The Power of Technical Analysis in Stock Trading
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Note: I had a bit of a dispute with the publisher over the authenticity of the manuscript. I advocate charting and quantification in technical analysis in this book, but he was on the other side of the fence. He is currently a value investor and analysed stocks up to the time this book went to print. I limited myself to one stock.
Because no matter how bearish the market trend is right now, there may be one stock out of 100 that is one revision higher, and I couldn't convince him to use it as an excuse to throw away fundamental analysis.
So I chose only one stock, Doosan. In addition to this stock, I was also challenged by bitcoin and exchange rate issues during the writing of this book.
In any case, on the final day of this book, I will make a final update on "Doosan" the Korean won exchange rate, Samsung Electronics, and our posthumous plans and publish the book. Technical and fundamental analysis is not only a matter of economics, but also a matter of philosophy.
2025/Jan/08 The publisher has informed me that the cover of the book is complete.
This means that we are nearing the end of our Doosan "proof of publication" live broadcast.
So far, we have written four blog chapters, and after this one, we will have a total of five live chapters.
From 27th October to 8th January 25th, the price rose from 185,000 won to 304,500 won. The percentage increase (%) = [(new price - old price) / old price] × 100. Here, we get: [(304,500 - 185,000) / 185,000] × 100 = 64.59%, which is an increase of about 64.59%.
Is the challenge of economics technical analysis? I had a bit of a debate with the publisher in Chapter 1 of this book. This debate will continue after my death. However, the reader is advised to abandon fundamental analysis and go all in on technical analysis. Life is not long. It's not about knowing a lot, it's about knowing deeply.
Anyway.
I promised to discuss the results of this stock by the time this book is published. The book hasn't been published yet, but I think I'll call it a day, take my profit and call it a day.
The Power of Technical Analysis in Stock Trading
In the world of stock trading, two primary approaches dominate the conversation: fundamental analysis and technical analysis. While fundamental analysis dives into a company's financial health, technical analysis focuses on price movements and chart patterns to predict future trends. Over time, the author of this blog has become a firm believer in the latter approach. Here's why.
The Debate: Fundamental vs. Technical Analysis
In a conversation with a publisher, the author encountered some resistance regarding their stance on technical analysis. Despite the publisher's preference for fundamental analysis, the author remained steadfast, advocating for technical analysis as the more reliable method. This viewpoint was put to the test using real-time data of Doosan stock, Bitcoin, and exchange rates, all of which highlighted the effectiveness of technical analysis.
Doosan Stock: A Case Study in Technical Analysis
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One of the most prominent examples the author discusses is Doosan stock. From October 27, 2024, to January 8, 2025, Doosan saw a significant price increase, rising from 185,000 to 304,500 KRW, a 64.59% increase. This change was not merely coincidental but could be attributed to patterns identified in the stock's technical charts. By analyzing the monthly chart and the 10-day moving average line (MA), the author could predict this surge. The 10-day MA formed a 45-degree angle, signaling a strong upward trend.
This rise was just one example of how technical analysis could guide investors toward better decisions. The argument here is that technical analysis accounts for more than just the price movements—it encapsulates the collective psychology of the market, providing a more accurate forecast than relying on historical financial data.
Chart Analysis: The Core of Technical Insights
In technical analysis, charts play a crucial role. They give visual insights into how a stock is behaving over time. For instance, the moving averages of Doosan, plotted over various time frames, indicated a strong bullish trend. The 10-day moving average, in particular, showed consistent upward movement, which served as a clear buy signal.
By focusing on the chart and ignoring other variables like the company's financial statements, technical analysis offers a straightforward way to gauge market sentiment and predict short-term price movements. Unlike fundamental analysis, which can be influenced by data asymmetry, technical analysis provides equal visibility to all investors, making it a more democratic approach to stock trading.
Bitcoin and Exchange Rates: A Broad Application of Technical Analysis
While the primary focus of this blog is on Doosan, the author also discusses other assets like Bitcoin and exchange rates. The argument remains the same: technical analysis offers a more practical and measurable way to track these volatile assets. Bitcoin, in particular, is prone to rapid fluctuations, and using charts to track its movements can yield more reliable predictions than relying solely on fundamental indicators.
Conclusion: The Future of Stock Trading Lies in Technical Analysis
The author’s experience with Doosan and other assets reaffirms the power of technical analysis. By using charts and patterns, traders can gain a more accurate understanding of market trends and make more informed decisions. In contrast, fundamental analysis, while useful in certain contexts, does not offer the same level of insight into short-term price movements.
In conclusion, it is clear that the future of stock trading belongs to those who embrace the power of technical analysis. As the author puts it, “Don’t waste time trying to analyze everything—focus on the trends that matter, and trust the charts.”
For those interested in learning more, the author encourages readers to explore their past blog posts and stay tuned for upcoming content, which will delve deeper into the world of technical analysis.
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