History Always Repeat Itself

forex-scalping.jpgSince traders need profits, all charts contain the same information and all traders operate with similar assumptions about market behavior based on chart formations.

But in sort technical analysis show nothing than a reflection of past prices, nothing more. In itself a graph cannot predict future price movements. A currency does not trade up or down because of a formation on a chart.

It moves because market participants make basic assumptions about future price behavior based on the record of past price action. A charted history of price action is the cumulative story of thousands of trading decisions; it is a record of the past behavior of thousands of individual traders.

Price information is meaningful because trader’s decisions give it predictive power. A simple proof of the limited forward intelligence of historical price action is the well attested notion that technical analysis can show that history always repeat itself.

 

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