„False breaks are followed by fast moves“ is one of these market psychology rules that are mentioned from time to time in media reports about stock markets. It is one of the big traps stock market investors try to avoid by doing a lot of chart analysis on all kinds of indicators based on historical chart data in order to predict the future market behavior.
The funny thing is, that as many investors (and the algorithms they use for it) are doing the same or similar kind of analysis they come to the same or similar predictions. As a result, the future market behaves often (not always) like these predictions and so the result of their chart analysis becomes a self-fulfilling prophecy.
Simply speaking, people with the same objective using the same or similar methods are able to predict the future based on historical data. Find the mistake.
