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Learn how MACD and Trendlines are Connected.Hey, I am back, this time with something, kinda unusual, and I dont know If you like this kind of stuff, but here is some education for you to make a better trading decision in your future! Okay, so I would like to teach you a bit about MACD and how is this indicator connected to trendlines. In this chart you can see three flags , each flag can be bullish or bearish. But how do you know if a flag will be bullish or bearish? Pretty simple and pretty hard in same way. If a price breaks uptrend ascending ressistance it means breakout ! And if the price breaks ascending support level it means a breakdown . This type of trading is called breakout trading. But what makes flag, a flag? In simple. Flag is a continuation pattern, they usually represent only brief pauses in a dynamic stock also they are typically seen right after a big, quick move , thats why we see so much flags in the Bitcoin charts, its a very quick and dynamic moving stock compared to others stocks, not cryptocurrencies. Channel/flag, is formed by a ascending support level and ascending ressistance level. Inside this channel you can spot tests on both support and ressistance level. So lets now just go trough the chart chronologically and see how the MACD reacts to trendlines. At first double top you can see the test of ressitance uptrend flag/channel. This test was negative, you can spot that by histogram finding his top and starting to decline, same thing on "Point A". As histogram is starting to decline ,Bitcoin is about to test a certain level, this time it is a ascending support level, you can spot it at first macd uptrend test where the histogram turned around and started to see buying volume increasing, this same is valid for each succesful uptrend test. After some tests of each ascending ressistance or support, when the price leaves this channel, its a prediction for a sharp move in a way, which was broken, for example broken ascending ressistance level would mean breakout. After the first flag has broken out, steep uptrend were build , and succesful test of this steeper uptrend meant another wave of buyers p ushing price even higher, found ressistance at 6800, failed at testing second steep uptrend and found new channel. In a second flag , Bitcoin is on selling wave , so for macd to give us buy signa l, Bitcoin would need to break ascending ressistance and that would give macd buy signal, its opposite as buying wave, while on buying wave you see rise in histogram which meant succesful test, here means the fall ( or rise from negative bottom if you will ) of histogram, Bitcoin finding support. A fter Bitcoin has failed in the second flag breaking/testing the ressitance twice as macd suggest and also the ascending ressistance which wasnt overhelmed, the flag has seen a breakdown . After breakdown Bitcoin found support and formed another uptrend , found new ascending ressitance and formed another flag, on this last flag, you can beautifuly see how is macd testing , each test represent an ascending support test on the chart, after 4 succesful test in a row, the flag has broken out and saw a breakout! In short MACD shows test of trendlines, ressistance, support. When is MACD doing waves , or in another words blue riding on orange line, it means succesful test of uptrend , support and price of stock may continue to rise. When Flag gets broken , heavy price action is ahead. When uptrend is broken , usually downtrend is formed until stock finds support and from there form another uptrend. The highest positive histogram tick represent finding ressistance , falling volume, headed to test support levels. The lowest( or the longest if you will) negative histogram tick represent finding support and price headed to test ressistance for possible macd turnaround, on chart you can see two unsuccesful, which led to breakdown. Hope you liked this Education about MACD and Trendlines connection and also some education about flags/channels. Hope I havent missed anything important , if yes point it in comments. I f I have learned you anything that you are able to benefit from and be a bit better trader , let me know by smashing that agree button, each like is very appreciated as I am doing this for FREE and it took me a LOT of time, Thanks a Lot!
BITFINEX:BTCUSDEducation
by TiborVrbovsky
5
How to detemine Targets for Pennant BreakoutsThe target for a pennant breakout should be determined by the height of the pennant In this example the height was 165 pips. The price reached broke out and reached 161 pips. Of course, it's not always perfect but it's close enough. A similar example can be seen in last weeks pennant break out on EURUSD. However, on the EURUSD example, when price broke out it did a retest and then continued to the target. Retest do occur, so be weary of moving your stop too early and then missing the main move Thanks for reading.
Education
by jannatul96
USDCAD idea update - why you must get your entry rightHere's another example of the larger time frame providing plenty of chances on the lower time frame. A healthy breakout is one with buildup against the level under attack. If we keep probing/failing....and STILL attacking the level from closer and closer, you know where the pressure is. I'm sure you already use variable size to consistently risk the same % of your account per trade. i.e. keeping risk the same whether you're accounting for 10, 20, or 30 ticks/pips. I'd suggest adding another filter - standardizing the SIZE of your stops. By that I mean if you're taking trades with stops between 10-30 ticks/pips, that's fine. But what if another move suggests a stop of 100 pips/ticks? Can you expect the same R out of the move? Are you actually just chasing price? This filter will get you to be more disciplined about your entries, keeping them tight and decisive. This move was already extended. But the level was attractive enough I expected a healthy push at least to the levels I marked out. This is very different to trying to get in with a young, strong trend. You've got to recognize what you're trying to get out of the move and how the market is likely to react at SPECIFIC points.
Education
by structuredtrader
Why an early fail can actually HELP a breakoutThis is a great example for traders of all timeframes to study. I don't really have time for people basing trades on wide zones - that's fine for analysis, but for a TRADE, you've got to see the fight at a specific level. When you draw these correctly, you can get a really great picture of evolving sentiment and balance of power shifts. Most traders treat breakouts way too lazily. You don't just enter at a new High/Low. You NEED buildup. Any naked attack from distance is likely to fail. But what if it only pauses, instead of crashing? Do you redraw the level? Do you avoid the trade completely? What works for me: Talk out the developing scenario. A fail failed? Ooh, interesting. Maybe there's more power on the original side than expected. Once the breakout's happened, how is the other side thinking? I was biased long, getting everything I wanted to see....but what would the Bears want to see? Probably a close back under the grey/yellow boxes, right? But wait, now that we created another temporary level during the failed probe, there's another level price needs to break through before even attempting the yellow level and then grey boxes! --> this makes for a likely bounce point, and creates several chances for late entries. Best of all, it means a breakout entry at the original level will be protected by that bounce and your trade stays green.
CBOT_MINI:YM1!Education
by structuredtrader
level attack without buildup, the recipe for a trapWhen you have your eyes consistently at the same important levels (preferably horizontal ones), you'll quickly see the difference between a buildup that creates a powerful breakout vs a breakout fail / trap. Naked run ups like this can be scary to get in front of, and it's not a straightforward entry, especially if you're executing on the H1. But this is why you should be building libraries of similar setups. If price knifes through that level and shoots straight up, its likely because of some really spectacular news catalyst. But in NORMAL market conditions, this is a great trap patter to study. I think I recently shared a chart showing consistent buildup ahead of a level on the NQ. Several turns, wedging, etc BEFORE the level's probed. That's power, like a coiling snake. But no coiling here. Think about the psych of the traders involved here. The Bulls who bought down low are happy and probably looking for an excuse to cover. Smart longs are covering at least part of their position here (sell orders). Some late FOMO Bulls are looking to get in and will try and buy on a probe past highs. Big money isn't doing this. Bears are entering and keep pushing price back under the level (check out the 15m). With each bar, more Bears are selling. IF price pokes back up above highs, that's usually where Bears will tap out and the BO will be safe. This actually momentarily happens on the 15m, but it ends up turning into a second Bull trap. From the same perspective, once we've got that wedge, a push below the wedge spells the end of the Bulls. When it happens, there's no fail of a fail....Bulls pull out, and price crushes back into the big range.
Education
by structuredtrader
Example of a Symmetrical Triangle on ETHUSDETHUSD formed a symmetrical triangle. It has two trend lines. One uptrend line is acting as support while the downtrend line is acting as resistance. Contains three highs lower and two lows higher. When these points are connected, the lines converge as they are extended and the symmetrical triangle takes shape. The symmetrical triangle can be continuation or reversal, so we must wait for which line will break. To confirm the breakout, the price should close above the resistance line or below the support line. In this case broke by resistance, then we must make a long. The profit target is the distance away as the back of the triangle.
BITSTAMP:ETHUSDEducation
by heco08
Example of an Ascending TriangleGBPAUD formed an ascending triangle. We could see a horizontal upper line (that would be a resistance) and a lower uptrend line (that would be a support). Prices moves with equal highs, and lows higher than previous. Then after a few attempts, the prices finally break through resistance. The ascending triangle is a continuation pattern. Prices come from an uptrend then prices bounce inside the triangle before breaking higher. To confirm the breakout, the price should close above the resistance line, if so, make a long. The profit target is the distance away as the back of the triangle.
Education
by heco08
Another way to use "Divergence" to spot Fakeout from Breakout -is to find out if the momentum is getting stronger or weaker, if the chart make a higher high and the indicator made lower high so it refer to; the momentum is decreasing, in order to spot the (breakout from fakeout) -in this example we have a rectangle consolidation, you can see the first breakout was a fake out, here we'll use divergence to spot this fake out take a look at the indicator is making higher low while the price get back to same low this indicate the momentum is decreasing, the bears are already exhausted and the price get back to rectangle pattern. -But the next one was a real breakout look at the indicator is making lower low just like the price, also if you look what just happened next the price soar up to reach the support line of the rectangle pattern which is turned to resistance, the bears gathers more steam to push the price down -Hopefully this was helpful and another tool to put it in your arsenal facing the market wish y'all a green week, Peace.
Education
by YaseenG.Housari
3
Bullish Consolidation 1-2-3-Breakout PatternThis is a great example of the 1-2-3-Breakout pattern on Bitcoin using the Daily chart. This pattern can be applied to any equity. Chart patterns represent human behavior and that is a constant among all asset classes. Point 1 - The First Test - The New High Price reaches a new high and pulls back when investors take profits. Price falls. Point 2 - Second Test New buyers come in and price tries to attack the highs for a second time. Often this attack fails, because there just aren't as many buyers as before, and people who didn't get a chance to sell at (1) now have a chance, so they sell and run to the bank. Price falls. A trend line has now formed between point 1 and 2. This downward trend line basically shows us that price is making lower highs. What we want is to see a higher high, which is an uptrend. Pretty easy right? Well we can't see a higher high until we break out of the downtrend, meaning, we have to break out of this trend line. Point 3 - Third Test People start to watch the trend line as well, so it becomes a self-fulfilling prophecy and the price starts to get stuck under the trend line. In general, we know that we have less buyers here than before. So here we ask the question, will we ever breakout of this downtrend? Or will we crash down because the buyers are disappearing Point 4 - The breakout Now we have the answer. This is VERY OFTEN the fail or succeed point of a pattern like this. After 1,2 and 3 tests of the downtrend, either buyers will give up and go home, meaning sellers take over and price breaksdown OR new buyers come in from somewhere, or maybe they were just waiting for lower prices to buy. Whatever the reason, they step in and start buying. We breakout of the downtrend line, and that inspires more buyers to come in because they were the ones waiting for the trend line break. And then price starts moving fast because everyone wants to buy. THen the media says "this is a great buy" and boom more people come in. Until finally....we reach a new high price (1) once again. Investors take profits and the whole cycle repeats itself. If we IDENTIFY the patterns, and RECOGNIZE the breakout points, then we can be prepared to jump in at a favorable point.
Education
by BerlinTrader591
10
How to Trade a Range and Potential BreakoutHello Traders, All of us want the price action to follow the direction of our trade but that doesn't happen always. The price action has a natural tendency to move up and down; build ranges and develop patterns. Most of the ranges and patterns are like whipsaws and many traders stuck in these situations and lose money. The most effective ways to deal with such a price action is patience and a better strategy. When I say better strategy that means the one which keeps you ahead of the others. In this backdrop, I have tried to spot better entry points in case the price action builds a range after a nice up move and we are visualizing a potential breakout on upside. The basic principle behind the strategy is to "Buy at the low and Sell at the high". It should be noted that the entry spots can not guarantee sure win but surely minimize our risk and increase the chances of reward. After an entry, stops can be placed either below the range or below the prior swing low -- whichever suits the situation. Same strategy can be applied, in opposite direction, in case the overall trend is down and we visualize a potential breakdown after a range. Notes on the chart. Hit like for better educational publications in future. Comments are welcomed. Trade safe. Best Regards Bravetotrade
Education
by Bravetotrade
3
Keys to the PROFITABLE TRADING III. - Breakouts I.Hey Guys, today I want to start writing about breakouts. As I have read many articles these days it almost looks like the breakouts shouldn't be traded at all. Many traders even despise breakouts because one is entering trades TOO late. But the truth is there is many situation where the strong BO gives nice confirmation for a trade. In this part I want to give you some points how the right breakouts should look like. The Price Action before entry bar: 1. Bars should create some form of triangle. It means the market should become narrower. 2. The momentum of the bars should be low. I will write about measuring the momentum in some other article. But easily said the range of the bars should be also narrower. -> these 2 conditions ensure that the market is waiting for something bigger. It often means some form of accumulation or distribution. 3. There should be some free area for BO. The Entry Bar: 1. The BO bar should be a trend bar - if long - open near low and close near high and vice versa . -> it means that the buyers was much more active all the day -> they did not let the price fall under the open and even the high price of the day is not too high to trade there before close 2. The range of the bar should be above average. - there is no exact number how much above average - you also do not have to count it, the BO bar have to be easily visible 3. The close of the bar should be out of the triangle pattern. - also no exact number, you have to see it 4. The BO bar have to be easily visible. - maybe the most subjective condition but also the most important - IF YOU HAVE TO LOOK FOR THE PATTERN, IT IS NOT THE RIGHT ONE! The Price Action after the BO bar (after you enter the trade and the idea works): 1. There should not be quick reverse bar. - it is quite clear, but it has to be written because of the other condition... 2. There can be more small reverse bars, pins, dojis etc. - many traders make a mistake they are moving the stoploss bar to breakeven very quickly - after the BO move there can be some small exhaustion, not many traders want to trade for this price YET and some can even exit if they enter before the BO - it can happen and you have to wait and just be aware of rapid reverse (it means big counter move in short time) 3. If the price creates some swing and then retest it the price should go through this swing. (or not reverse quickly at least) - after the BO one is waiting for creatin some form of trend and the main character of trend is that the price is creating swing which is also breaking -> if the price can't break the swing, it shows us that the BO is not as strong as we have waited OK. It was some basic conditions for trading breakouts successfully. Next time I will go through the trading situations on this chart and will explain these conditions more practically. If you have ANY questions about breakouts, write them down below please. Paul
FX_IDC:XAUUSDEducation
by Paul_K
EURAUD: Reviewing The Tape (Education not a trade idea)I've already written my "Trading Recap" blog post for today but I wanted to share something with you guys. For you guys that have been following along with my blog you know that I've been working on an article looking at professional athletes and professional traders. One of my main comparisons is the amount of preparation and review that both do. Just like Peyton Manning or Tom Brady do after every game, after each trading day I review the tape, meaning that I go back through my trading day and critique myself. After all, in this industry we are our own bosses so if we don't do it who will? Last night I posted a trade looking for a potential breakout to the upside on EURAUD, although we did test the highs of our previous structure level we never got the break that I was looking for and it ended up being a scratch trade (breakeven). This morning in our Warroom meeting Jason Stapleton fired off 2618 idea for this same pair. (I'll attach a link to the FREE 2618 training at the bottom of this post). In the live room we ended up finding a bearish Cypher at the same level and ended up getting short as well. After banking some good pips, I spend the rest of our session going through the rest of my portfolio and basically but this pair on the back burner. BIG MISTAKE, if only i would have paid more attention to it, i would have seen that IF our 2618 setup were to rally to 2nd targets THEN we'd also have a Bat pattern completion which we plant a stop & reverse at. So yeah I left a few pips on the board today but the important part is that I was able to identify my mistake and turn it into a learning experience. For those who don't take the time to review their day, well that mistake may continue to be a future mistake. Thanks for taking the time to read this and I'll see you next week at the Technical Trader Workshop!!! FREE 2618 Training Lesson: www.youtube.com 2015 FREE Technical Trader Workshop: promos.tradeempowered.com
Education
by Akil_Stokes
10