STT - Technical Analysis (TA) - V
marty386
Date: 06/05/16
Time: 21:44:07
Post #: 17700340
NUH daily chart is a textbook example of a Bull Flag. Some key points to look for are the descending volume over the time of the Flag and then the spike in volume at the breakout. Also notice the two long shadows on those two candles. The price was pushed down searching for supply and was promptly rejected. Shows buyers were lurking.
952i
Date: 06/05/16
Time: 21:52:18
Post #: 17700379
Here are some recent examples of a type 2 upthrust - they are basically the opposite of springs.
These are similar to what @Zandaya posted except they occur over one bar rather than two bars. Same concept of a huge breakout with no follow through.
I've gone through my charts diary and added some commentary on upthrusts and springs. Wyckoff theory believes you can make a living trading nothing but springs.
952i
Date: 06/05/16
Time: 22:56:45
Post #: 17700685
Upthrust VS Absorption
Since Upthrusts have been covered above. A common mistake alot of us make is differentiating upthrusts with absorption. A mistake I used to make quite a few times is sell out the moment I see an upthrust and only to watch it break way higher couple days or the week higher. So how do you spot absorption:
If I had to summarize absorption in one sentence: "An upthrust which fails to produce a breakdown".
Essentially the best way to notice absorption:
1. Upthrust appears
2. Followed by a bearish bar which is the result of an upthrust
3. No follow through from the bearish bar instead a reversal occurs
4. Prices pushing against resistance and increasing levels of support.
Here are some examples with commentary I've added to some charts I've got:
Finally one which I feel is currently going under absorption: BGS. I feel this will breakout next week as early as Monday.
Personally I find absorption one of the trickiest things to spot, I feel pros love using it to shake out weak hands. It does take guts to hold onto a stock after a massive sell off after an upthrust.
I've given myself one simple rule. If I notice an Upthrust the next bar is usually a downbar. So you have two bars to work with a huge breakout(1), no follow through downbar(2). I continue to hold until the third bar, if the third closes lower than second I sell knowing its not absorption. However if bar 2 fails to create a further breakdown and bar (3) attacks resistance again I know it is absorption.
Zandaya
Date: 07/05/16
Time: 14:49:48
Post #: 17702890
Relative Strength Index (RSI)
Definition: The Relative Strength Index (RSI) is an indicator developed by J. Welles Wilder and is discussed in his 1978 book New Concepts in Technical Trading Systems. RSI compares the magnitude of a stock's recent gains to the magnitude of its recent losses. RSI can be considered as a momentum indicator because it measures an internal strength compared to past prices. The RSI formula converts the price action into a number between the range of 1 to 100. The higher the number, the more overbought; the lower the number, the more oversold. In its simplest form, RSI is considered overbought above 70 and oversold below 30.
When a stock is identified as overbought or oversold, it becomes vulnerable to a trend reversal.
How to Use: Reversal patterns often occur after bullish or bearish divergence appears. Bearish divergence takes place when the stock makes a new high, while the RSI makes a lower high. Bullish divergence occurs when a stock makes a new low while the RSI makes a higher low.
RSI can help identify turning points before confirmations or divergences appear. RSI can also be used to identify overbought and oversold conditions when the RSI value reaches extreme highs or lows.
On average, when an RSI reaches the 70 level, you should consider selling. If a market is extremely bullish, it can extend to a higher area such as 80 or higher. Likewise, if the RSI approaches the 30 area, it is nearing a buy level. For extremely strong bear markets, it might gravitate to the 20 or lower area.
RSI has a weakness in that it is considered a lagging indicator. However, it can create false buy and sell signals when used by itself; therefore, many consider it a secondary or complimentary indicator to be used more effectively with other tools such as a Stochastic orMACD.
eg Chart below,
Cheers,
Zand..
FullMoonFever
Date: 07/05/16
Time: 17:45:32
Post #: 17703569
Great discussions this weekend re the TA and peoples diff styles, views etc and what works for them. Gives us all a bit of an insight to broaden our thinking re the diff styles.
Anyway, people have prob seen me putting up Ichi and Heiken-Ashi charts and thought I would share some background and info on them for anyone interested on how they work....well, should....if I can continue to enhance my understanding of them
As most have said....it is a never ending journey to continue the learning and the need to poss add diff styles to our own...as evidenced by my tipping, it is obvious I still need to work on some consistency and maybe learn other indicators that may help finding slightly more explosive moves to get the 25% within the 4 weeks - that's where I feel the FA side can assist with potential upcoming catalysts to poss drive the SP higher after maybe an initial break / entry identified prior to the FA
Will put up a series of posts as I can this arvo (and links) and apologies in adv if a bit long or covered previously but they may be helpful to someone.
First off - Gatis Roze's 21 Rules:
http://www.tradingtrue.com/gatis-rozes-21-rules/
Gatis Roze’s 21 rules polled from various traders he has dealt with:
1. Sell based on technical indicators and find out the fundamentals later.
2. Accept losses to get gains. Risk and reward are always part of the equation.
3. Pick your favorite couple of indicators, learn them and trust them in depth. Learn how and when they work, when they don’t. Ignore the rest.
4. Understanding yourself as an investor / trader is crucial to success. Mark Douglas’s book, Trading in the Zone, is sensational.
5. Keep track of your trades. Know why you bought and why you sold. Review your reasons after you close out a position.
6. First review your long-term charts, then your medium-term ones, then short term and finally minute-to-minute charts. Go from a telescope to a microscope.
7. Knowing the individual equities that comprise your ETFs and mutual funds is an insight worth utilizing.
8. Watch for sectors and industry groups breaking out of a base – then find the best stocks in that industry. At least fifty percent (50%
9. A chart tells you about the true market fundamentals of a company – believe in the charts first. They matter more than the fundamentals.
10. Thinking of the market as being manipulated by Mr. Market as he tries to achieve his objectives has been truly a revelation. I’ve discovered that Mr. Market’s true intentions are revealed in minute-to-minute charts and money flow.
11. There is a difference between a good company and a good stock chart. I want both.
12. The market is always changing and evolving. You must be willing to change along with it. Don’t fight it. You aren’t big enough.
13. Appreciate that the market offers you a menu of probabilities. Certainty is not on the menu. Be comfortable playing the probability game.
14. Read my own rules every week.
15. Constantly be aware of shedding old habits that fail to contribute to the “new you” – the improving investor you’re becoming. Shed weakness, feed strength.
16. Charting sister stocks along with the stock I bought has proven to be surprisingly powerful.
17. Know what you’ll do in a bullish scenario. Know what you’ll do in a bearish scenario, so you won’t start second guessing yourself in the midst of a big move during market hours.
18. Understanding myself as an investor is far more important than I ever previously acknowledged.
19. Sophisticated money managers talk about the importance of money management. I did not appreciate its importance for profitable investing until just recently. It’s made a big difference.
20. Pyramid purchases into your model position and let the market prove to you that your first buy was correct. Pyramid out faster than you pyramid in.
21. Know your stop. Adjust it regularly as the stock moves up. Don’t ignore your stop.
FullMoonFever
Date: 07/05/16
Time: 17:50:31
Post #: 17703585
Ichimoku and some links and vid:
http://www.marketvolume.com/technicalanalysis/ichimokuclouds.asp
http://www.feedroll.com/technical-analysis-oscillators-indicators/720-ichimoku-indicator/
http://www.ichimokutrader.com/elements.html
http://www.ichimokutrader.com/signals.html
About: About Ichimoku Clouds technical analysis - using moving averages to build clouds - index chart examples of technical analysis.
Description
The Ichimoku Cloud (also called Ichimoku Kinko Hyo) was developed by Goichi Hosada in 1969. This indicator has been used in technical analysis to define support and resistance levels, to reveal trend direction, to generate trading signals and to define the strength of signals. The full translation of "Ichimoku Kinko Hyo" (the old name for Ichimoku Clouds) could best be described as 'one glance balanced chart.' While, initially, this indicator might appear confusing and complicated on a chart, it is really quite straightforward and is often used to establish the trend and detect trend breakouts. As with most technical indicators, it performs better when it is used on the longer-term charts. Nevertheless, this indicator performs quite well during range bound markets.
Technical Analysis
Chart 2: NASDAQ 100 Index (^NDX) - Ichimoku Cloud
The Cloud (Kumo) is formed by the Leading (Senkou) Span A (green line) and Leading (Senkou) Span B (red line) lines and is the most noticeable feature of the Ichimoku Cloud. Since the Leading Span A is based on shorter than Leading Span B bar period setting, Leading Span A moves faster than the Leading Span B. In technical analysis, Cloud is used to define the overall trend. Thus, if the price moves above a Cloud, the trend is considered bullish. When the price is below a Cloud, a trend is bearish and the trend is flat when the price is inside a Cloud. At the same time, the Clouds could be used to evaluate the strength of a trend. If a Cloud is green and the price is above the Cloud a bullish trend is considered strong and when Cloud is red while price is above Cloud a bullish trend is considered weak. Controversially, when price is below a red Cloud, bearish trend is considered as a strong trend and when price is below a green Cloud a bearish trend is considered to be weak.
While Clouds are used to define the current trend, the Conversion (Tenkan) and Base (Kijun) lines are used to generate signals. In the same way as with moving averages, a "Buy" signal is generated when Conversion Line moves up and crosses the Base Line. When the Conversion Line declines and crosses the Base Line, a "Sell" signal is generated.
Depending on the relation of the Clouds to the price when a signal is generated, a signal could be considered to be a strong signal, a medium signal or a weak signal. As an example, a "Buy" signal is considered as a strong signal when it is generated when the price rises above a green Cloud and a "Buy" signal is considered weak when it is generated when the price is below a Cloud. Overall, Ichimoku signals and Clouds can be summarized in the following table:
Table 1: Ichimoku Clouds and Signals generated on Conversion and Base Lines Crossovers
While Conversion/Base Lines crossovers are most often used to generate signals in Ichimoku Clouds, there are other strategies to generate signals based on the Ichimoku lines. Thus, signals could be generated on the crossovers of the price and Base Line, signals could be generated when Cloud changes its color (crossovers of Leadings Span A and Leading Span B) and as signals could be generated if the price breaks above or below a Cloud.
1 2 3 4 5 6 7 Price isabove Cloud Bullish Green Strong Buy Strong 8 Sell Weak 9 Red Weak Buy Medium 10 Sell Weak 11 Price isbelow Cloud Bearish Green Weak Buy Weak 12 Sell Medium 13 Red Strong Buy Weak 14 Sell Strong 15 16 Price isinside Cloud Flat Green Weak Buy Medium 17 Sell Weak 18 Red Weak Buy Weak 19 Sell Medium
Chart 3: NASDAQ 100 Index (^NDX) - Ichimoku Clouds
Signals generated by Conversion and Base Lines during Bullish trend
Formula and Calculations
The Ichimoku Clouds are constructed by five lines with colored areas between two of them, which are called Clouds. The Ichimoku lines are based on the average of High and Low values over a specified period (number of bars).
The five plots of Ichimoku Clouds consist of
- Tenkan Line(Conversion Line):
(highest high + lowest low) / 2calculated over the last 9 periods (bars)
where 9 is the default and most used conversion line bar period- Kijun Line(Base Line):
(highest high + lowest low)/2 calculated over the last 26 periods (bars)
where 26 is the default and most used bar period (Slow Period)- Chikou Span(Lagging Span):
most current closing price plotted 26 time periods back
where 26 is the same bar period as used in the Kijun Line (Base Line)- Senkou Span A(Leading Span A):
(Tenkan line + Kijun Line)/2 plotted 26 time periods ahead
where 26 is the same bar period as used in the Kijun Line (Base Line)- Senkou Span B(Leading Span B):
(highest high + lowest low)/2 calculated over the past 52 time periods and plotted 26 periods ahead
where 52 is the Leading Bar period and 26 is the same bar period as used in the Kijun Line (Base Line)
