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Recently, there have been some rather extreme opinions suggesting that the future is an era of investment, and technical analysis will become ineffective. For instance, a stock with a seemingly promising trend may suddenly plunge in value due to a scandal. Conversely, a stock with a poor performance may experience a significant increase in value after releasing positive news. Many technical aspects may gradually become ineffective due to the intrinsic changes of the listed companies. These viewpoints may seem correct, but they actually have significant logical flaws.

We all know that in the global market, most markets do not have restrictions on price fluctuations, and are influenced by various news, leading to gaps at the opening with significant drops or rises. Some trends may appear peculiar, as if technical analysis has failed. However, if you carefully examine the trends of the U.S. and Hong Kong stocks, especially on a weekly or monthly basis, you will find that they fully comply with technical patterns.

Lifting restrictions on price fluctuations and implementing T+0 trading can lead to greater volatility, but these fluctuations ultimately conform to technical patterns. Nvidia, which has been very popular in recent years, if you have studied its trend carefully, you will find that it fully complies with technical patterns, including wave patterns, adjustment cycles, and even trading volumes.The fundamental reason why technical analysis will never become obsolete is because it reflects the inflow and outflow of funds on the market, or rather, the coming and going of funds forms the cyclical patterns of trends, evolving into technical analysis.

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Those who say that technical analysis will become ineffective simply do not understand the essence of technical analysis.

It is the existence of capital that precedes the formation of patterns, not the other way around where patterns lead to the existence of capital.

As long as the market conforms to the laws of capital, technical analysis will never become obsolete.

Any capital, in order to make a profit in the stock market, must buy and sell stocks.

Even if one makes money by short selling, it also requires buying and selling.

This process will inevitably involve the exchange of chips, resulting in turnover rates and changes in trading volume.

Of course, if one is patient, it is possible to deliberately control the trading volume by buying in small quantities over a long period of time to conceal one's actions.

The same applies when selling, one can conceal their trading traces by selling in small quantities or through the method of matching trades.There is one more point to consider: in order not to reveal their intentions, the main force often engages in the process of "washing the plate."

Minor "plate washing" will remain at the daily line level, while major "plate washing" will remain at the weekly line level, and almost no "plate washing" occurs at the monthly line level.

This is because the "faking" of the market by capital also requires time and cost, and deceptive lines rarely appear on the weekly line, and are almost impossible to appear on the monthly line.

This has become the essence of technical analysis, the effectiveness of trend analysis.

Short-term technical analysis is often prone to errors, precisely because of the deliberate deception by the main force, which leads to short-term fluctuations.

If you do short-term trading, you must be prepared to make mistakes, otherwise, it is easy to get more and more involved.

The essence of technical analysis is not to predict the rise and fall of tomorrow.

If technical analysis could predict the rise and fall of the next day, then there might be a kind of technical analysis that can make money every day.

You should know that even if you only earn 1% every day, with more than 240 trading days in a year, it would be more than 10 times.

This is equivalent to adding a zero every year, and after eight or ten years of stock trading, you could buy the entire stock market.So, technical analysis is not played in such a way, the so-called tactics are just a way of "deceiving".

Otherwise, they wouldn't need to sell any tactics, they could just make a fortune by trading stocks themselves.

Therefore, many paths of technical analysis, under the influence of interests and in the face of greedy desires, have been completely led astray.

Technical analysis has four core elements.

Many friends may not necessarily understand, but by slowly understanding, you can comprehend a lot.

Although we seem to be talking a lot of sense, in fact, we are also on the road of continuously understanding and iterating in technical analysis.

First, the trend.

The trend is very easy to understand.

When funds buy or sell stocks, they will definitely drive the trend, because the chips are out of balance.The upward movement indicates an upward trend, while the downward movement indicates a downward trend.

The determination of trends is generally based on the weekly line as a standard, and the trend of the daily line will drive the change of the trend of the weekly line.

The rise and fall of a single day cannot form a trend; it is just a short-term fluctuation.

If capital wants to make big money, it will definitely lay out in advance, and the trend formed will naturally not be at the daily level, but at the weekly level, or even the monthly level.

The trend is unstoppable in the short term because there is a cycle from the entry to the exit of funds.

There is no such thing as a trend appearing at the weekly level and ending immediately.

Therefore, making a trend determination has become key.

Moreover, it is easy to determine whether it is a rebound or a reversal, just by looking at the trend changes of the small and large cycles.

Secondly, the volume.

The volume determines the level of capital.The trading volume of some stocks is only 200-300 million, or even just tens of millions, so the level of funds involved must be relatively small.

The trading volume of some stocks can reach 2-3 billion, or even 5-10 billion, which must be the main target of large capital games.

Volume is not necessarily about the transaction amount, but mainly about the expansion of trading volume, or what is called the volume ratio.

The volume ratio represents the current level of capital activity in the stock, the higher the activity, the more opportunities there are.

The foundation of technical analysis is volume, which is also the main standard for tracking the direction of capital.

Even if the daily volume can be deceptive, the weekly and monthly volumes will definitely not deceive.

As long as the volume is effectively expanded, there is an opportunity to participate, but stocks with long-term contraction should be avoided as much as possible.

The most deceptive are those with originally small volume, which suddenly expand the volume significantly, which is prone to incorrect judgments.

There is one more thing that needs special attention about volume, which is sustainability, generally measured by 3 trading days as the standard.

Third, the cycle.Long cycles and short cycles yield different judgments in technical analysis.

As previously mentioned, the shorter the cycle, the greater the likelihood of technical analysis failing.

For some market fluctuations that last only a day or a week, technical analysis finds it difficult to capture them.

The larger the cycle, the better the effect of technical analysis, and the higher the probability of making money.

If you are willing to become wealthy gradually, you must learn technical analysis; it is a remedy.

But if you are thinking about getting rich quickly and have learned technical analysis, it is likely to be a poison.

In the end, very few people succeed in short-term trading, because in short-cycle games, the main capital always wins, without exception.

Fourth, space.

The last point, the important core of technical analysis, is space.

Technical analysis can effectively determine the space on the basis of a long cycle.Spatial quantification is a method of estimating the height of capital exit based on the direction of the trend, the volume of transactions, and the intensity of short-term increases.

The same principle applies to the downward trend, where the spatial position can be estimated through technical patterns and the price position of the stock.

Spatial quantification is the most complex part of technical analysis and is the key to determining how much profit one can make.

Many people believe that the extent of a stock's increase is related to its performance, but in fact, the relationship is not significant.

The space is entirely determined by the strength of the capital, and most of it will be inflated, with little connection to performance.

Performance can only determine the lower limit, while capital can truly determine the upper limit.

Technical analysis does not focus on theoretical discussions but emphasizes practical experience and the accumulation of experience.

No matter how much technical analysis teaching you read, it is better to understand the logic of trading by yourself and then continuously verify it through practice.

My current understanding of technical analysis is also the experience I have gained through years of continuous trading, including the lessons learned from losses.

No one can take a shortcut in the path of technical analysis. Even if someone teaches it, one must understand it by themselves, which is an inevitable path.