Charts do indeed have their limitations. There are both good and bad elements. On the negative side is the adverse predisposition of more than a few traders who use a chart as a crystal ball instead of merely a tool. The trader must make the decisions not the charts. Although charts can signal opportunities with today’s technology, it is still the trader who must pull the trigger. Technical analysis can give you an idea of future price movements, however a major limitation is that they fail to take into consideration any major news of the day that can substantially change the way the markets react. Charts may very well be considered a memory for a trader as we all too often fail to recognize patterns that we have seen before and therefore have a understanding of what may take place again. Technical analysis is there for a trader to use as a supplementary tool to experience and judgment. It can be used to reinforce what we already know or believe.
In following posts, we hope to begin explaining how many of these chart formations are used and deciphered and when is the proper time to utilize them. We invite all to voice their opinions on what has worked well for them and in what type of markets. We also invite any vendors of analytical applications to discuss them and their advantages. We will also be utilizing charts to reinforce informational posts. >