Is technical analysis based on some underlying factors in the market or do they work simply because other people use them?

manpreet Best Answer 2 years ago

The market is undoubtedly driven by people, and technical analysis is one way to analyze and predict this behavior.

My question (also the title) is "Is technical analysis based on some underlying factors in the market or do they work simply because other people use them?". What I mean is, are the popular of the methods of technical analysis, such as the stochastic oscillator, moving averages, Bollinger bands, and Fibonacci lines based on some truth, value, or such factor underlying in the market; or do the such methods of technical analysis only hold any purpose simply because other people use them, and therefore drive the market.

Another way to phrase the question, that might help clarify my point, is: if other people did not have access or knowledge of the methods of technical analysis, would the methods still have any predictive capabilities?