Lets Understand Why Technical Analysis r ...

Lets Understand Why Technical Analysis reject the concept of Intrinsic Value?

Aug 04, 2023

🔸 Technical Analysis relies on objective data, such as price charts and volumes, which can be observed and analyzed, rather than subjective judgments involved in intrinsic value estimation.

🔸 Efficient Market Hypothesis suggests that market prices already reflect all relevant information, including intrinsic value, making it difficult to consistently identify undervalued or overvalued securities.

🔸 Technical Analysis is commonly used by short-term traders who focus on immediate market dynamics, making the concept of intrinsic value less relevant in short-term price fluctuations.

🔸 Estimating intrinsic value involves complex calculations and subjective assumptions, leading to a higher level of uncertainty and imprecision compared to the straightforward tools used in Technical Analysis.

🔸 Technical Analysis acknowledges the influence of market psychology and investor behavior on price movements, focusing on identifying patterns that indicate shifts in market sentiment rather than determining underlying asset value.

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