The "Animal Instincts" Framework for Technical Analysis

Four Instinctual Archetypes for Mastering Market Psychology

Overview
Technical analysis often feels like interpreting the market’s "animal spirits."

By linking investor behaviour with trading heuristics, we can create a memorable and effective frameworks to approach charts, trends, and market sentiment. This is not just about candlesticks and moving averages—it’s about understanding the market.

The below animal analogies accompany a chart with human psychology linked patterns playing out.

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1. The Framework: The Four Animals of Technical Analysis

Each of these creatures symbolizes a common market scenario and the psychological biases that accompany it.

A. The Hawk 🦅 Finding high quality / good momentum and staying in the trade.

Behaviour: Hawks are keen-eyed predators that scan for opportunities from above.
In Technical Analysis: The Hawk represents breakouts and high-momentum trades.
Psychology: Overconfidence bias can lead to chasing after false breakouts.
Heuristic:

• Focus on Volume: A true hawk waits for confirmation of prey. Look for increased volume to confirm breakout validity.

• Wait for Retests: A cautious hawk circles before diving. Retests of support or resistance levels improve your entry odds.

Key points to note:

· Situational awareness is key

o If markets are buoyant conditions are supportive (better for right decisions and more forgiving of wrong decisions)

o “A rising tide lifts all boats”

· When situational awareness confirms an opportunity rich market

o Focus on names that give the best bank for your buck

o Higher ADR names

o Confirmatory volume

o Historic analogues for strong price action coming out of consolidation

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B. The Bear 🐻 Know what you own / know what you see.

Behaviour: Bears are cautious but powerful. They hibernate when necessary and attack decisively.
In Technical Analysis: Bears symbolize downtrends and short-selling opportunities.
Psychology: Loss aversion can cause traders to exit too early or hold losing positions in denial.
Heuristic: