Traders' psychology sometimes leads to the self-fulfilling and self-destructive nature of technical indicators, and when a trend is determined but the technical indicators show self-destruction, there is no need to fear; simply ignoring them is fine, or taking the opportunity to buy low is also an option.

The confidence of stock market investors is like the heart of a girlfriend, changeable and unpredictable, appearing and disappearing at times. Most investors "believe" in technical analysis and like to talk about strict stop-losses, thinking it will make them lose less and earn more. Of course, this "belief" can also change easily, especially after experiencing several "beatings" and living through a period of "life worse than that of cattle and horses."

There are many occasions when both supporters and critics of technical analysis mention its "self-fulfilling" nature. Supporters believe that because many people trade based on technical analysis, it influences the market to move in the direction indicated by the analysis. The most typical example is when stock prices, especially indices, break through or fall below key levels, causing many technical analysis investors to buy or sell, leading to sharp rises or falls. Nowadays, many institutions use automated trading, and the breakthrough of key levels will cause the software to automatically chase the market to buy or sell at market prices.

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The volume of such purchases is usually not very large, as positions are generally set to be bought in stages; however, the volume of sales is usually large, especially when the stock market has been rising for a long time, and some automated trading funds will sell out in full, and even after selling everything, they may also sell short on futures derivatives, which puts a lot of pressure on the stock market and can easily lead to a sharp drop. In this way, the signals sent by technical indicators are realized, verifying the accuracy of technical analysis.

Nobel laureate in Economics and Yale University professor Robert Shiller, after the "Black Thursday" of 1986 and the stock market crash of 1987, sent out a survey to many institutional investors and individual investors, asking "What was your reason for buying or selling during this period?" The answers were almost the same, selling because the market fell. At that time, the media attributed the stock market crash to political news, economic news, and market rumors.

Shiller's survey also investigated whether the respondents were buying, selling, or waiting before the decline, and then asked if they thought the stock market was overvalued relative to the fundamentals during this period. However, the survey yielded contradictory results: more than 68.1% of individual investors and 93.1% of institutional investors believed that the stock market was overvalued during this period, but they were still buying stocks. On the other hand, more than 10% of people said that before the stock market crash, they were operating according to a clear stop-loss strategy.

Shiller also asked whether the respondents' selling was affected by the 200-day moving average being breached, as the 200-day moving average is generally considered the long-term trend line of the stock market. 73.3% of individual investors and 33.1% of institutional investors gave an affirmative reply.

Shiller's survey proves that whether it is individual investors or institutional investors, most of them, like retail investors, buy because the stock is rising and sell because it is falling; technical indicators, especially those representing a change in the long-term trend, have a significant impact on investors' operations.

In this way, it seems that technical analysis indicators are indeed affecting the operations of most investors and the market. Unfortunately, due to these people's confidence in technical analysis indicators, some larger and more cunning market participants have seen opportunities, and these people have a common name, "big players" or "market manipulators."

Big players have long discovered this trading characteristic of most investors and have found the opportunity to make a lot of money. If they deliberately break the key levels of technical analysis, it will cause many people to sell or buy. And then the big players take the opportunity to buy in after most people have sold, and then continue to push up, and then sell after most people have bought. Sometimes, it's not one or a few big investors who are in charge, but a tacit understanding between institutions, deliberately smashing the market before or at the beginning of a big rise, creating selling signals to wash out retail investors; or deliberately raising the price to deceive retail investors into taking over the position.Even sometimes without manipulation, the psychological convergence of retail investors can also lead to the self-destruction of technical analysis. For example, many technical analysts calculate the recent high point through the golden section ratio or Gann theory and buy at a price far from this high point. Originally, it was the self-fulfilling prophecy of technical analysis, but because many people think that there will be a lot of people who want to sell at that point, they might as well sell in advance. So many people hang orders to sell at a price lower than the target high point, and some other people find or speculate about this situation, so they hang a lower price to sell. As a result, the selling price becomes lower and lower, and the high point calculated by technical analysis is not reached. Due to this psychology of traders, the self-destruction of technical analysis is caused.

The manipulation of market makers or institutions, and the self-calculation of retail investors, jointly lead to the self-destruction of technical analysis. This situation is not only present in small-cap stocks, but also in large-cap stocks, and even the entire market will frequently have technical indicators fail, even in markets that are considered very standardized. The following figure is the trend of the S&P 500 index in recent years and the main technical indicators. It can be seen that even the U.S. stock market, which is considered the most standardized, frequently sends out sell signals during a bull market and buy signals during a bear market.

As for other markets, let alone. Due to the mutual influence of the psychology of large and small investors, there is no market where indicators do not fail, after all, there are too many influencing factors, and people's hearts are fickle. But this does not affect our profits in the stock market, because if we do not pay attention to these short-term indicators, once the trend is formed, we firmly hold on for a long time, regardless of market manipulation or retail investors' blind actions, they cannot affect our income.

From the recent trend of the stock market, the fundamentals are good, most technical indicators are also positive, and the enthusiasm of investors is increasing, even achieving the self-fulfilling prophecy of technical indicators. However, there are continuous gaps in the K-line chart, and the KDJ shows overbought, which seems to be possible to pull back. Of course, the KDJ often shows overbought, and the masters say this is called indicator dullness. As for when it is called dullness and when it is called overbought, the use of it is up to the heart, depending on personal grasp or the mouth of the master. It is a convention to surge after the Spring Festival, but the duration is not certain, and there may be a pullback, or even the self-destruction of technical patterns. At this time, everyone must not panic, as long as they believe that they are investing in a good listed company, they should hold firmly until they bring a rich return.