TA patterns were discovered looking at charts of stocks and commodities. It is not clear that they can or should be extrapolated for other uses. They often can be explained by clear psychology. Take for example horizontal resistance. If people have held on to a stock remembering that it was once at 10 and it is now at 5, if it goes up to 10, they may all want to unload it at 10. You can easily imagine explanations for head-and-shoulders and other patterns.

   Once the patterns become well known there is a certain amount of self-fulfilling prophecy, although the patterns may become a little trickier. (For example, by my understanding decades ago break-outs began working less well and were often followed by back-testing — or simply more and more often became false break-outs — once TA became widespread.)

   A bowl pattern may or may not work for something that is not directly bought or sold.

   I am not arguing one way or another. I just express a misgiving that I have over and over again when I see TA pattern analysis applied to things other than things from which TA was derived. It may work. I don’t know.

   • Karl says:

     February 14, 2020 - 6:40 am at 6:40 am

     Here is my other misgiving.

     Is a bowl or cup really suitable for the data? Again, I don’t know. I just raise the question. When is it suitable, when is it not in view of the distribution or nature of the data?

     I see a couple of ways of looking at the matter.

     –> Do the values touch the bottom of the bowl in enough places for a bowl or cup to be appropriate? Couldn’t it just be a crazy disorderly line?

     –> The data don’t look too curvy to me. (The following is more the way I think of things and maybe others can skip. As I’ve written, I used to take lots of data and see which polynomial fit the best. When I see your cups and Northstar’s, I can often imagine a quadratic equation fitting the data well. In this case, would a curved polynomial such as a quadratic fit the data well at all? I expect a linear equation would fit (though there’s lots of noise), but I am not at all sure about any curved function, even if you start from that really high peak above. Not having done it, I don’t know however.)

     • Patrick says:

       February 14, 2020 - 7:36 am at 7:36 am

       I totally agree with your assumptions. For rates of change type charts… I would use trendlines… as guides for trend direction… staying within them.. still on track… and break above them.. a change in trend. Something outside the world of that chart has actual buyers and sellers that ultimately spilled in the visual being reviewed. Arc’s help in another matter.. they help spot higher lows .. and the eventual break line… all of which could of been identified without the arc. So the arc is not special in itself.. but combines a whole bunch of “check list” a good TA analyst should be checking.. in a one-stop shop. Probably why they have high prob of success… A well drawn arc, as the technical s encompassed by it’s mere existence are what a good TA analyst weighing the probabilities of a move possible move would do.