XJO Weekend Charting and Chat - 09 Feb 2018, page-64

If you're just starting out, I'd suggest using the default settings. Most stuff you read will have the default settings.

Personally, for EMAs I use fairly standard stuff, 20/50/200 emas.



There's too much to cover in the topic "Technical Analysis" for a post here on Hot Copper.

I personally have a very large library of TA books. Some of these are very large books. "The Encyclopaedia of Chart Patterns" by Bulkowski, for example, runs to nearly 700 pages. That's just one book.

Start with a couple of books which cover the basics. e.g., Technical Analysis for Dummies. Stan Weinstein's book is a classic. "Secrets for Profiting in Bull and Bear Markets".

There's also plenty of free stuff on the Web. I think 48 gave a good run-down.

As time goes on you might develop your own style. I tend to use a top-down model.

1. Look at the over-all market on three time frames: monthly, weekly, daily. Determine the trends on each time-frame. Trade in the direction of the trend when they are in sync. Another way to do this is to use a daily chart and note the 20/50/200 DMAs. Short/medium/long term trends. Trade in the direction of the trend when all are pointing up.

2. Check Relative Strength of Sectors. (Use Mansfield Relative Strength on the Prorealtime charts). Trade in the strongest two or three sectors.

3. Look for entry into strong stocks in the strongest sectors.

I'm using a lot of sophisticated stuff these days, e.g.,

1. a three-line trend channel using short-term MAs all moved one step horizontally to the right. The MAs are based on Average High for the past three days. Average low of past three days. Average Typical price (H+L+C)/3 for the past three days. (Pinched that from Drummond Geometry.)

2. Double Bollinger bands using one and two standard deviations.

3. Dynamic indicators. Put Bollinger Bands on indicators such as CCI, RSI, Stochastic. All sorts of "buy" and "add" signals are provided by these BBs on Indicators. I also put 5-Day MAs on these stochastics. This does away with standard overbought/oversold readings on the indicators. (e.g., Don't use above 70 for overbought on the RSI.)

I'm using double stochastics. i.e., A regular stochastic using defaults overlaid with a long term Stochastic with 50/10/10 settings. The long term stochastic gives a general idea of trend. Trade the regular Stochastic according to the trend indicated by long term stochastic.

I put a 5-Day MA on most of my indicators. They provide short-term trading entry signals according to the trend.

On Mansfield Relative Strength, I use a 3/8 Day MA x-over for signals. Use Mansfield for determining strongest sectors.


There are many styles of technical analysis. I tend to use classic technical analysis (trend following) with some sophisticated adaptations that I've picked up along the way.

Other styles use highly sophisticated systems, e.g., Elliott Wave. You need to spend a huge amount of time learning EW to become proficient at it.

Lots of people use Fibonacci numbers and varieties of Gann analysis.

Each of these requires lots of investments in time in order to be proficient.

Clearly there is no end to this topic.

Get your head around a couple of good books. Or delve into some of the good sites on the web.

Good luck.