...I have been using Technical Analyses (TA) to trade since long like all of u. I have found them very useful.
They form the basis as well as reference point for any analyses. They are the scale against which we measure, judge and understand stock and market movements...........
But i have realised that Technical Indicators move because market moves, and not the other way round that 'Markets or stocks move because technical indicators indicate so'. I have seen that Market and Stock movements don't obey Technicals in strict sense.
............So many times i have seen that technical indicators suggest that market or a particular stock should fall. but it doesn't. so far so, that it doesn't fall for a long long time after that also. it keeps on climbing in leaps and bounds even after the technical indicators keep "yelling" behind!!! Technical Indicators keep on running BEHIND the stock price or market movement.
They explain the broad state of affairs but nothing more. They don't command the market. They can explain everything in the market but not dictate it.
Technical Indicators should be called Technical Followers as they indicate less and follow more.
I have written this all to caution all new comers who depend heavily on Technical Indicators to trade and often get mauled.
After losing money they start blaming themselves rather than questioning the TA basis of their decisions.
FUNDAMENTALS CAN DRAG TECHNICALS MERCILESSLY FOR MILES!
In Late 2009 and early 2010 rally Technicals couldn't tell when the sugar company stocks would stop rising - THEY ROSE AND ROSE AND ROSE...........,
technicals couldn't explain when the metal stocks would stop rising - THEY ROSE AND ROSE AND ROSE WITH FALLING DOLLAR,..........,
MOVING AVERAGES CROSS OVER WHEN THE STOCK OR MARKET PRICE CHANGES AND NOT THE OTHER WAY AROUND................I have seen people predict the fall at the SMA cross-over only to find it cross over again....making everyone feel like a big fool.............
there are hundreds of examples to prove that technical indicators only hint but don't "indicate" specifics......
they only follow and not lead the price movement.
If u blindly follow technicals, u may get into trouble. Rather, I know many who get into trouble very often. Don't follow technicals blindly.
I AM NOT SAYING STOP FOLLOWING OR LEARNING TECHNICALS. All I am saying is 'Learn to give importance to fundamentals and trend and sentiments and liquidity and mood of the market'................
Start to look beyond TA......if u want to protect ur capital and earn.
The Sun is not revolving around the Earth, it is the other way around!
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