Technical Analysis (TA)

Our entry system is 100% technical. Price pattern, structure, rejection candles, divergence, volume. TA answers *where and when* to enter and exit. Fundamentals answer *which direction and why*. That division of labour is the whole reason we hold both, and it is worth understanding what you are actually leaning on when you draw a level. ### The three claims underneath every chart Technical analysis is not a grab bag of patterns. It rests on three assumptions, inherited from Charles Dow (1851 to 1902), the first editor of the Wall Street Journal, whose market writing became Dow theory: - **Price discounts everything.** Whatever is knowable is already in the quote. - **Price moves in trends.** Direction persists until something breaks it. - **History repeats.** Technicians hold that investors collectively repeat the behaviour of the investors who preceded them, which is what makes price patterns recognisable at all. Every tool you will ever use is a bet on those three. Robert Edwards and John Magee's *Technical Analysis of Stock Trends* (1948) is the seminal text that turned the ideas into a discipline. It is a real profession, not a hobby: the CMT Association, founded in New York in 1967, runs the three-level Chartered Market Technician exam programme, and FINRA recognises the designation. ### The honest limits You should know the case against it. The efficient-market hypothesis holds that past prices cannot be used to profitably predict future prices, the case Eugene Fama set out in his 1970 review of the evidence. Burton Malkiel, in *A Random Walk Down Wall Street*, argues that pattern-based forecasting is ultimately self-defeating, because once a regularity is known to market participants they act in ways that stop it happening again. He has compared technical analysis to astrology. Critics also point out the self-fulfilling loop: if enough traders watch the same level, price moves because they are watching, not because of anything underneath. We do not pretend that objection away. We answer it with narrowness. Our TA is not a wall of indicators trying to predict the future. It is a rules set that tells you when a break of structure *counts*, where the stop belongs, and when there is no trade at all. It converts a chart into a repeatable decision, which is a very different job from prophecy. ### Where beginners get it wrong Two failures, both common. The first is confusing more tools with more edge. Six indicators disagreeing is not confluence, it is noise you can pick from until one agrees with you. The second is subtler and worse: using TA to *justify* a trade you already decided to take. That is exactly why Devils Advocate exists in this system, and why divergence is mandatory rather than optional on unswept setups. The rules are there to argue with you. If your analysis never talks you out of a trade, it is not analysis, it is decoration.