ChatGPT: Your Real-Time Digital Technical Analyst.

“The future depends on what we do in the present.” — Mahatma Gandhi

This profound reflection by Mahatma Gandhi underscores the importance of the actions and decisions we make in the present and how they shape our future. In the context of technical and financial analysis, this quote emphasizes the need to use advanced tools and technologies, such as ChatGPT, in the present to be better prepared and positioned for future markets.

1.Introduction:

In today’s digital age, technical analysis tools have evolved significantly, expanding their capabilities beyond traditional methods. One of these innovations is ChatGPT, an artificial intelligence designed by OpenAI, which can interpret financial charts and provide detailed analysis based on user descriptions. This article explores how ChatGPT can become your personal technical analyst.

2.Pros and Cons: Balancing AI and Human Analysis:

Traditional Technical Analysis:

• Pattern Identification: ChatGPT can recognize a variety of chart patterns, such as triangles, flags, heads and shoulders, among others. These patterns are essential for predicting future price movements.
• Moving Averages: This tool is key in technical analysis. ChatGPT has the ability to calculate and analyze different types of moving averages. Specifically, the simple moving average (SMA) is a calculation that takes the arithmetic average of a set of prices over a specific number of periods. On the other hand, the exponential moving average (EMA) gives more weight to more recent prices and thus reacts more quickly to price changes than the SMA. Both are used to identify trends in a market. ChatGPT provides crossover points and potential future trends based on these averages.
• Support and Resistance: These are key levels in any chart. Artificial intelligence can identify these levels and offer predictions about what could happen if the price breaks these levels. It is vital for any trading strategy.

What sets ChatGPT apart is that despite its ability to perform these analyses, everything is based on the textual description of the chart that the user provides, reflecting the versatility and adaptability of the tool.

Integration with Current Technology:

• User-Friendly Interface: Without the need to install specialized software, you can access ChatGPT from any device with internet access. This flexibility means that technical analyses are at your fingertips anytime and anywhere.
• Real-Time Interaction: One of the main advantages is the ability to interact in real-time. You present a described chart, and within seconds, you receive a detailed analysis. This is especially useful in volatile markets where time is of the essence.

Advantages and Limitations:

• Objectivity: Lacking emotions, biases, and cognitive biases, ChatGPT offers an analysis purely based on data and logic. While human analysts might be influenced by their own opinions or emotions, AI ensures a logical and systematic approach.
• Adaptability: ChatGPT can adapt to different types of analysis depending on user needs, from basic analyses to more advanced techniques.
• Accessibility and Convenience: One of ChatGPT’s most notable advantages is its constant availability. Whether it’s the middle of the night or during a holiday weekend, you can count on technical analysis at any time. There are no waiting times or geographical barriers, and it operates directly from your browser or device, making it ideal for those looking for hassle-free solutions.

However, some limitations should be considered:

• User Description Dependence: The quality and accuracy of ChatGPT’s analysis significantly depend on the clarity and accuracy of the description provided by the user. If the description is vague or incorrect, this can impact the accuracy of the resulting analysis.
• Verification Need: It’s crucial that users cross-reference and verify the provided analysis with their own knowledge and other sources. No tool, however advanced, should be used in isolation.

With these capabilities, ChatGPT not only stands out as a technical analysis tool but also as a companion in any trader or investor’s investment journey. It’s a blend of analytical tradition and modern technology that redefines how we approach technical analysis in the digital age.

3. Real-world Application: Deciphering the Bitcoin Market with ChatGPT:

In an environment where the cryptocurrency market is known for its volatility and swift changes, having access to precise and real-time analysis is essential. In this scenario, a Bitcoin chart was provided to ChatGPT.

Prompt:

“Based on the attached chart image, provide a comprehensive analysis that includes main trends, inflection points, supports, resistances, and any notable pattern. Additionally, share any relevant observations that might help interpret the presented data.”

Attached Chart image:

Outcode:

This practical case not only showcases ChatGPT’s technical prowess but also the versatility with which it can operate in different scenarios and for various assets. In a world where swift and informed decisions can make the difference between a successful trade and a losing one, tools like ChatGPT are invaluable.

4. Considerations to Bear in Mind

Dependence on User’s Description:

• Granularity and Detail: The accuracy and depth of the analysis provided by ChatGPT largely depend on the level of detail you provide. It’s essential to be thorough and specific to get a deeper analysis. Omissions or ambiguities can affect the quality of the outcome.
• Objectivity in the Description: While ChatGPT is objective, the description you provide should be neutral. Avoiding biases or assumptions in your description ensures an analysis that truly reflects the market situation.
• Familiarity with Terminology: it’s beneficial to become familiar with technical terms and common metrics in technical analysis. By providing clear and technically accurate descriptions, you maximize the effectiveness of ChatGPT as an analytical tool.

To get the best result from ChatGPT, it’s crucial to provide a detailed description of the chart or situation being analyzed. For example, instead of simply saying “the price went up,” it would be more helpful to provide details like “the price rose by 5% over a 3-day period, having been in a downward trend for the previous two weeks.” Vague or incorrect descriptions can lead to less accurate or even erroneous analyses.

Importance of Verification:

• It’s Not a Silver Bullet: While ChatGPT is powerful and precise, it shouldn’t be considered a definitive solution. It’s one tool among many in an investor’s arsenal.
• Cross-Validation: It’s vital that after obtaining an analysis from ChatGPT, users cross-check this information with other analysis tools or experts in the field. For example, if ChatGPT suggests there’s an upward trend based on certain indicators, it would be wise to review other sources or tools to confirm this trend before making investment decisions.
• Combining with Personal Experience: Your experience and knowledge in the investment realm are invaluable. Combining insights provided by ChatGPT with your professional judgment can result in more informed and balanced decisions.

In summary, while ChatGPT represents a significant advancement in automated technical analysis, it’s essential to use it complementarily, always considering the broader context and applying a critical and reflective approach.

5. Conclusion:

The emergence of advanced tools like ChatGPT symbolizes a turning point in technical analysis, establishing a new paradigm on how investors and analysts interpret markets with greater agility and precision. In a rapidly evolving financial environment, adaptability and continuous learning are key. These tools, besides providing efficiency, pave the way towards new horizons and the improvement of established strategies. Despite the benefits they offer, it’s crucial to remember that human intuition and experience remain irreplaceable. Technological innovations enhance human discernment, rather than replacing it. Their true value lies in complementing traditional analysis, enriching it with renewed perspectives. The convergence of artificial intelligence and financial analysis marks the beginning of a promising era. In this ever-changing scenario, it’s essential to merge emerging technology with human wisdom and experience in a balanced symbiosis.

The train is in the station and you can’t miss it, so join us on this journey. We are an open community and if you want to collaborate with us, please send us an email: andres@smartlever.tech