The three uses of charts - don't mix them up!

Beginner Questions Candlesticks, Chart Patterns, and Price Action
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Price charts are extremely valuable. All charts are useful and with added MA’s, s/r levels, trends, patterns, candlestick patterns and indicators etc. are your technical analysis and all tell you something which can help in your trading. But you will lose money if you mix up their purposes -

  • predictive - TA which tells you what price will most probably do next, so it’s also opportunistic
  • opportunistic - TA which shows you what could be a great trade, but it’s definitely not predictive
  • confirmational - TA which shows you what has been happening just now and recently and historically, maybe for years and years, but that’s all

When you look at someone else’s TA, first identify what their TA is aimed at doing. And it is NOT always making you money.

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Boy, that sure sounds like a lot. Beware if your charts start looking like Pollock’s drip phase.

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Look at me! I’m doing technical analysis!!
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But seriously, Pipsology suggest keeping it simple. And I agree. We get caught up in piling up on indicators, and they each serve a purpose, but using them together can lead to more confusion–not less.

@tommor Good point.

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