The Importance of Long Range Charting Perspective

Long range price charts provide a perspective on the market trend that is impossible to achieve with the use of daily charts alone. During our introduction to the technical philosophy, it was pointed out that one of the greatest advantages of chart analysis is the application of its principles to virtually any time dimension, including long range forecasting. We also addressed the fallacy, espoused by some, that technical analysis should be limited to short term "timing" with longer range forecasting left to the fundamental analyst.

The accompanying charts will demonstrate that the principles of technical analysis-including trend analysis, support and resistance levels, trend lines, percentage retracements, and price patternslend themselves quite well to the analysis of long range price movements. Anyone who is not consulting these longer range charts is missing an enormous amount of valuable price information.

The most striking features of long range charts is that not only are trends very clearly defined, but that long range trends often last for years. Imagine making a forecast based on one of these long range trends, and not having to change that forecast for several years!

The persistence of long range trends raises another interesting question that should be mentioned-the question of randomness. While technical analysts do not subscribe to the theory that market action is random and unpredictable, it seems safe to observe that whatever randomness does exist in price action is probably a phenomenon of the very short term. The persistence of existing trends over long periods of time, in many cases for years, is a compelling argument against the claims of Random Walk Theorists that prices are serially independent and that past price action has no effect on future price action.