Limitations

1) Relying on the past data

The major limitation of technical analysis is itself deals with past data. Analyst is studying the past trends which may or may not repeat in the future. So, an uncertainty is always there in the technical analysis.

2) Late entry& late exit

There are certain condition before which one could not make entry or exit in a particular stock. For example only due to increase in the volumes one cannot make entry until that stock indicate the upward trend. The time when we make entry in a particular stock that stock has already increase a substantial amount.

3) Expect only reasonable return from technical analysis

The last limitation is technical analyst is the trend follower so he can only make reasonable return from technical theories though the major gains are made by insiders (company directors or major stock holders) only.

4) Not a guarantee way of predicting share prices

Technical analysis is not a guarantee way of predicting share prices if it was, everybody would use it and if everybody used it, it wouldn’t work anyway. At best technical analysis will provide you with a mixed bag of results. Sometimes the technical indicators will come good and you will make money, at other times.