I occasionally find it fun to look for “patterns” in the price movements of stocks and indexes as a way to see what might happen in the future. I put patterns in quotations because I actually tend to think that my efforts are mainly just my brain’s meager attempt to find order in what really is probably meaningless chaos. However, I have read that Jim Simons main hedge fund works on the basis of taking advantage of patterns, so I’m not really sure about the utility of spending my time on this subject…
Anyways, in the chart below you will see two boxes, the first one being the pattern, and the second box containing a rough tracing of where the index will go if this pattern reoccurs (click for larger image).
I think I will continue to regard technical analysis as something I should not entirely disregard. It will be a very minor consideration in investment decisions.
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