The most underrated element of technical analysis has to be relative strength.
It’s impossible to outperform your benchmark if you own assets that are underperforming.
Much of this work is grounded in the overarching notion that asset prices trend while volatility mean-reverts.
But humans behave as if it’s the opposite.
Relative strength is merely denominating prices in a different asset than the native currency. Like price trends, relative strength also exhibits a tendency to trend, rather than mean-revert.
So, what does that mean?