✅Almost all traders read books and tutorial over the internet regarding technical analysis and patterns. After reading a lot of literature, traders start believing that some patterns ought to work 100% of the times. But according to my personal experience, this is just a mistaken belief.
✅The chart patterns are based upon human psychology, which the pioneers of technical analysis claim that never changes. But in my humble opinion, different human beings have different psychology in life as well as in trading. Not only that, the trading behavior of one particular trader might be different at different occasions.
✅But does that means we should not rely upon technical analysis at all?
✅In order to settle this dilemma, I must say that 'adaptation' is the best strategy one can add in his/her quiver. Seeking ideal behavior is perfectly fine but when things deviate from theory, we must adapt to the psychological behavior of the traders/investors.
✅Yes, this puts into practice a widely accepted truth that trading is more than 70% psychology.
✅As as example, the stock above never retested the resistance zone, which was an ideal behavior to test buyers at a level which once was a resistance. But it never happened and the stock gave a very strong move after the breakout.
✅A stubborn pullback trader would miss a nice 25% leg in this case. But if he adapts to the buyers' psychology, who were so eager to buy this stock, he would look for opportunities on smaller timeframes with minimum risk and huge potential for momentum.
Determination is a wonderful disposition but obstinate determination may hurt, both in trading or in life too.
I hope it was useful. Thanks for reading. Keep liking for more educational stuff in coming days.