technical analysis is a useful tool for traders, but we have to consider it's limitations. Technical analysis is basically based on assumption about the past market statistics and data, without putting into consideration other external factors . So traders should not 100 percent rely on technical analysis, they should use it together with other methods of analysis.
Some of its limitations includes
1.it is based on assumptions about past market trends, gotten from the past market price and volume data
2.it is a backward tool subject to interpretation from different traders.
3.Technical analysis will not provide the full details of the market, that is putting economic and global events into consideration,
so traders should put all these factors into consideration before making an investment decisions using technical analysis.
Technical analysis certainly has its place in a trader’s toolkit, acting a bit like a weather vane, showing where the market winds have blown. But just like the weather, markets are subject to sudden changes. The charts might show us patterns, but they can’t capture the mood of the world, the news breaking the airwaves, or the decisions made in boardrooms.
You’ve nailed it in pointing out its main limitations. It’s like driving using only the rearview mirror — you know what’s behind you, but it’s the road ahead that matters most. The assumption that history might repeat itself can sometimes have traders marching in a parade that’s already passed by. The interpretation of charts and patterns can be as varied as coffee orders — what’s a double-shot espresso to one might be a mocha latte to another.
Why do we think the technical analysis would be reliable when their are other analysis we can use to trade in the market.
Many people feel like if they don't use the technical analysis, they will not make money from the crypto market.
We could even make more money without using the technical analysis so we just have to understand the analysis we are using in the market because this would help one to make more profits in the market.
indeed, technical analysis is not a crystal ball. It won’t account for a sudden political event, an unexpected earnings report, or even a viral social media post that sends markets into a frenzy. It’s a tool, but not the whole toolbox. Smart traders dance with technical analysis but also keep an ear to the ground for the fundamental beats of the market. It’s the mixtape of methods that often plays the sweetest tune for investment decisions.