Re: Who truly moves the market— price action, or the news itself
Does technical analysis precede the news? Who truly moves the market—the chart and price action, or the news itself?
I did some digging, and I hope you find the answer in this post.
Some of you may already know Dow Theory’s First Rule:
|Snip|
This is the essence of Dow’s first rule—price action is king.
News, reports, and predictions? They’re just late reflections of what’s already unfolding on the chart. Price moves first, and the news comes later to justify it—not the other way around.
Let’s put this theory to the test.
I conducted a simple analysis of crypto charts that crashed due to news events. Here are the prime examples:
1 - Bitcoin Crash Due to COVID-19
Two days before the crash, a Head & Shoulders pattern had already formed.
Any seasoned technical analyst would’ve opened a short position right before the collapse.
2 - FTT's Crash Following FTX Bankruptcy
The chart had already printed a descending triangle—a textbook bearish formation.
Any technical trader worth their salt would have spotted it and shorted FTT before the collapse.
3 - LUNA's Catastrophic Fall
Not one, but two bearish patterns showed up:
A rising wedge (bearish)
Another Head & Shoulders formation
The Common Thread?
These crashes were predictable—not the entire meltdown, but at least the bearish sentiment and downward momentum.
Anyone who lost money might have saved their capital—or even profited—if they had technical knowledge.
What do you think?
I did some digging, and I hope you find the answer in this post.
Some of you may already know Dow Theory’s First Rule:
|Snip|
This is the essence of Dow’s first rule—price action is king.
News, reports, and predictions? They’re just late reflections of what’s already unfolding on the chart. Price moves first, and the news comes later to justify it—not the other way around.
Let’s put this theory to the test.
I conducted a simple analysis of crypto charts that crashed due to news events. Here are the prime examples:
1 - Bitcoin Crash Due to COVID-19
Two days before the crash, a Head & Shoulders pattern had already formed.
Any seasoned technical analyst would’ve opened a short position right before the collapse.
2 - FTT's Crash Following FTX Bankruptcy
The chart had already printed a descending triangle—a textbook bearish formation.
Any technical trader worth their salt would have spotted it and shorted FTT before the collapse.
3 - LUNA's Catastrophic Fall
Not one, but two bearish patterns showed up:
A rising wedge (bearish)
Another Head & Shoulders formation
The Common Thread?
These crashes were predictable—not the entire meltdown, but at least the bearish sentiment and downward momentum.
Anyone who lost money might have saved their capital—or even profited—if they had technical knowledge.
What do you think?
This is a really good question, something that I often think about and can't totally agree with my answer. To be honest, I think that price isn't always predictable, even with access to the latest news or technical analysis but what I'm 100% sure about is that when price is going up and the bubble is growing too much, there always happens something negative that causes the bubble to burst and gives a start to bears.
I don't believe in technical analysis because drawing someone on chart means absolutely nothing. What if someone posts his technical analysis but I am a whale and do whatever I want with the price? What if I'm Elon Musk and do whatever I want? Then how will you say that your technical analysis is correct? You can choose any timeframe and draw whatever you want. You can draw different picture on 8 hours charts, 12 hours charts, 1 day charts, 1 week charts, 1 year charts. You can draw literally anything but that means absolutely nothing.
Technical analysis like this ones where people draw lines, is just an imaginery way of predicting something. It's like believing in Zodiac.
Ah, You’ve stirred the pot with this one, my friend. Let me give you a response that’ll make your head spin.
Look, you're onto something there. Price is a beast that doesn't just dance to technical analysis alone, and you know what? Sometimes it’s a wild ride of unpredictability. Even with all the latest news or the "perfect" charts, trying to catch the movement is like chasing the wind. Capisce?
But here's where I disagree just a little: Technical analysis—while not a crystal ball—gives us patterns that have been crafted through history. It’s not about predicting the future like some soothsayer. It's about identifying the psychology of the market. People follow trends, get greedy, panic, and act like herds. And that, my friend, is where TA comes in handy. You don’t need to be Elon Musk to see a trend, you just need to recognize the patterns those before you have already left.
Yeah, the market can be manipulated by whales, but that's where the beauty of market sentiment comes in. If a whale is pulling strings, the reaction from the crowd is still something predictable. The herd will react, and that’s all we need to get a sense of what’s coming. Technical analysis isn’t perfect, it’s not a foolproof system, but it’s a tool. It’s not about drawing pretty lines—it’s about reading what’s in front of you, understanding what it means when people start losing their minds over a price movement. It’s the psychological warfare.
Technical analysis isn’t a belief in the Zodiac, it’s a map. It won’t tell you where you're going, but it sure as hell will help you not get lost. And as for Musk, he may move mountains, but the market’s psychology is what will tell us how big the ripples are. You see, we’re not just predicting numbers; we’re predicting human behavior. That's the power.
So, maybe it’s not perfect, maybe it’s not a guaranteed win, but it’s far from just a fantasy. It's a strategy, and in a world full of chaos, it’s the closest thing we have to order. Embrace it.
