A MA does not establish a trend. Analyzing price movement outside of the trend that's being traded will provide insights that a MA can't begin to do.
Hypothesis: Technical Analysis only works in the immediate short-term
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It really bugs me when people answer a straight forward question with something strange.
Question: what color does red and white mixed together make?
Reply: A number higher than 6 is not 7. You need to think outside of numbers
Your solution of using a longer term MA will not be equivalent to that of someone analyzing the trends in higher time frames. There is no way to even compare these methods.
Thanks. I do not see why. Maybe others can offer opinion as well.
An uptrend on a 1 minute chart may prove to be no more than a correction within a downtrend when viewed in a higher time frame. Or, doing so may show that the move is a continuation of the primary trend.That is just one reason people use higher time frames. Your solution of just plotting a longer term MA would not provide such information. These forms of analysis are so far apart that no comparison can be made. So looking at higher time frames is not just to see if the current trend is up or down, and expanding the MA is not an alternative method.
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That's a very good question, especially since some charting software will not support indicators based on different time frames on a single chart.
Generally, you can use a longer MA and you will get the same up/down slope that you would see on an MA on a higher timeframe if the prices series is fairly uniform. However, in cases where you have outlier data with values that are at the extreme ends of the price range, that could make a difference because 1) more data, including the outlier, is included in the longer MA on the lower timeframe, and 2) an MA on a higher timeframe is more impacted by the fewer number of price values used in its calculation. So that outlier data can skew the results of the MA calculation for either the lower or higher timeframe, just depending on where it falls in the price series.
Another consideration is the type of MA. If you're using "exotic" MA's that weight the prices in a manner that gives an outlier more weight, that could also make a difference in the results. But if you're using a common exponential MA, you shouldn't have this problem.
The problems I've typically seen is that a trader uses and applies T/A inappropriately or has an incorrect understanding of what a particular technical study accomplishes as well as its shortcomings.
Used correctly, T/A works as well or better than any other market data analysis and interpretation tool. It's certainly not the only tool but it's a proven tool.
You can go out and buy an electric router or alternatively you can use a hammer and chisel to make a wood mortise joint. And if you don't know how to use that electric router correctly and use the proper safety precautions you can easily lose some fingers or severely lacerate yourself.
Used correctly, T/A works as well or better than any other market data analysis and interpretation tool. It's certainly not the only tool but it's a proven tool.
You can go out and buy an electric router or alternatively you can use a hammer and chisel to make a wood mortise joint. And if you don't know how to use that electric router correctly and use the proper safety precautions you can easily lose some fingers or severely lacerate yourself.
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I've used TA to anticipate trends that spanned over years, particularly major trend reversals. But that's my own personal experience.
Dead nuts on.