[Macce]

[ QUOTE ]

I think some of those folkes (inc. "The New Market Wizards" interviewees) are now busto.

[/ QUOTE ]

No they are not, but let´s assume they are. Even then, it still provs that TA worked out for them while building their fortune. Market conditions maybe changed and they did not react to that, or they used to high leverage and went broke, like a lot of the very best poker pros has done. That still does not make them losing players, and it still makes the market wizards winning traders by using TA.

And if TA did work for in the 80´s and 90´s, it sure as hell works nowadays too.

Here is the locigal explanation why TA work:

Lets says the MSFT stock (Microsoft) trades for $100 for a long period of time. People buy and sell, so there are two camps out there, those who sold, and those who bought. Then the price falls to $80, and all the sellers are glad they got out at $100 and are reluctant to buy MSFT again. The buyers on the other hand, are paying very close attention to the market and decide that MSF is such a solid company, that they will not sell now at a loss. They decide to put it away and try to forget it.

Now some time later, MSFT price has picked up and is approaching $100. The people that has been in for the ride down to $80 is now paying very close attention again, and are on average a bit more inclined to sell at $100, since people really like to get out at break even when they can. The former sellers at $100 however, are not more inclined to buy back when MSFT is trading at $100 again, because they feel they almost got burned last time, and selling was the right move then, so buying is definately the wrong move now.

And wham, there you have it! It's a slight differentiation in buy vs sell pressure now, and $100 has become a resistance level for MSFT. Every time is reaches $100 in the future, it will experience a little added selling pressure that will stack the odds against that stock going up.

This is exactly why prices has a tendency to bounce at the same levels many time.

There are actually logical explanations for all technical patterns like trends, breakouts, fibonacci levels and ranges as well, but they are bit more complex then resistance.