Endorsements for Following the Trend gestion monetaria forex Andreas F. The poor reputation of technical analysis is well deserved. The way this field has expanded makes it very difficult to take it seriously. Professionals stay clear of the term technical analysis for good reason.
Well, that’s just the problem, isn’t it. Anyone can make up anything and call it technical analysis. The field now seem to encompass everything from drawing trend lines to astrology. Technical analysis started out with quite simple concepts, which are not all that dumb. In the early days, it was about looking for directional trends in prices and divergences between related market indexes.
Experience told traders that when prices start moving in one direction, they are more likely to continue than to reverse. Technical analysis was just a way to visualize this concept. Divergences was mostly about comparing the Dow Jones Industrial with the Dow Jones Transport, the two most important indexes at the time, and draw conclusions from potential differences. Again, experience had taught traders that extreme short term moves are often followed by a sudden pullback.