eli5 how does technical analysis work in trading? and why is it not just astrology?
In: Economics
There are some great books out there on this, and I’m far from an expert, but as I understand it, it has to deal more with the human factor and how predictable we can be.
For example, with any given stock, people have a general idea of what the average high and low is. Despite all other factors, this helps drive whether they will buy or sell.
So if the average low end is $10, and the average high end is $20, you will see more people buying as it approaches 10 and selling as it approaches 20. This doesn’t change much regardless of the other factors at play etc.
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