[SamBam]

The idea is that stock graphs show patterns. That when it's rising you can stare at the shape of it and intuit whether it is going to rise or fall within the next short period of time. People get very into specific patterns, and books are written about these patterns.

To a certain extent, if a lot of people are doing this this can turn out to be a self-fulfilling prophesy, because lots of people are looking at the same charts and saying "it's bound to fall now" and so sell their assets.

The problem is, this only makes any kind of sense with assets that have very little "real world value" grounded in reality. Why does the price of BitCoin going up? Because people expect it to go up. So they buy it. So it goes up.

[deandree]

Patterns are an oldschool Technical Analysis fallacy that blindly believes that X means up and Y down. More practical and successful approaches (Price Action) focus on statistical significance and recognizing market context and supply/demand imbalances.

Self-fulfilling prophecy is not a real thing - take any chart and you can find 10 patterns that say up and 10 that say down. Big players move the markets and they don't use retail trader Technical Analysis patterns.