🧐 Why do I always say that only looking at technical analysis is garbage | Interpretation of "A Complete Explanation of K-Line Technical Analysis, Avoiding Ten Years of Detours"

The sharing about K-line by Brain Zong on YouTube is excellent and more thorough. Recommended for everyone. Video link at the end:

I strongly agree with the core thinking of his sharing:

Simply put: Don’t treat technical analysis as a “secret to predicting the future.” Predictions are just tricks; those things are no different from mysticism.

In the era of computers/quantitative trading and now AI, flashy indicators and patterns are prehistoric relics, mostly beaten out by arbitrage algorithms.

So does that mean technical analysis has no value?

Not exactly. It still has its value, which he describes as: “Positioning/Tracking/Risk Control,” and it must be subordinate to fundamentals.

1️⃣ First, dismantle the “witchcraft”

He believes that most retail traders’ obsession—K-line patterns (Morning Star, Head and Shoulders), indicators (MACD/KDJ/RSI), and even more esoteric wave/Gann/Chan theory—are essentially:

“Manual quantification” from before the computer era.

You use the naked eye + simple formulas to find “repetitive patterns,” but today Wall Street/quant funds use supercomputers to backtest millions of patterns to the extreme. If a pattern is truly stable and profitable, it would have been completely eaten up by algorithms long ago.

Therefore, he concludes: what you learn and can openly teach is often “already invalid.”

2️⃣ So, does technical analysis still have use?

It’s not that K-line moving averages are completely useless, but rather that technical analysis should be repositioned as: not a prediction tool, but a “dashboard.”

He proposes two “axioms” (underlying worldview):

Axiom 1: Price fluctuates around value (like a dog on a leash)
Value = the person, Price = the dog
The dog may run wild (overestimate/underestimate), but it’s tied with a leash (value law), and ultimately it will return near the person.
How is this reflected on the chart? He uses long-term moving averages (like yearly or 250-day MA) ≈ the value center;

Axiom 2: Price is a pendulum of “excessive fluctuations”
Price doesn’t move exactly along the value, but swings too far due to greed/fear/herd effect; the larger the deviation, the stronger the reversion force (“tension”).

Combined:
The significance of technical analysis is not to predict rise or fall, but to measure “deviation and sentiment.”

3️⃣ Technical analysis “answers only 3 questions”

A very practical framework: technical analysis only does three things—

Position: How far is the price from the “value center/MA”? (degree of deviation)
Direction: Is the current trend upward/downward/sideways? (trend)
Sentiment: Is it at an extreme? (overbought/oversold)

4️⃣ What is the “Iron Sword Technique”? (core method)

Delete all complex indicators, leaving only: trend + moving averages;
And support it with the most important principle: follow the big trend, oppose the small trend;

Big trend: Monthly/yearly trend (long cycle determines direction);
Small trend: Daily/weekly fluctuations (short cycle is noise + emotion).

In operation:
Only focus on/ prioritize assets with an upward long-term trend;
During short-term pullbacks (small pendulum swings downward), buy in stages near long-cycle support points (MA/value center);

Don’t chase daily emotional peaks.

Additionally, during sideways trends (repeatedly crossing MA, no new highs or lows), try to avoid trading.

5️⃣ “Complete Investment Process”

Clarify the division of “moves” and “internal skills”:
Technical screening: Use trend/MA to quickly filter out candidates from thousands—“monthly upward + daily correction” (telescope);
Fundamental research: Clarify why the MA is rising—is it due to genuine improvement in performance/industry or hype (microscope);

Forward-looking judgment: How long can this value improvement last? Valuation ceiling/cycle stage?

Trading decision: Fundamentals tell you what to buy, technical analysis tells you when to buy;

Only technical: you might buy cheaply but wrong (踩雷);
Only fundamentals: you might buy right but expensive (buy at the top);
Combine: buy the right thing at the right time.

6️⃣ How can you “simply use it” (one-sentence version)

1) First check if the monthly/yearly chart is upward (only do big trend upward);
2) Then wait for the daily correction near key MA/support, and buy when it stabilizes (don’t rush in at the first sign).
3) If fundamentals can’t explain “why people move forward,” don’t bet just because the chart looks good.

7️⃣ For example, the current $BTC price:

According to his theoretical system:

BTC is in a “mid-term correction/clearing phase within a long-term upward trend”: the big trend (monthly value center) is still rising, the small trend (weekly) is still weak, and the price is above the long-term support but has not yet recaptured the mid-term MA;

If you are more long-term oriented (>6–12 months) within his framework, consider “tentative position building / staged layout”;

If you are more medium-short term (weeks to months), his framework now looks more like “observation/awaiting confirmation.” At this point, you shouldn’t act; a stronger confirmation is when the weekly chart recovers and stabilizes above the EMA9 (≈92.9k), indicating the small pendulum is starting to swing back, and a more robust sign is returning to the 99–100k mid-term MA zone (indicating mid-term trend recovery).

Original video link: