The Theory of Overbought and Oversold
Momentum in the Concept of Technical Analysis
Overview: The science of technical analysis is based on estimates, an understanding of probability, and articulation of how current price patterns may translate to future price movement. Because it is an inexact science, technical analysis has been criticized as invalid or unreliable. However, when the alternatives are considered—namely, accepting market averages as the best possible outcome—technical analysis has been demonstrably legitimized time and again.
The purpose behind a range of analyses collectively termed “technical analysis” is to accomplish three goals. First, technical signals define the most recent price behavior and its associated ...
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