[New Series Zone Final Chapter 8] "Correct analysis = winning" the illusion — the inherent limits of technical analysis and the truth of support lines ??

To you across the screen, who today as well draw many lines on the chart and face the market earnestly ☕️✨

In the previous 【Chapter 7】, we talked about how the “technical analysis” we use is a tool to find patterns created by the collective psychology of people. You may have thought, “I see! If I master those patterns perfectly, the market will go as I want!” and felt a bit excited?

However, in this 【Chapter 8】, Mark Douglas delivers a very cruel, but most important “truth” that chills that expectation.

“Technical analysis inevitably has an unbridgeable ‘limit’.”

“What, that the indicators and chart patterns I studied so hard have limits?!” Please don’t be shocked. This isn’t about denying analysis methods. It’s about unraveling the “fatal illusion” that the human brain unconsciously creates when we use analytical tools.

Based on the valuable additional materials we received,we will go deeply into the real reason “Why prices rebound at support lines?”Understanding this chapter will prevent you from later getting angry at the market for not moving as your analysis predicted or from falling into despair ✨ We’ll explain deeply and kindly, so it’s easy to read on a smartphone too ??

? The brilliance of technical analysis and the tricky traps hidden within

First and foremost, the author acknowledges the usefulness of technical analysis. Chart patterns and indicators based on mathematics have the power to predict price movements with a degree of accuracy that is surprisingly hard to believe. In fact, we use technical tools precisely because we have repeatedly experienced that selling leads to a drop and buying leads to a rise.

At the same time, the author warns: the psychology related to chart patterns and indicators has “very troublesome characteristics,” and to maximize the potential profits, you must notice these characteristics and reinforce them.

What exactly are those troublesome characteristics? There are four main ones.

? First and Second Characteristics: “The next one” is something even God doesn’t know

The primary characteristic of technical analysis is that, viewed as a sequence of forecasts, it can show a high probability, but for individual forecasts (the next one), nothing can be predicted at all. As a second characteristic, technical patterns can indicate the win rate across a series of trades, but cannot indicate the probability of winning in an individual trade.