The reason charts have any predictive skill is that they represent the "trading memory" of real people.
A simple example is a moving average: all it does is draw a line where the mean price for whatever time period is found. Half own it higher and half own it lower over that time period.
(not weighted by volume, so still crude)
Another simple example is resistance, a price that brought in enough sellers to stop a prior move.
Where you can get in trouble is thinking there is anything magical about this and frankly drawing lines that extend past the life span of anyone trading today is simply magical thinking.
That said, and eliminating the two longest lines there are still three trend lines converging at point "1" and it is worth noting.
From Kimble Charting Solutions via Advisor Perspectives:
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Months ago the Power of the Pattern suggested that the Dow could make it to the 16,000 level (see post here). Last month the Dow came within 350 points, less than 3% from the target.
The chart below shows us that numerous resistance lines all meet at price point (1) in the Dow. Was this heavy resistance the reason the Dow backed off around 800 points from the highs reached in the month of August?...MORE
