Hey guys, I thought I'd join the debate, and lend my 2c. I am new here today, but have been in this game for a while. TA is not a hard science, it is not an absolute. But for Res, and others, that don't believe in it, you might just lack the proper context and perspective in the method. You will not "find it all" in that method. Think of TA as another tool in your toolbox, and not everyone knows how to use it. Some expect too much from it, then dismiss it as it doesn't give the expected results while standing on it's own.
One guy here said that TA is not trying to predict the future. It actually really is trying to predict the future, no harm in that. The difference is in how hard you stick to that prediction as "gospel". Anyone that ever argues that trying to predict the market is non-sense, is really missing the mark, because that is exactly what all traders are doing all the time whether they will admit it or not. The men are separated from the boys when these predictions are based on sound logical principals, based on real trading dynamics, one being order flow, another being volume, another being momentum... You need some context and flexibility to be able to use TA. It's not as simple as, "if price touches X price again, it will go up" There is a lot more to interpret that goes hand in hand with that clue.
TA is just that, a clue. An educated guess of where value is laying in the market. Lets put some volume and orderflow analysis at those same levels and see what happens, then react to the movement.
Why does TA act as a clue giver? You have to remember that in Fx (as well as other instruments and markets) there are banks, hedge fund, specs etc buying and selling. Now if price has reached a low level in the market, then has gone up from there, it stands to reason that there is value at or near that level. In TA, you would call that support. So it is logical for a fund that is buying large amounts to target that same area as a place to buy, simply because it is a value area. That alone should absolve TA of all "wrong doing" here. When you understand this, you are one step closer to leaning the odds in your favor.
The thing is, is that you cannot blindly trade this way. You need to confirm the trade as it comes, and take in the fundamental picture, the volume, momentum and the news at or around that time. The trick is to know where these levels are, and which ones are more valid than the rest. That's where experience comes into the picture.
One guy here said that TA is not trying to predict the future. It actually really is trying to predict the future, no harm in that. The difference is in how hard you stick to that prediction as "gospel". Anyone that ever argues that trying to predict the market is non-sense, is really missing the mark, because that is exactly what all traders are doing all the time whether they will admit it or not. The men are separated from the boys when these predictions are based on sound logical principals, based on real trading dynamics, one being order flow, another being volume, another being momentum... You need some context and flexibility to be able to use TA. It's not as simple as, "if price touches X price again, it will go up" There is a lot more to interpret that goes hand in hand with that clue.
TA is just that, a clue. An educated guess of where value is laying in the market. Lets put some volume and orderflow analysis at those same levels and see what happens, then react to the movement.
Why does TA act as a clue giver? You have to remember that in Fx (as well as other instruments and markets) there are banks, hedge fund, specs etc buying and selling. Now if price has reached a low level in the market, then has gone up from there, it stands to reason that there is value at or near that level. In TA, you would call that support. So it is logical for a fund that is buying large amounts to target that same area as a place to buy, simply because it is a value area. That alone should absolve TA of all "wrong doing" here. When you understand this, you are one step closer to leaning the odds in your favor.
The thing is, is that you cannot blindly trade this way. You need to confirm the trade as it comes, and take in the fundamental picture, the volume, momentum and the news at or around that time. The trick is to know where these levels are, and which ones are more valid than the rest. That's where experience comes into the picture.