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Pattern recognition software

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Market Wizard
Birmingham UK
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: IG/eSignal
Favorite Futures: Dax
 
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Do the chart patterns of today exhibit the same behaviour as chart patterns prior to technical analysis being widely adopted?

I would think the more people who employ the techniques of technical analysis...the more potent it should become. For instance, let's say there are a million traders and all of them are waiting to see if a stock is about to break support. If it does, then all of them may dump it...thus putting even more downward pressure on the price...like a self-fulfilling prophecy. If technical analysis was not present to coordinate this group think mentality then the downturn would be less amplified.

This is the fallacy of the 'self-fullfilling prophecy' argument that many also use to dismiss TA and fibs and wave patterns and such like. They say if it works at all it must just be due to what traders are seeing on their screens.

Nothing could be further from the truth - as any deep analysis would reveal. There are many thousands of traders, yet there are many hundreds of millions of investors, most of which have never seen a chart, let alone know how to spell TA.

The patterns, cycles, waves and ratios that exist in highly liquid cash markets do so simply because of the ebb and flow of human optimism and pessimism. Obviously individual stocks and levels in the futures markets get gamed by large players, options and HFT and such like but that is just noise added to the underlying movement.

The patterns I see everyday, all day are no different now than they were a century ago, just faster and with more tactics and strategies employed to game them or attempt to defeat them.

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