Technical Analysis: A Tool to Simplify Market Fluctuations - The World's Largest Cryptocurrency Exchange Platform

Wealth is the manifestation of understanding the development of things.

Technical analysis is not the holy grail of investing,

Essentially, it is a form of a priori probability judgment about market behavior—it is not an exact prediction of future trends,

But a probabilistic hypothesis about future possibilities based on historical data.

The core premises of technical analysis are built on three axioms:

Market behavior discounts everything (sufficient trading)

Prices evolve in trends (continuous trading)

History repeats itself

These three axioms together form an a priori cognitive framework.

Technical analysis seeks linear patterns in a nonlinear financial market,

This is a simplification in terms of cognition.

But the market is a complex interaction of countless rational and irrational trades in an uncertain environment,

While technical analysis assumes that price movements follow identifiable patterns and order.

This simplification provides traders with decision-making convenience,

But also masks the true nature of market randomness.

Technical analysts believe that certain chart patterns have predictive value,

Not because they possess some mysterious power,

But because they recur repeatedly in history and trigger specific directional price movements.

This understanding is essentially an application of inductive reasoning,

Judging and assigning probabilities based on historical data before the outcome occurs.

And at the end of a trend,

It becomes easier to believe in the “power of belief,”

Logic and fundamentals are “unpredictable” at price tops and bottoms.

So,

Does this mean technical analysis is worthless? I think quite the opposite.

The value of technical analysis does not lie in predicting the future,

But in providing traders with a probabilistic framework for risk management,

Prediction errors are not scary,

What’s scary is predicting wrong and still believing that technical analysis is correct.

Some well-known technical analyses include but are not limited to:

Candlestick patterns (combinations)

Moving averages

MACD, KDJ, BOLL, etc.

Chart patterns (arcs,

Cup and handle,

Wedges, etc.)

Dow Theory,

Waves,

Chan Theory, etc.

These are all tools.

For example,

In FPS games,

Various guns are like technical analysis.

Short-range: USP, Desert Eagle

Medium-range: M4A1, AK47

Long-range: AWM, AWP

We need to first assess our own patterns before choosing suitable weapons,

Instead of holding a Desert Eagle for long-term trading,

And a sniper rifle for short-term trades.

When you eliminate your enemies,

It’s not because of the gun you use,

But because your crosshair is aimed at them.

Stock prices rise,

Not because of some divine intervention,

But because there is a logical reason for the rise,

Do not invert cause and effect.

Any technical pattern can be formed,

But the logical reason for the rise is the market consensus.

The theoretical foundation of technical analysis can be understood by reading classic books on the subject,

If you cannot understand them, then you might as well give up on this path,

I won’t elaborate here.

You really don’t need many technical analysis tools,

One or two are enough,

Only poor students have many tools.

What truly makes you money is your cognition,

First, identify the correct direction,

Then use technical analysis to find entry points,

Whether you hold or not depends on your mindset and cognition.

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