Really hope your right @Dennis3450, for me Gold is always where I make the most.
However I put zero faith whatsoever in long term price patterns. I guess that’s why I make a lousy investor.
For me the best predictor of gold is a favourable COT position structure with the swap dealers AND when front month futures contracts are more expensive than longer term ones.
Then I’ll pay notice.
Cup and handles, flying saucers, ceramic tea pots, whatever you want to call em, to me its no different to a trip to the Oracle of Delphi.
John, you sound like Warren Buffet, which is not a bad thing. Technical analysis verse Fundamentals has been a long time debate. One could make a small fortune just by investing in the S&P 500 buying more each month and reinvesting the dividends and never selling, All without ever looking at a chart.
Gold has been a disappointment for me, I have bought into the hype of gold/silver and have been holding a rather large position for many years, Had I put that money into Amazon I would have seen a 5 times return, had I put that money into Bitcoin I would have seen a 200 times return.
Let’s hope the Oracle of Delphi ( I have no idea what that is) is also calling for gold to rise
Heh don’t get me wrong here, I’m a technical trader for the most part.
But in the same way it’s easy to predict what your likely doing tomorrow and not so easy predicting what you are doing a year from now, to me TA is very much the same.
Its easier to know what the market is doing tomorrow rather than a few months out IMO
I think TA is generally a poor predictive tool anyway, I prefer to let the market tell me where to go, rather than predicting where it is going.
The difference is subtle and may be lost on some of the newer members.
But the predictive TA camps such as GANN & Elliot in particular, make for the worst possible style of trading - though I admit they are great for newsletter writing and internet marketing for pulling in the gullible.
I guess what I’m trying to say is that I always need a line in the sand for the market to cross where price action suddenly becomes bullish or bearish
My original point is that a chart pattern such as cup and handle should not be considered bullish or bearish because it has formed…
iMO you need a line in the sand, or to paraphrase Jesse Livermore the line of least resistance before a position should be taken.
And while I do use TA I do believe that much of it is nonsense, unfortunately it’s many of these techniques that are being taught to beginners so they become cabnon fodder for the brokers
This though is my opinion and doesn’t mean I am correct
A cup and handle (1) signals that the market is prepping to make a key move (2) defines a key price level- your “line in the sand”. Thus, predictive in nature. Not 100% of the time obviously.
We’re on the same page. Take care and thanks for the discussion!
How does one efficiently define “a line in the sand”? The argument is that certain patterns produce that line in the sand, and, can indicate underlying order flow is yet to favor one side of the market vs. the other.
There is an argument - maybe even a correct one - that these patterns show order flow.
However getting into a market on that alone is not a method of trading I’d like to try with leverage.
The break of a trendline, a SR level, pivot high, Tom De Mark line, highest high of last three days count back line etc are real catalysts that shows the market has tipped its hand.
No breakout not trade is fine - but saying a pattern is bullish without it having broken out is dangerous, and yet one said by market commentators often
At the end of the day this forum is for beginners and the moment many of them read those words ‘bullish setup’ they jump the gun
I still believe these patterns mean precious little, but I am the first to admit we all have to view the market through our own unique lense
The pattern defines the level you require to monitor for a breakout.
Certain patterns are inherently bullish/bearish.
Once your level is defined by the pattern, the pattern indicates a skew to one side of the market.
If all checkboxes for your trading plan are checked off, a position is entered based on that TA.
Agreed. TA is the most subjective objective form of analysis out there.
Love the back and forth conversation guys, here is my two cents
TA is reactionary, but so is fundamentals, Stock Prices will rise and fall based on the 3 to 5 year outlook for the company, the company is also trying to predict the future with their sales growth estimates, those estimates may not hold true.
Regardless of what type of fundamentals or TA you use, you are still trying to predict future price action based on the past.
It’s too nuanced to make a blanket statement TBH. It all depends WHAT analysis your consuming and how it applies to your individual trading plan.
Moving average crossover- lagging.
Forward P/E ratio w.r.t multiple expansion analysis- leading.
TTM P/E ratio- lagging.
FXCM SSI- leading.
on and on…
This is an over-simplification and how did you settle on 3-5 years specifically? Individual equities trade minute-by-minute based on whatever is happening that day. A short term trader has 0 interest in the “3-5 year outlook”. High frequency algo’s (making thousands of trades per week) can care less about fundamentals- it’s arbitrage, order flow analysis (front-running), and spread scalping.
Don’t these two statements contradict one another?
let me rephrase it, During a earnings call the CEO of CFO will give their outlook going forward several years, that outlook for long term growth will move the stock price
Lets also not forget their is a lot of insider trading that goes on, and the SEC is very selective in who they go after.
