In the Real World, Nothing Is Textbook so Stay Flexible
Technical analysis is based on the premise that price patterns repeat themselves. This is because people in the markets repeat themselves given similar market conditions. Unfortunately, in the real world, the term “similar market conditions” is subject to interpretation. Studying one market as it trends and reverses shows how much leeway there is in a technical pattern and what to do when things “sort of” happen.
Technical analysis is based on the premise that price patterns repeat themselves.
When Things “Sort of” Happen—a Case Study
The U.S. 30-year bond yield was in a downtrend starting in early 1992. Figure 20.8 shows that for much of 1993 to date, the yields had been in a tightening ...