Confirmation On A Chart

At the doctor, they check your eyes. You read several lines on a chart. If you can’t read the letters on the second line, the doctor has confirmed by the eye chart that you’re blind as a bat.

In finance, chart confirmation is different. Since technical analysts ignore fundamentals and actual market behavior and instead look at lines on a chart, they begin to look at charts the same way that children look at clouds.

Is it a monkey up there? No, that cloud looks like a spaceship. No… it's definitely John Travolta riding a lone wolf.

Individual bias can confirm whatever you wish it to be. The same goes with chartists, who look at charts and believe that patterns they've seen in the past will predict future performance.

Understand that technical trading is palm reading. An attempt to tell the future based on lines that have no true indication of future performance. But don't let that stop the people reading tea leaves from trying to tell you that, based on their own bias from a single chart, that they can predict the future.

Listen at your own peril.