CHAPTER 01 · LESSON 03

Technical analysis: scope and limits

Technical analysis studies price, market structure and recurring behaviour. It describes possible paths; it does not make the next move certain.

What technical analysis studies

It organises visible market behaviour: direction, structure, price location, volatility and the way a market responds around important areas.

What it cannot prove

A chart pattern cannot guarantee a future outcome. The same pattern can behave differently when the higher-timeframe environment, liquidity or risk context changes.

A verifiable conclusion

Write the observation, the evidence supporting it, the evidence that would weaken it and the price behaviour that would invalidate it. This makes the conclusion reviewable instead of merely confident.

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