“Traders see technical analysis as a tool, while they are themselves the instruments of technical analysis”

Tribune. The wisdom of the Greeks and their mythology have spanned the ages and are sometimes still surprisingly current. These universal myths can find resonance even in the most unexpected areas. Stock market technical analysis, an analysis method based on the study of price history, is used to predict its evolution.

This analysis is intended to be technical, as its name suggests, with its graphical representations, which make it possible to analyze trends, identify peaks, troughs, inflection points, reversals or rebounds. The main advantage of technical analysis is that it is widely used by traders. The predictions that are drawn from them have an influence on the behavior of operators, and therefore on stock market development.

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By mostly following the predictions of technical analysis, by selling or buying depending on these results, traders by their behavior favor an evolution of the stock market in accordance with these predictions. If the technical analysis indicates to them for example the growth of a stock price, this will encourage them to buy the stock in question, which will increase its price, according to the law of the market of supply and demand. .

A programmed prediction

Conversely, if we anticipate by technical analysis the reversal of an upward trend, traders fearing a drop in the value of the securities held in their portfolio will rush to sell these securities, which will cause prices to fall. . It is therefore not so much the technical analysis which makes it possible to predict a stock market evolution as the faith given to this analysis which will provoke a reaction from the operators and lead to a stock market evolution in the direction which was anticipated.

The greater the number of traders using technical analysis and having faith in these results, the greater the influence of the latter on the evolution of the stock market. We remember the quote attributed to Abraham Lincoln, famous sixteenth president of the United States: “The most reliable way to predict the future is to create it. “ This is what technical analysis ultimately does, it predicts the stock market movement by creating it. It is supposed to predict the stock market evolution, it is in fact the cause that makes the prediction come true.

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But what relationship then with Greek mythology? This link with the technical world of the Stock Exchange is possible if we refer to the story of Oedipus. Before his birth, the oracle of Delphi had predicted to his parents, King Laios and Queen Jocasta, that the son born of their union, without his knowledge, would kill his father and marry his mother. So that the oracle is not fulfilled, they decide to abandon the newborn, who is welcomed and adopted by the king and queen of Corinth, Polybius and Merope. Oedipus grew up without knowing his real parents.

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