Confirmation Bias
No matter how much caution you take in your role as technical analyst, and no matter the quality of confirmation you locate, it remains possible to find exactly what you seek, and to ignore all else. This confirmation bias makes trend analysis an uncertain science with many pitfalls along the way.
This is the tendency “for people to seek information and cues that confirm the tentatively held hypothesis or belief, and not seek (or discount) those that support an opposite conclusion or belief.”6
In chart reading, confirmation bias translates to a tendency to see specific patterns that confirm reversal or continuation, even when the pattern is not strong or does not even exist. A study of this produced several primary results, ...
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