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Originally Posted by bigt2k4
Wait, support and resistance are nonsense? If you see a stock selling off and all of a sudden volume increases massively at a level and the stock isn't dropping below it- that doesn't count for anything?
No, that's suppply and demand in the moment. Support and resistance is the notion that because something bounced off a point previously, it will behave differently in some way because of that.
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I understand an exact price is nonsense, but if you see a stock fall toward a certain level a bunch of times and each time the volume picks up and the price rebounds from either above or a little below that level how is that not a support level?
Because it's not. Even if support and resistance were real, the vast majority of what you believe to be support and resistance levels would in face be noise. Think about that for a minute.
The below is a random walk. Notice the extremely strong patterns in it - support and resistance, trend, channels, breakdown, support becoming resistance, etc. You'll find these patterns in most random walks. And this is a random walk of just price; if you added random volume as well, the signals would get even stronger.
I've been through before. mrbaseball et al have no rebuttal, hence they slink away like cowards and refuse to debate or even engage meanginfully, coming back every now and then to reignite the debate with trolling. They have no brains, just a religion...there are traders who trade on astrology signals also. People see patterns in noise all the time, then confirmation bias does the rest.
The evidence is conclusive that support and resistance don't exist. It's been studied. mrbaseball is just a deluded weirdo who can't think, hence he bypasses any substance on this topic but regularly flashes his insecurity, like above.
The claim isn't as strong for momentum. There is some data that indicates long term momentum is real. Short term momentum appears not to exist, at least in equities. There's some evidence for momentum in commodities, which mrbaseball used to trade, which probably explains some of his persistent delusion.
Anyway, my main point is that not even that TA doesn't doesn't exist. It's that even if it had some predictive or explanatory value, it would necessarily be small (since it's algorithmic), and hence is a noisy distraction from where real alpha comes from, which is very -EV for generating real alpha.
Last edited by ToothSayer; 02-01-2018 at 01:44 PM.