Technical Analysis: Reading the Playing Field 

Technical analysis is not about predicting the future with certainty. It is about understanding what the market is doing, identifying the important areas on the chart, and recognizing where the probabilities may be tilted in one direction.

I like to think of a chart like a hockey rink.

The rink has rules, boundaries, lines, an offside line and, most importantly, two goals. You cannot predict exactly how the players will move, who will pass the puck, or who will score. But you know where the goals are. You know where the boundaries are. And when the puck enters the attacking zone, the probability of a scoring chance changes.

Trading works in a very similar way.

A chart gives you a visual representation of the playing field. It shows you the market structure, the prevailing trend, support and resistance zones, previous highs and lows, breakouts, momentum and important psychological price levels.

You can see where buyers have previously stepped in and where sellers have defended their positions. You can identify areas where the market repeatedly reacted in the past. You can also see when the existing structure is being challenged or potentially changing.

The chart is the playing field

One of the biggest advantages of technical analysis is that it gives you a framework for organizing the market.

Instead of looking at every candle as an isolated event, you can look at the bigger structure.

Is the market making higher highs and higher lows?

Is it making lower highs and lower lows?

Is price respecting a trendline or a channel?

Is a previous resistance becoming support after a breakout?

Is price approaching an important level where the market has reacted before?

These questions are often more useful than trying to guess what the next candle will look like.

For example, if price is moving inside a rising channel, the middle of the channel, the upper boundary and the lower boundary can all become important areas. They do not guarantee what price will do, but they give you a framework for thinking about possible reactions.

The same applies to support and resistance. A support level is not a magical line where price must reverse. It is an area where buyers have previously shown interest. Resistance is an area where sellers have previously appeared.

The important word is area, not line.

Breakouts change the game

A breakout is another good example.

When price breaks above an established resistance level, the market is telling you something has changed. But the breakout itself is not proof that price will continue higher.

Sometimes the breakout holds and becomes the beginning of a new trend.

Sometimes price returns to the broken level, retests it and continues.

And sometimes the entire move is a false breakout and price quickly returns back into the previous range.

That is why I don't treat a breakout as a prediction. I treat it as a change in the information available to me.

The same principle applies when support breaks. A broken support level can become resistance, and the previous bullish structure may begin to deteriorate.

Technical analysis is therefore less about saying "this will happen" and more about defining:

"If this happens, this is the scenario I will consider."

The chart cannot see the news

This is where technical analysis has its limitations.

A chart does not know that a central bank is about to change interest rates. It does not know that a geopolitical event is developing, that an unexpected economic report is about to be released, or that a politician is about to make a statement that moves the market.

The market can completely change its behavior in a matter of minutes.

A beautiful technical setup can fail.

A perfectly respected support can break.

A breakout can turn into a false breakout.

A trend that looked extremely strong yesterday can look completely different today.

That does not necessarily mean the technical analysis was "wrong." It means that the playing field changed.

This is especially important in markets such as crude oil, where geopolitical developments, inventories, production decisions, sanctions, transportation disruptions and changes in expectations can produce very large moves.

Fundamentals and technicals tell different parts of the story

This is why I don't see technical analysis and fundamental analysis as competing ideas.

They answer different questions.

Fundamentals and news help explain what is happening around the market and why the market may be reacting.

The chart shows you how the market is actually reacting.

And that distinction is important.

You can have extremely bullish fundamentals, but if price cannot break resistance, the market is telling you that buyers are not yet strong enough to push through it.

On the other hand, you can have apparently bearish news while price continues to rise. In that situation, the chart is telling you that the market is absorbing the information differently than you might expect.

Price is ultimately where all those expectations meet.

You don't need to predict every move

This is perhaps the most important part of technical analysis.

You don't need to know exactly where the market will go next.

You need to know where the important areas are and what would change your view.

Instead of saying:

"Oil will definitely go to 100."

you can think:

"If price holds this structure and breaks this resistance, the next important area is here. If support fails, that scenario becomes invalid and the next area to watch is lower."

That approach gives you multiple possible scenarios instead of forcing the market into one prediction.

It also makes risk management much easier because you can define where your idea stops making sense.

Read the playing field, not the future

For me, technical analysis is therefore a map, not a crystal ball.

It helps you understand the playing field.

It shows you where the important boundaries are, where the previous battles between buyers and sellers took place, where momentum is changing and where a particular scenario would become invalid.

But the map cannot tell you exactly what the players will do.

That is the job of the market.

Your job is not to predict every pass, every shot or every goal.

Your job is to understand the rink, recognize the important zones, watch how the game develops and be prepared for more than one outcome.

You don't need to know exactly where the puck will go.

You just need to know where the goals are. 🏒📊