in this economic world where moves are made more by news events, what is in it for technical analysis? recently, technicals have hardly given positive outcomes in these heavy economic climates with so much to digest at the same time. now the major rhetoric by economies is “data dependence”. i’m more inclined to follow up on news releases because they contribute to more than 70% of the aggregate moves on currency pairs. i’ve seen so many technical setups get thrown out the window and abrupt reversals in trends in the blink of an eye. so i need more “forward guidance” on what my position should be in this regard. is all the charting tools still relevant in wading these economic waters?
This isn’t my experience at all.
Different people mean different things by this. To the extent that it’s true, I suspect it’s far more relevant to investing than to trading, anyway? It depends on one’s perceptions, I think?
Given the fractal nature of markets, this statement doesn’t actually mean much without a very careful and accurate definition of its timeframes and movements, does it? It doesn’t appear to have much relevance at all to my own trading.
We all have.
I think that’s about “predictability”?
No individual trade ever has a predictable outcome, but fortunately that doesn’t matter: we can still derive steady income, through technical trading, from the markets in spite of that being true: what matters is collective predictability. It matters that you can win more from your winning trades than you lose from your losing trades, collectively - it doesn’t matter which individual trades win or lose.
It depends what you mean by “tools”, I think. I look at it as chart-interpretation and chart-analysis. I don’t use indicators (so I’d say that they’re not very relevant and they never were anyway). Of course, there’s plenty of “technical analysis” that has nothing to do with “indicators”. I’d also say that chart-interpretation and chart-analysis are no less relevant than they ever were.
I’m not trying to detract from your entirely valid implicit observations about “changing fundamentals” at all, I hasten to mention. I’ve seen those for myself, over the decade that I’ve been looking at the markets, and my suspicion (though it’s terribly hard to judge) is that they’re increasing, as you rightly imply. But fortunately there are ways of trading that minimise their relevance, and those [I]are[/I] “technical ways”.
I think you nailed it here. Timeframes and sentiment cycles affirm the relevance of technicals, (definition dependent of course).
lexys… but you agree that changing fundamentals is increasing. i am just a year old trading forex markets and i haven’t really got the kind of experience that you’ve got for 10 years. however, moves are made in the markets from news events and much is attributed to economic activity of pertaining countries. i think you’re right in regards to many indicators not doing much for trading. but i guess some others may not see things the same. i guess it all really depends on the power and accuracy of predictability as you pointed out. you can only affirm the relevance of technicals in regards to timeframes and sentiments by virtue of hindsight. you can’t know anything for sure before it happens except you have some clairvoyant ability
I think both are important. Technical analysis gives you a price level, an actual level whereby you can determine as a resistance or support. Indicators are tools that you can use to assist you in determining the momentum of the market in a visual way. Fundamentals are data that are released at a predetermined hour on a daily basis, and in anticipation of the data, market sentiments are formed as to whether a particular currency is strong or weak.
Its not really about technical or fundamentals are being better as a methodology in trend determination. Its really about how you USE them! So as to help you make an informed decision. Therefore, you can take a more intelligent calculated risk.
Things always change. They never remain the same. The key lies in being able to adapt.
For example, when a resistance or support level is breached. What is your trade view base on technical or fundamentals? Do you add position, drawdown, average, hedge or cut loss? And if so, why? Its not easy and the learning curve for Forex trading is damn steep. IMO.