Technical Analysis Isn't the Problem - Misconceptions Are

For as long as trading has existed, critics of Technical Analysis (TA) have rushed to declare that “it doesn’t work” or that it’s nothing more than a set of meaningless indicators. Their conclusions usually come from a place of impatience and, more importantly, a place of limited knowledge.

Most anti-technical voices believe TA is simply about glancing at a 200-day moving average or spotting 52-week highs and lows. They assume technical traders merely look for overbought or oversold readings and jump into trades. Naturally, such a shallow understanding leads them to believe TA is useful only for short-term speculation and has little value in long-term investment decisions.

But these assumptions reveal a fundamental truth:

They have never gone beyond the surface.

The Real Depth of Technical Analysis

Technical Analysis is not a collection of stereotyped tools. It is not limited to moving averages, breakout scans, or oscillator levels. These are entry-level concepts—just the first page of a much deeper subject.

True technical proficiency requires studying structure, rhythm, psychology, and price behaviour in a manner far more sophisticated than what most critics ever attempt. The real potential of TA lies beneath the surface, in areas that require time, effort, and intellectual discipline.

And, without this deeper understanding, criticism becomes inevitable—because people often criticize what they do not understand.

Why Comparing Fundamentals vs. Technicals Is Misleading

There has always been a clash between the fundamental and technical schools of thought. Both sides have written extensively against each other, and both have their own biases.

Now, to be clear:I do not criticize fundamental analysis simply because “balance sheets can be window-dressed.” That argument is just as shallow as the anti-technical arguments made by the other side.

Instead, my criticism is based on a functional reality:

Fundamental analysis struggles with timing. Technical analysis excels at timing.

Fundamentals may help you understand what to buy.

Technical analysis helps you understand when to buy.

And when it comes to deploying capital efficiently—timing is everything.

Fundamental analysis often results in capital being blocked for months or years while waiting for valuations to be realized. Technical analysis allows capital to revolve efficiently, entering at the right time and exiting at the right time, letting traders compound returns more effectively.

The “You Can’t Time the Market” Myth

Another common accusation is that technical analysts cannot pick tops or bottoms. But here is the reality:

No method—technical or fundamental—can consistently buy at the exact bottom or sell at the exact top.

Occasionally, someone may catch an extreme point, but that is just one odd trade that becomes memorable. What matters is the consistency of timing, not perfection.

Technical tools—especially advanced ones—offer far superior timing than any valuation-based approach ever can.

The Depth Beyond Indicators: Elliott Wave as an Example

Take Elliott Wave Principle, for instance. It is a structured way of understanding the rhythm of price movement through motive and corrective phases. Markets move in patterns—never straight lines—and this principle captures that natural rhythm.

On its own, Elliott Wave is powerful.But when combined with other technical tools, it produces exceptional precision in both entries and exits. It ensures trades are taken at the right moment—not months before an actual move begins.

A Simple Illustration: Timing vs. Blocking Capital

Consider this scenario:

A fundamentally strong stock trades at ₹500. A fundamental analyst values it at ₹800 and buys immediately (say, on 1st January 2020). But unknown to him, the stock is entering a corrective phase. A technical analyst following Elliott Wave identifies that the stock is in its Wave 4 correction. Based on this knowledge, they wait. The stock continues to fall and completes its correction on 30th June 2020 at ₹400.Only then does the technical analyst buy.

Eventually, the stock rises and hits the ₹800 target.

Now compare outcomes:

Fundamental Analyst

• Bought at ₹500

• Capital was blocked for 6 months while the stock fell

• Entered early and inefficiently

  
  

Technical Analyst

• Bought at ₹400

• Capital remained free for six months (and could be deployed elsewhere)

• Achieved a better entry AND better return

• Timed the market with precision

  
  

Both reached the same target.But one used timing to maximize return, while the other wasted time and opportunity.

Final Thought

Technical Analysis is far more than a collection of basic indicators. It is a comprehensive discipline that, when studied properly, becomes one of the most powerful tools for timing markets, managing risk, and maximizing returns.

Before anyone criticizes it, they must first understand what it truly is—not what they imagine it to be.