RE:Technicals...Bottom line...
1. Market price is determined by the influence of buyers who are optimistic about the value of a purchase, and sellers who are pessimistic about the value.
2. Consumers purchase (or not) based on the comparison of current market price to their perceived value (this decision is not a fundamental decision, it is a sentiment)
3. Investors purchase (or not) based on a comparison of the current market price to their projection of the future price (this decision is also NOT a fundamental decision, it is a sentiment - see 4-11)
4. Investors tend to BUY investments when they are optimistic about the future price, or SELL when they are pessimistic about the future price
5. Optimism and pessimism about a particular investment is determined based on many factors;
- which mix of fundamentals each investor is influenced by,
- which particular fundamentals carry more weight in the decision of each investor,
- how each investor interprets any particular fundamental,
- whether better investment options are available for each investor,
- whether mega investors can manipulate the price for a profit
- the time frame required to achieve a desired profit
- etc etc etc
7. Fundamentals DO NOT determine market price of anything because investors interpret the same fundamental data in different ways
8. Market Sentiment (the balance of overall optimism vs pessimism) is what determines market price, and sentiment is based on a very UNscientific interpretation of fundamentals (among other things)
9. Since market price is determined by sentiment to any particular investment, charting historic market prices over various time frames is NOT a reflection of the fundamentals of any investment, it is literally a reflection of market sentiment of that investment i.e. measuring optimistic buyers vs pessimistic sellers who had the same fundamental information available
10. Chart trends, and reversals in trends, are useful considerations for investment decisions because they are telling you what the whole balance of sentiment is toward an investment...
11. You can "fundamentally" disagree with the market's interpretation of your investment's fundamentals, but you will still get crushed because the market is NOT following YOUR INTERPRETATION OF THE FUNDAMENTALS
12. Those who ignore market sentiment are blindly assuming that the majority of investors in the market are making decisions using the same process as they are (see #5 above)
- Fundamentals affect market price INDIRECTLY, as they affect market sentiment (but not in a scientific manner at all)
- Sentiment affects market price DIRECTLY; in fact, they literally become the same thing
- If you are investing in any investment for it's market price, WHY would you only consider information that indirectly affects that price and ignore information that reveals how the entire investor group has/is viewing that investment?
(NOTE: commodities are not separate from this process simply because they are consumables; they also are traded on speculation by consumers, producers, governments, and pure speculators ... which effects their market price)