太虚一毫 wrote: Mon Apr 17, 2023 2:34 pm
There are many resistance and support indicators. Fibonacci, pivots, channels, moving averages, trend lines, etc., can be counted in the category of resistance and support.
The question is: has anyone used mathematical methods to prove whether the statement of "resistance, support" is reliable?
The answer is: yes and no
Despite the fact that all areas of support & resistance (or which other phrases you use to describe those areas) are mostly broken by price, they work for some traders because they interpret price behaviour around those areas in such a way that they can mostly predict what is going to happen, i. e. have a statistical edge.
One obvious example:
If there is a break of the above mentioned areas is this a break (or a fake), for example.
It is impossible to have working criteria that actually test the areas in exactly the same way they are "used" by experienced traders who "almost feel" whether price will come back or not etc...
Technical vs fundamental:
this opposition is a construction that doesn't solve any trading problem whatsoever.
Both can work, both can fail.
The only question that counts is whether the trader has a statistical edge or not.
And the only way to know this is to do your homework and test your strategy (Gaussian distribution needs a minimum of 1000 cases).
For a retail trader it is more likely that fundamental won't work because she or he is the last person in a very long line of people to receive the news/fundamental information that influences price. I think it is as simple as that.