From the desk of Louis Sykes @haumicharts
One of the great features of technical analysis and classical charting is its universal nature.
Technical analysis is a proven value-add regardless of which asset class you’re analyzing, be it equities, commodities, bonds, or even the emerging world of digital assets.
Markets are incredibly sophisticated, with many moving parts. A big misconception about technical analysis held by novice proponents is that fundamentals are of no use.
It’s quite the opposite. Fundamentals drive markets.
Particularly when it comes down to long time frames, markets are driven by fundamentals and macroeconomic factors.
On the other hand, technicals help us profit in the direction of those fundamentals.
Over shorter time frames, markets are driven by speculation and significant players. As a result, technicals and order flow are important to emphasize over these time frames.
Under these conditions, smart players with a lot of size push prices to maximum pain thresholds of the so-called “dumb money.”
Many times, you’ll see this manifest in false moves. That is, when prices push slightly beyond a support/resistance level, whipsawing traders, before quickly reversing in the opposite direction.
Over short and intermediate time frames (ranging from hours to months), this is an incredibly common pattern in cryptocurrencies.
In fact, I’d make the argument it’s the most common pattern.