Musa R Kaiser | | What are Chart Formations? Chart formations identified and analysed by the authors are graphic representations of unchanging human behaviour in complex multivariate situations.
They are the depiction of multifarious human actions bearing on a single variable (price). On price converge a galaxy of influences: fear, greed, desire, cunning, malice, deceit, naivete, earnings estimates, brokers' need for income, gullibility, professional money managers' need for performance and job security, supply and demand of stocks, monetary liquidity and money flow, self-destructiveness, passivity, trap setting, manipulation, blind arrogance, conspiracy and fraud and double dealing, phases of the moon and sun spots, economic cycles and beliefs about them, public mood, and the indomitable human need to be right!
Chart formations are the language of the market, telling us that this stock is in its death throes; that the stock is on a rocket to the moon; that a life and death battle is being wages in this issue; and in that other, the buyers have defeated the sellers and are breaking away.
They are, in short, the inerasable fingerprints of human nature made graphic in the greatest struggle, next to war, in human experience.
- an excerpt from the preface of Edwards & Magee, Technical Analysis of Stock Trends, 8th Edition.
A breathtaking explanation of Chart Formations. Reading it after many years and I am humbled and dumbfounded at the same time. It captures everything about chart patterns and I doubt anyone can better it.
Wishes n Riches,
Dr. Musa R Kaiser.
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