Baby Steps Pattern-TriveniBaby Steps Pattern- High Probability of Good Up-Move.
This is only for Educational Purpose.
Not a Buy/Sell Call.
Do your own Research! (DYOR)
Technical_analysis
Trading 101: The benefits of hard closesIntroduction:
In the world of technical analysis, traders are constantly searching for new and innovative methods to gain an edge in the market. One such technique that has gained popularity in recent years is the use of "hard closes." In this idea, we will delve into what hard closes are, why they are considered superior to conventional crossover methods, and the benefits and practical applications of incorporating hard closes into your trading strategy.
Understanding Hard Closes:
A "hard close" is a unique approach to analyzing price movements in financial markets. Unlike traditional moving average crossovers, which rely on the intersection of two moving averages, hard closes focus on the closing price of an asset. In essence, a hard close is an inflexible criterion that triggers a signal when the closing and opening price of an asset meets specific predetermined conditions.
How to Spot Hard Closes:
Let's say we have a level of resistance, and we are waiting for the price to break out so that we can long it, an up candle must open above the level of resistance, as well as close above it (because it also has to be an up candle). Similarly, if we are looking for a support breakout, we need a down candle to open below the level of support and close as a down candle. Hard closes can be used on both horizontal levels and trendlines.
Why Hard Closes Are Better:
Reduced Noise: Hard closes eliminate a significant amount of noise present in conventional crossover methods. By focusing solely on opening and closing prices, they filter out intra-period fluctuations as well as fakeouts and provide a cleaner and more precise signal.
Benefits of Hard Closes:
Risk Management: By reducing false signals, hard closes help traders make more informed decisions. This, in turn, enhances risk management strategies, preventing traders from entering ill-timed trades.
Versatility: Hard closes can be applied to various assets and timeframes as well as different kinds of levels, making them suitable for day traders, swing traders, and long-term investors alike.
Practical Uses of Hard Closes:
Trend Confirmation: Hard closes can be used to confirm the strength and direction of an existing trend. A bullish hard close, for example, can reinforce the conviction of a bullish trend.
Entry and Exit Points: Traders can employ hard closes to identify precise entry and exit points for their trades. This approach minimizes the guesswork involved in trading decisions.
Filtering Signals: Hard closes can be integrated into existing trading strategies to filter out less reliable signals, enhancing the overall effectiveness of the strategy.
In conclusion, hard closes represent a powerful and innovative approach to technical analysis that offers several advantages over conventional crossover methods. Their ability to reduce noise, improve accuracy, and adapt to different trading styles makes them a valuable addition to any trader's toolkit. Whether you are a seasoned professional or a novice trader, consider exploring the potential of hard closes to enhance your trading strategy and gain a competitive edge in the financial markets.
Top Trios of Technical IndicatorsBuilding on my previous article, "Top Technical Indicators Pairings", that explored the powerful duo combinations of technical indicators, I am excited to share my research on the top trio combinations of technical indicators.
This article aims to shed light on the intricate relationships between different indicators, and how using them in groups of three can provide more robust signals for trading strategies.
Remember, there is no foolproof strategy, and the success of a trading strategy depends on various factors such as the trader's skill, market conditions, and risk management techniques.
1. Moving Averages, MACD, and RSI
- Strengths:
Moving Averages: Moving averages smooth out price data and help identify trends. They provide a clear visual representation of price movements, allowing traders to understand the overall direction of the market.
MACD: The MACD confirms trends and provides momentum signals. It calculates the difference between two exponential moving averages (EMAs) and plots a signal line. When the MACD line crosses above the signal line, it generates a bullish signal, indicating a potential upward trend. Conversely, a bearish signal is generated when the MACD line crosses below the signal line, suggesting a potential downward trend.
RSI: The RSI is a popular oscillator that measures the speed and change of price movements. It helps identify overbought and oversold conditions, indicating potential price reversals. A reading above 70 indicates overbought conditions, suggesting that the asset may be due for a pullback. A reading below 30 suggests oversold conditions, indicating a potential rebound in price.
- Drawbacks:
Moving Averages: Moving averages are lagging indicators, meaning they may not respond quickly to sudden price movements. As a result, there could be delays in capturing trend changes.
MACD: The MACD can generate false signals in choppy or sideways markets where there is no clear trend. Traders should be cautious and use additional confirmation indicators to avoid false signals.
RSI: The RSI can sometimes remain in overbought or oversold conditions for an extended period, leading to potential false signals. It is essential to combine the RSI with other indicators for confirmation.
- Strategy:
The combination of Moving Averages, MACD, and RSI provides a comprehensive approach to trend identification, confirmation, and potential reversal signals. Traders can use the Moving Averages to identify the overall trend direction. When the shorter-term Moving Average crosses above the longer-term Moving Average, it generates a bullish signal. Conversely, when the shorter-term Moving Average crosses below the longer-term Moving Average, it generates a bearish signal. The MACD confirms these trend signals by generating bullish or bearish crossovers. Finally, the RSI can be used to validate the strength of the trend and identify potential overbought or oversold conditions. When all three indicators align, traders may consider entering or exiting positions. The Moving Averages, MACD, and RSI work synergistically to provide a comprehensive strategy that combines trend identification, momentum confirmation, and overbought/oversold analysis.
2. Bollinger Bands, Stochastic Oscillator, and ADX
- Strengths:
Bollinger Bands: Bollinger Bands consist of a moving average (typically the 20-day SMA) and two standard deviations above and below it. They provide valuable insights into price volatility and can indicate potential overbought or oversold conditions. When the price touches the upper band, it may suggest that the asset is overextended and due for a reversal. Conversely, when the price touches the lower band, it may indicate that the asset is oversold and due for a rebound.
Stochastic Oscillator: The Stochastic Oscillator compares an asset's closing price to its price range over a specific period. It consists of two lines (%K and %D). When the %K line crosses above the %D line, it generates a bullish signal, indicating potential upward momentum. Conversely, when the %K line crosses below the %D line, it generates a bearish signal, suggesting potential downward momentum.
ADX: The Average Directional Index (ADX) measures the strength of a trend, regardless of its direction. A rising ADX indicates a strengthening trend, while a falling ADX suggests a weakening trend. It helps traders assess the strength of a trend and potential entry or exit points.
- Drawbacks:
Bollinger Bands: Bollinger Bands may generate false signals during periods of low volatility or in non-trending markets. Traders should exercise caution and consider additional confirmation indicators to avoid entering trades based solely on Bollinger Bands signals.
Stochastic Oscillator: The Stochastic Oscillator can produce false signals in choppy or sideways markets, leading to potential whipsaws. Traders should use it in conjunction with other indicators to increase accuracy and reduce false signals.
ADX: The ADX does not provide information on the direction of the trend, only the strength. Traders should combine it with other indicators to confirm the trend direction.
- Strategy:
The combination of Bollinger Bands, Stochastic Oscillator, and ADX offers a well-rounded approach to analyzing price movements, trend strength, and potential reversals. Traders can use Bollinger Bands to identify price volatility and potential overbought or oversold conditions. When the price touches the upper band and the Stochastic Oscillator generates a bearish signal, it may indicate a potential reversal to the downside. Conversely, when the price touches the lower band and the Stochastic Oscillator generates a bullish signal, it may suggest a potential rebound. The ADX can be used to confirm the strength of the trend. When the ADX is rising, it indicates a strengthening trend, providing additional confidence in the potential trade setup. By combining these three indicators, traders can enhance their decision-making process and identify potential entry and exit points with greater confidence.
3. Fibonacci Retracements, Moving Averages, and RSI
- Strengths:
Fibonacci Retracements: Fibonacci Retracements are powerful tools for identifying potential support and resistance levels based on the Fibonacci sequence. Traders can use these levels to determine potential price reversal points and assess the strength of a trend.
Moving Averages: Moving Averages provide valuable insights into trend direction and potential entry or exit points. By using moving averages with different timeframes, such as the 50-day and 200-day SMAs, traders can identify short-term and long-term trends.
RSI: The RSI helps identify overbought and oversold conditions, indicating potential price reversals. It offers valuable information on the strength of a trend and can be used to confirm potential trade setups.
- Drawbacks:
Fibonacci Retracements: While Fibonacci Retracements can be effective in identifying potential support and resistance levels, they are subjective tools and require traders to interpret and apply them correctly. Additionally, in certain market conditions, prices may not adhere to Fibonacci levels as expected.
Moving Averages: Moving Averages, as lagging indicators, may not respond quickly to sudden price movements, resulting in delays in capturing trend changes. Traders should be mindful of potential false signals during periods of choppy or sideways markets.
RSI: The RSI can remain in overbought or oversold conditions for extended periods, potentially leading to false signals. Traders should use additional confirmation indicators and consider the overall market context when using the RSI.
- Strategy:
The combination of Fibonacci Retracements, Moving Averages, and RSI can provide a comprehensive approach to trend identification, potential reversal points, and confirmation of overbought/oversold conditions. Traders can use Fibonacci Retracement levels to identify potential support and resistance areas. When prices approach these levels and the RSI indicates overbought or oversold conditions, it may suggest a potential reversal. The Moving Averages can further confirm the trend direction, with crossovers and price interactions indicating potential entry or exit points. By combining these three indicators, traders can build a strategy that utilizes the strengths of each indicator to identify high-probability trade setups and manage risk effectively.
4. Ichimoku Cloud, MACD, and Volume
- Strengths:
Ichimoku Cloud: The Ichimoku Cloud is a comprehensive technical analysis tool that provides insights into trend direction, support and resistance levels, and potential breakout signals. Its five components (Tenkan-sen, Kijun-sen, Senkou Span A, Senkou Span B, and Chikou Span) work together to offer a holistic view of the market.
MACD: The MACD confirms trend direction and provides momentum signals. It helps traders identify potential entry and exit points by capturing changes in momentum. When the MACD line crosses above the signal line, it generates a bullish signal, indicating potential upward momentum. Conversely, a bearish signal occurs when the MACD line crosses below the signal line, suggesting potential downward momentum.
Volume: Volume provides insights into the strength of price movements. By analyzing volume alongside the Ichimoku Cloud and MACD, traders can confirm the validity of trends and potential breakouts. An increase in volume during a breakout or trend continuation can provide additional confirmation.
- Drawbacks:
Ichimoku Cloud: The Ichimoku Cloud can appear complex for novice traders and may require time and practice to fully understand and interpret its various components. Traders should invest time in studying and gaining familiarity with this indicator.
MACD: Similar to standalone MACD usage, false signals can occur in choppy or sideways markets. Traders should combine the MACD with other indicators to increase accuracy and avoid false signals.
Volume: While volume is a powerful tool, it should be used in conjunction with other indicators for confirmation. Isolated volume analysis may not provide complete insights and could lead to misinterpretation.
- Strategy:
The combination of Ichimoku Cloud, MACD, and Volume offers a comprehensive approach to trend identification, momentum confirmation, and volume-based analysis. Traders can utilize the Ichimoku Cloud to identify trend direction, support and resistance levels, and potential breakout signals. When the price breaks above or below the Cloud, it may indicate a strong bullish or bearish momentum. The MACD confirms these trend signals by generating bullish or bearish crossovers. Traders can use volume analysis to validate the strength of price movements. An increase in volume during a breakout or trend continuation can provide additional confidence in the potential trade setup. By combining these three indicators, traders can enhance their decision-making process and identify potential entry and exit points with greater confidence.
5. Support and Resistance, Moving Averages, and OBV (On-Balance Volume)
- Strengths:
Support and Resistance: Support and resistance levels are key price areas where buying or selling pressure tends to emerge. These levels help traders identify potential entry and exit points and assess the overall market sentiment.
Moving Averages: Moving averages provide valuable insights into trend direction and potential reversal points. By using different timeframes, such as the 50-day and 200-day moving averages, traders can identify short-term and long-term trends.
OBV (On-Balance Volume): OBV is a cumulative volume indicator that adds volume on up days and subtracts volume on down days. It reflects buying and selling pressure and can confirm the strength of price movements.
- Drawbacks:
Support and Resistance: While support and resistance levels can be effective, they are subjective and can vary among traders. Identifying accurate support and resistance levels requires experience and proper analysis.
Moving Averages: Moving averages, being lagging indicators, may not respond quickly to sudden price movements, resulting in potential delays in capturing trend changes. Traders should use additional confirmation indicators to avoid false signals.
OBV: OBV is based solely on volume and may not capture all relevant factors influencing price movements. Traders should consider using OBV in conjunction with other technical indicators for a more comprehensive analysis.
- Strategy:
The combination of Support and Resistance, Moving Averages, and OBV provides a well-rounded approach to identifying key price levels, confirming trends, and assessing the strength of price movements. Traders can use support and resistance levels as reference points for potential entry and exit positions. When prices approach these levels and the Moving Averages align with the overall trend, it can indicate potential reversal or continuation signals. OBV can be used to confirm the strength of price movements. When OBV aligns with the price action, it confirms the buying or selling pressure and provides additional confidence in the potential trade setup. By combining these three indicators, traders can develop a comprehensive strategy that utilizes support and resistance, trend confirmation, and volume analysis.
6. Volume, RSI, and Parabolic SAR
- Strengths:
Volume: Volume is a crucial indicator that reflects the strength and conviction behind price movements. High volume during price advances or declines confirms the validity of the trend and suggests continued momentum.
RSI: The Relative Strength Index (RSI) measures the speed and change of price movements. It helps identify overbought and oversold conditions, highlighting potential price reversals or corrections.
Parabolic SAR: The Parabolic SAR (Stop and Reverse) indicator helps identify potential trend reversals. It provides visual signals on the price chart, indicating when the trend direction may change.
- Drawbacks:
Volume: While volume confirms the strength of price movements, it does not provide information about the direction or timing of future price action. Traders should use volume in conjunction with other indicators for comprehensive analysis.
RSI: The RSI can sometimes remain in overbought or oversold conditions for extended periods, leading to potential false signals. Traders should consider the overall market context and use additional confirmation indicators when relying on RSI signals.
Parabolic SAR: The Parabolic SAR works best in trending markets but can generate false signals in sideways or choppy conditions. Traders should use it in combination with other indicators to increase accuracy.
- Strategy:
The combination of Volume, RSI, and Parabolic SAR offers a comprehensive approach to trend confirmation, potential reversals, and market sentiment analysis. Traders can analyze volume alongside price movements to validate the strength of trends. When volume increases during price advances or declines, it suggests continued momentum. The RSI can be used to identify overbought and oversold conditions, signaling potential price reversals. Traders can consider taking profits or entering trades based on RSI readings in conjunction with other indicators. The Parabolic SAR provides visual signals on the price chart, indicating potential trend reversals. When the dots shift from being above to below the price, it suggests a potential shift in trend direction. By combining these three indicators, traders can develop a comprehensive strategy that incorporates trend confirmation, sentiment analysis, and potential reversal signals.
7. Pivot Points, Stochastic Oscillator, and ADX
- Strengths:
Pivot Points: Pivot Points are price levels calculated based on the previous day's high, low, and close. They act as potential support and resistance levels, providing traders with valuable reference points for identifying price reversals and trend continuations.
Stochastic Oscillator: The Stochastic Oscillator compares an asset's closing price to its price range over a specific period. It helps identify overbought and oversold conditions, signaling potential trend reversals and providing entry or exit signals.
ADX: The Average Directional Index (ADX) measures the strength of a trend, regardless of its direction. It helps traders assess the strength of a trend and potential entry or exit points, indicating whether a trend is strong enough to warrant trading.
- Drawbacks:
Pivot Points: Pivot Points are subjective levels and may vary among traders. Different calculation methods can lead to variations in the levels identified. Traders should consider additional technical indicators and price action analysis for confirmation.
Stochastic Oscillator: In choppy or sideways markets, the Stochastic Oscillator can produce false signals, leading to potential whipsaws. Traders should use it in conjunction with other indicators to increase accuracy.
ADX: The ADX does not provide information about the direction of the trend, only its strength. Traders should combine the ADX with other indicators, such as trend lines or moving averages, to determine the trend direction.
- Strategy:
The combination of Pivot Points, Stochastic Oscillator, and ADX offers a comprehensive approach to identifying potential support and resistance levels, assessing trend strength, and identifying trend reversals. Traders can utilize Pivot Points as reference levels for potential price reversals or trend continuations. When the Stochastic Oscillator indicates overbought or oversold conditions near these levels, it may suggest a potential reversal. The ADX can be used to assess the strength of the trend. A rising ADX indicates a strengthening trend, providing additional confidence in potential trade setups. By combining these three indicators, traders can enhance their decision-making process and identify potential entry and exit points with greater confidence.
8. Moving Averages, Bollinger Bands, and OBV
- Strengths:
Moving Averages: Moving Averages provide valuable insights into trend direction, potential support and resistance levels, and entry or exit points. By using different timeframes, such as the 50-day and 200-day moving averages, traders can identify short-term and long-term trends.
Bollinger Bands: Bollinger Bands consist of a moving average (usually the 20-day SMA) and two standard deviations above and below it. They help identify price volatility and potential overbought or oversold conditions. When the price touches the upper band, it may suggest that the asset is overextended and due for a reversal. Conversely, when the price touches the lower band, it may indicate that the asset is oversold and due for a rebound.
OBV (On-Balance Volume): OBV is a cumulative volume indicator that adds volume on up days and subtracts volume on down days. It reflects buying and selling pressure, providing insights into the strength of price movements and potential trend reversals.
- Drawbacks:
Moving Averages: Moving Averages, as lagging indicators, may not respond quickly to sudden price movements, resulting in potential delays in capturing trend changes. Traders should use additional confirmation indicators to avoid false signals.
Bollinger Bands: Bollinger Bands alone may generate false signals during periods of low volatility or in non-trending markets. Traders should combine them with other indicators for comprehensive analysis and confirmation.
OBV: While OBV is a useful volume indicator, it may not capture all relevant factors influencing price movements. Traders should consider using OBV in conjunction with other technical indicators to gain a comprehensive understanding of market dynamics.
- Strategy:
The combination of Moving Averages, Bollinger Bands, and OBV provides a comprehensive approach to trend identification, volatility assessment, and volume analysis. Traders can use Moving Averages to identify the overall trend direction and potential entry or exit points. When the shorter-term Moving Average crosses above or below the longer-term Moving Average, it generates bullish or bearish signals. Bollinger Bands can help identify price volatility and potential overbought or oversold conditions. When the price touches the upper or lower band and aligns with the overall trend identified by Moving Averages, it may suggest a potential reversal or continuation. OBV can be used to confirm the strength of price movements. When OBV aligns with the price action, it confirms the buying or selling pressure and provides additional confidence in potential trade setups. By combining these three indicators, traders can develop a comprehensive strategy that incorporates trend identification, volatility assessment, and volume-based analysis.
9. Fibonacci Extensions, RSI, and MACD
- Strengths:
Fibonacci Extensions: Fibonacci Extensions are powerful tools for identifying potential price targets beyond the typical retracement levels. They help traders determine where price may potentially reach during an extended trend, providing valuable insights for setting profit targets or assessing the potential for trend continuation.
RSI: The Relative Strength Index (RSI) measures the speed and change of price movements. It helps identify overbought and oversold conditions, highlighting potential price reversals or corrections. RSI readings can indicate the strength of a trend and provide valuable entry or exit signals.
MACD: The Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator. It helps identify the direction and strength of a trend by comparing two moving averages. MACD crossovers and divergences can signal potential trend reversals and provide entry or exit signals.
- Drawbacks:
Fibonacci Extensions: Fibonacci Extensions are subjective tools that require proper interpretation and selection of anchor points. Traders should exercise caution and combine them with other technical indicators or price action analysis for confirmation.
RSI: RSI readings can remain in overbought or oversold conditions for extended periods, potentially leading to false signals. Traders should consider the overall market context and use additional confirmation indicators when relying on RSI signals.
MACD: MACD signals can lag during volatile market conditions or fail to capture short-term price movements. Traders should use MACD in combination with other indicators to avoid false signals and confirm trend reversals.
- Strategy:
The combination of Fibonacci Extensions, RSI, and MACD offers a comprehensive approach to identifying price targets, assessing trend strength, and confirming potential trend reversals. Traders can use Fibonacci Extensions to project potential price levels beyond the typical retracement levels, helping set profit targets or assess the potential for trend continuation. RSI can be used to identify overbought and oversold conditions, indicating potential price reversals. MACD confirms trend direction and strength, with crossovers and divergences signaling potential trend reversals. By combining these three indicators, traders can develop a well-rounded strategy that incorporates price projection, trend confirmation, and momentum analysis.
10. Volume, Moving Averages, and Stochastic Oscillator
- Strengths:
Volume: Volume is a critical indicator that reflects the strength and conviction behind price movements. High volume during price advances or declines confirms the validity of the trend and suggests continued momentum. It provides valuable insights into market participation and can help traders gauge the interest and enthusiasm of market participants.
Moving Averages: Moving Averages provide valuable insights into trend direction, potential support and resistance levels, and entry or exit points. By using different timeframes, such as the 50-day and 200-day moving averages, traders can identify short-term and long-term trends. Moving Average crossovers can indicate potential trend reversals or continuations.
Stochastic Oscillator: The Stochastic Oscillator compares an asset's closing price to its price range over a specific period. It helps identify overbought and oversold conditions, signaling potential trend reversals and providing entry or exit signals. The Stochastic Oscillator is particularly useful in determining the strength and momentum of a trend.
- Drawbacks:
Volume: While volume confirms the strength of price movements, it does not provide information about the direction or timing of future price action. Traders should use volume in conjunction with other indicators and price analysis for comprehensive market assessment.
Moving Averages: Moving Averages, as lagging indicators, may not respond quickly to sudden price movements, resulting in potential delays in capturing trend changes. Traders should use additional confirmation indicators and consider market context to avoid false signals.
Stochastic Oscillator: In choppy or sideways markets, the Stochastic Oscillator can produce false signals, leading to potential whipsaws. Traders should use it in conjunction with other indicators and consider market conditions for reliable signals.
- Strategy:
The combination of Volume, Moving Averages, and Stochastic Oscillator offers a comprehensive approach to trend confirmation, market participation assessment, and momentum analysis. Traders can analyze volume alongside price movements to validate the strength of trends and identify potential reversals. Moving Averages help identify the overall trend direction and provide potential entry or exit points based on crossovers. The Stochastic Oscillator can be used to assess the strength and momentum of a trend, identifying overbought or oversold conditions for potential reversals. By combining these three indicators, traders can develop a robust strategy that incorporates trend confirmation, market participation analysis, and momentum assessment.
Conclusion:
The combination of various technical indicators provides traders with a comprehensive toolkit for analyzing and interpreting market dynamics. Each trio of indicators offers unique strengths and advantages, complementing each other to form a more complete picture of price movements, trend strength, and potential reversal points.
However, it is important to note that no trading strategy or combination of indicators can guarantee success in the market.
Traders should continuously evaluate and adapt their strategies based on market conditions, risk tolerance, and personal preferences.
It is crucial to practice proper risk management and use these indicators as tools to enhance decision-making rather than relying solely on them.
Charts Museum!!!👨🏫Hello, my dear traders🙋🏻.
Welcome🌸 to the Charts section📈. My name is Pejman, and this is the Museum🖼️ of Technical Analysis in Tradingview. I'm your tour leader on this visitation, and we will get to know all the Charts well together📊. I'll provide the necessary information about each Chart and answer your questions✅.
🚫So during this tour, please don't eat🍟or touch the charts🙅🏻😄.
But it would help if you tried everything you learned at home.👍🏻😉
And if you have any questions, ask me in the comments👨💻.
In the previous post, I reviewed the life story of technical analysis💹. I said that the best friend of technical analysis was the Chart📉, which didn't separate from technical analysis all these years🤝🏻.
On the other hand, I said that fundamental analysis was closely related👥 to the Chart and fundamental information was also present in the charts.
So the Chart plays a significant👌🏻 role in the market.
(Definitely, the monitor🖥️ plays an essential role in using the computer🧑🏻💻 otherwise, we should all look at our motherboards💽😄.)
If you're a beginner and want to join us, read the previous post so that you can take the critical steps in learning technical analysis one by one.📃
Now, let's start this post with an example.😊
Each book can contain different information, but the amount of information obtained from each book is different and depends on you.📖
For example, maybe an adult learns valuable information about life from a children's storybook and likes that. Or perhaps a child, despite his age, will relate to a science book about astronomy and like it.👨🔬📕
So the amount of information we get depends entirely on us.💁
Regarding the charts, each Chart, like any book, gives us different information, but what you get from each Chart or which type of Chart you are comfortable with is entirely up to you.🙇♂️
So, like a good bookseller, I have to tell you all the information about my books so you can use the book that suits you.😉
But ultimately, the choice is yours. The customer is always right. 😂👌
So let's start this tour right away because learning the charts is one of the essential steps in this path.🏃♂️
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The information about a price or stock can be displayed using different charts📊, and in the Tradingview platform, it is possible to use the best charts and even customize them🔧⚙️.
Charts are traders' working tools, like a painter👩🏻🎨 who paints with his tools🖌️🎨. Everyone likes to have the best tools🛠🥇.
In the TradingView platform, you can adjust your tools in any way you like👨🏻🔧.
On the other hand, if you get a Pro+ or Premium account, you can use most of the features for charts.✅️
In the following, we will get to know these features and facilities🙆🏻♂️.
Before starting the explanation, I used SWOT to easily understand the content in each chart, and I tried to share the information simply and based on the existing facts.💁♂️
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
SWOT analysis facilitates a realistic, fact-based, and data-driven examination of information strengths and weaknesses.📈📉
We will check these characteristics in all the charts. So let's dive into the types of charts, learn about their advantages & disadvantages, and even compare them with each other.
👇
Let's go through the chart types in order of Tradingview's formation.
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Bars Chart :📊
The Bar Chart is very similar to Candle charts in terms of the information it provides.
This chart shows us information using horizontal and vertical lines.
Bar Charts give us four types of information about an asset.
This information is called OHLC , in which O means the Opening price, H is the Highest price, L signifies the Lowest price and C represents the Closing price of a bar in a time frame.💵
Each vertical line represents price changes over a time frame.
The horizontal lines on the left indicate the bar's opening price, and the horizontal line attached to the bar on the right side shows the closing price of that bar.➡️
Also, other information is obtained by continuing the vertical lines from above and below.
When a bar has an extra line at its bottom, that means the end of this line represents the bar's lowest price.
The upper line also represents the highest price in that time frame.
Finally, I want to say that bars charts and candles chart may seem a bit complicated, but they can reduce our trading mistakes with the information they provide.🙅♂️
For sure, choosing which type of chart you can trade better with is entirely up to you.
In the Tradingview platform, you can change the colors of the bars and customize your chart. 🔁
I have to say that this option is not available on some platforms, and if you can’t see the colors & the chart is only seen in black, using this chart will be a bit confusing.😟
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Candles Chart :🕯
You might have seen the Candles chart or heard their name.
This type of chart has become the most popular among traders.
What do you consider is the cause of the popularity of this type of chart?
Now that it's time for the most popular chart among traders let me talk more about the advantages and disadvantages of this chart.
However, certain things about this chart have made it the most popular chart.
Candles are like the scoreboard of a stadium, which shows the result of the match between buyers and sellers in a time frame.
Candles have a body & a wick like a real candle, and these wicks show the same highest and lowest price in a time frame.
The body of the candle also indicates price changes.
If the color of a candle is red, the price has decreased from the time of opening to closing.
And on the contrary, if the candle is green, the price closed higher than when it was opened.
In my opinion, this type of price display has a better visual effect. It can be an essential reference for making trading decisions, guessing the next candlestick, continuing a trend, or finding the reversal trend.
Candlesticks can form patterns alone or in pairs that help us predict the subsequent movements of the chart.
Candlestick patterns are either a continuation of a trend or reversal patterns, which generally have more number and variety and are even more helpful.
If you need to become more familiar with reversal candlestick patterns, check out the post below.
Also, most indicators work best with candle charts. If indicators are relevant to a particular trading system, often candlestick charts are required.
Candlestick charts display who controls a market or market sentiment over a given time frame. Through various candlestick patterns and formations, such as the Doji Patterns, etc. A trader can assess the overall bias over a specific time horizon.
Overall, Japanese candlesticks are clear, simple, and easy to describe. But definitely, there are some disadvantages.
One of these disadvantages is Apophenia(A tendency to relate unrelated things to each other).
It is a mental bias to see patterns in things that are accidental. Our brains want to see patterns, and so they do.
We are also looking for meaning, so we find meaning in meaningless things.
By combining technical analysis, we see patterns in random data and attach importance where there is none to said data. Candlestick charts are great for this trap.
When I was a beginner and couldn't control my emotions, I often saw trends the way I wanted to & this was far away from logic.
You can escape these emotional traps by practicing and studying to decide with logic and thinking.
Don't worry; as I said, you can count on my help because we will travel together on the technical analysis training road.
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Hollow Candles Chart :
This chart looks very similar to the Candles chart, but it may look a little more complicated, and as a beginner, you may need help understanding the meaning of these candles at first glance.
The system and function of candlesticks & hollow candles are entirely the same, and the difference between them is their appearance.
But still, I will write some points about this chart.
This chart shows OHLC the same as Candles and Bar charts, but on some platforms, it may be seen in colors other than the default colors (green and red - black and white).
But in general, this chart will show the price fluctuations entirely, and because of the similarity to the candle chart, it is less used.
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Column Chart :
As you can see, this chart consists of colored rows. For example, the green row indicates a price increase, and the red row shows a decrease.
It may give us incomplete information for trading, but if you want to compare statistics with each other or get information quickly and with a simple glance, these charts are suitable.
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Line Chart :
I want to examine the Line chart, which is the simplest type of Chart.➡️
A line chart consists of points connected by a line, and these points only represent the final price ( closing price ) of a currency or share.
This Chart can be suitable for comparing the information with each other at a superficial glance because it doesn't have any extra data. Apply two line charts on top of each other and see correlations between different assets.
Line charts are less used for trading; Because a line chart consists of points connected by a line, and these points indicate the closed price in a time frame and give us less information.
There are some other charts similar to line charts that are suitable for comparing information, which I will discuss below.
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Area Chart :
This Chart shows the changes in one or more sets of data and can be checked with other variables, but usually, the second variable is time, and the price is measured relative to time.
This Chart will be suitable for comparing two or more charts.
I put the advantages and disadvantages of this chart in the picture like other charts.
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Baseline Chart :
You may have noticed the similarities and differences between this chart and the Line and Area charts.
The Baseline chart looks similar to the above charts but with different levels; it provides us with more information than these two charts.
By default, there is a hypothetical line, as the average price line in the middle of this chart.
When the area is green, the price is above the average level, and if the area is red, the stock or currency is traded below the average price level.
You can adjust the baseline level. This level has a comparative aspect, and this type of chart is very suitable for checking the market's fluctuations.
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High-Low Chart :
This chart provides us with more information than the line and area chart. But this chart is not complete and does not show the opening or closing price & it only expresses the price changes from the lowest to the highest amount in a time frame.
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Heikin Ashi Chart :
The Heiken Ashi chart is well-known among traders, like the candles chart, and was first used in Japan.
By filtering price fluctuations and averaging between two consecutive candles, this Chart makes it easier to identify trends and helps traders avoid market excitement.
Take a look at the below chart to get to know this type of chart better.
I have to say that this chart type is helpful in the stock market and commodity market, which is associated with more gaps because they determine the price direction without gaps.
So if you feel it can be useful for you, test this chart along with your other strategies.
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Renko Chart :
This type of chart does not pay attention to time, so the time axis is not present in its structure.
This chart consists of sections called bricks or blocks, for which the amount of price change is determined, and the minor changes are not taken into account.
Each block shows a price move covering a user-defined number from the recent close. If the user selects ten numbers, each block will represent a ten-number movement in either direction.
New blocks will only form when the price moves by the set amount of numbers. However, these can be tricky because more price movement can happen than expected.
The Renko chart is one of the oldest and most famous Japanese charts. You can use this chart any time frame if you have a Pro + or Premium account on the Tradingview platform.
Otherwise, you can only have this chart in the daily time frame.
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Line Breaks Chart :
These charts are excellent indicators of momentum.
Each bar is called a "line," A new line will form if the new closing price is higher than the current close or the new close is lower than the last 3 bars.
You can change this number to any number of lines in the past.
But the most popular number among traders is "three lines in the past."
For this reason, this chart is also known as three broken lines.
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Kagi Chart :
Now it's the turn of a fancy line chart with a formula.
The Kagi chart works established on price and discounts the time axis.
Think of it as someone's finger showing you, "We reached -this- high & then -this low” 😂.
Kagi lines do not reverse unless the price changes the minimum amount.
However, what defines what gets plotted is if the price moves by more than a specified percentage from the most recent close.
The color of the lines will change based on new highs and lows.
If the new high is higher than the previous high, the color changes to green & if the new high is lower than the previous one, it would be red, signaling weakness in price.
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Point & Figure Chart :
Point and Figure charts were initially developed as a price recording system and later became technical analysis charts.
Before computers entered the world of Technical Analysis, this chart was widely used. Still, fewer people use it these days due to the complexity of understanding this chart and the limited information it provides.
These charts are like Renko blocks. The X's denote bullish moves, and the O's designate bearish moves by a set number.
All the rules involved in Renko blocks apply here; however, these charts look additional.
These simple charts focus only on significant price movements and completely filter out noises (minor price movements).
The unique aspect of these charts is that, unlike Candles, Line, and Bar charts, the time isn't directly considered in the chart.
Sometimes we can obtain good results and price targets from these charts, which are sometimes very special and significant.
So if you are curious to learn point & figure charts do more research (remember to practice a lot😊.
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Range Chart :
The last chart of this museum is another chart related to the price movement.
This chart may look like a bar chart, but I have to say that it's not.
It contains some of the information that the bar chart had.
If you add this chart, you will see that it has a different time frame than other charts.
100 ranges; As the name indicates, it includes 100 of the latest price movements you can see in different time frames. But, it has more than 100 ranges, and you can determine the number of these movements, which varies from 1 to 1000.
Technical Analysis !!!👨🏫Hello, my trader friends🙋🏻.
I want to tell you the story of Technical Analysis, its advantages & disadvantages.
We're even gonna learn about its branches.
Like any other science, Technical Analysis has come a long way, and it's still evolving. But why should we learn it and know it well?🤷🏻
When you're trading, you may be afraid or greedy. But how do professional traders control these two?🤔
Let me start with a simple example.
If someone turns off the lights & challenges you in a new room, you will feel scared or lack confidence because you don't know that place. But if the challenge happens in your bedroom or home🏡, you'll feel more powerful 💪🏻 and confident because this environment is familiar & you can act better.✅
Fear is caused by the unknown. When you don't know this market, you can't get good results (or at least permanent good results).
So follow this page to conquer all the peaks⛰️ of Technical Analysis together🙌🏻 and learn from A to Z of it.
Also, I'm a fellow traveler on this route🛤️, not your tour guide.
So, if you have any questions, ask me in the comments💬.
My trader fellas, let's take one step👣 at a time because taking long and hurried steps will only hit you harder. I'm with you in all these steps🪜 & get started with the first type of market analysis.
Technical Analysis is old. I mean, it's almost 300 years old📜, but it doesn't like to talk about its age, so we couldn't find the exact information about its birth date🗓️😑.
Maybe it’s from Japan⛩️🎌 and was born in the 18th century, or perhaps its date of birth is in the Middle Ages.
But there is some more information that I'm sure about. For example, in 1879, the Technical Analysis found a friend by the name of Chart📈, and they have not separated until today.
Let's skip this story and be serious☺️. Technical analyzers believe that everything is in the Chart.
In Technical Analysis, there is all the necessary information for trading, such as entry points, exit points, market volume, stock prices in the past and present, etc. (The Chart is a complete encyclopedia for Technical analyzers!!🤦🏻😶 )
There is another type of analysis that examines the available information about a stock (from the founder of a stock or company to the cost and income and even the company manager's records), called Fundamental. But the Technicalists say that even some of the Fundamental information is in the Chart! 😐
Overall, Technical and Fundamental are both complementary to each other and opposite to each other. But both are related to the Chart. (These three have a complicated relationship; I mean, there is a love triangle, so we should stay out of it !!🤫😂 )
Let's skip the joke. All these things are just like the gears⚙️ of a car, but it's not enough. You need to follow more rules in the market to pass the finish line🏁 with your trading car🏎️ . Don't worry cause I'm gonna tell you everything you need to know to win🏆 this trade racing with your strategy car.
Now that we have learned a little about the history of Technical Analysis, it is better to learn about its contents.
The price chart, our most important resource and tool in Technical Analysis, consist of the price-time, Charts, and Candles.
But these candles🕯️ existed 100 years before bar and dot charts.📊📉
In 1700, a Japanese man named Huma realized that the price of rice depended on the emotions of traders in addition to supply and demand.
Candles show these feelings with their colors.
For example, the green candles🟢 show trust and good feelings among people who invested in a stock.🤑
But red candles🔴 indicate doubts or hopelessness of people about a stock, and they sell it.😞
I don't know why I remembered Moody's octopus doll🐙 :)
But candles tell you the feelings of other traders just like these dolls. But only its color is not essential.
Can you guess the other important factors about candles? I will tell you the rest of them soon.😉.
Have you heard that history repeats itself?
By looking carefully🧐 at the old charts, some creative people found that the prices behaved similarly to their past.
They realized that the candles make interesting shapes next to each other, and they made these shapes repeatedly in different periods.🔁
They formed different geometric shapes and patterns & continued to make these shapes until today :)
Let's accept that the Chart is creative and artistic! 🎨🖌️😊
For example, they found a shape called a Head & Shoulders Pattern. This type of pattern will cause a downward trend⤵️ in the Chart.
I tried to find it & place it on someone's Head & Shoulders to remember it better. 😁
Many patterns can be found in any chart, and I have already taught the reversal patterns in my previous posts, But I want to go over all the patterns in detail again in the future, so let's dive into the other contents of Technical Analysis.👇
Using formulas, mathematical🧮 ratios, and advanced calculations, indicators were created that can generally show the market's present and past and give a relative opinion about the future (Please don't get the indicators wrong with magic 8 ball🎱 or Professor Dumbledore's wand✨. )
Let's be serious about it. Maybe you know that indicators depend on the two factors of time and place of price.
In terms of time🕦, they are divided into two categories: leading and lagging.
In terms of price movement💹, they are divided into three categories: trend indicators, oscillators, and volume indicators.
The indicator that I made the above meme for is a leading oscillator.
Now it’s time to go for the other various tools that are made by using numbers🔢 and people’s actions in the market.
A person named Nelson Elliott made a useful tool, although, after his death, many people worked on this tool and improved it until today it reached us, but we are going to discuss it better in the following posts like the rest of the contents of Technical Analysis.😉
But I have to say Elliot believed that the market is not disordered and always repeats a repetitive cycle, and Eliot called these repeated movements waves.
According to him, if you can perfectly identify the repeating patterns in the price, you can predict how the price will change (or not change) in the next phase.
Eliot published his experiences and theories in a book called the waves principle, which I recommend if you want to get good information in this field; it's better to start from the origin of this theory.
I think there is no better definition for the word "Wave" than sea waves🌊, and I tried to draw Elliot waves like sea waves reaching the shore. 🏖️
In the end, I want to say that whatever style of analysis you have or whatever type of Chart you use, in the future, this machine will not go the right way without following a series of principles.
Suppose you have the best car in the world, but you neither know how to drive nor the rules. It can be guessed that you will either crash with someone or break the car💥.
You should have risk management along with your trading system, and don't forget that no trading system is perfect.🙅🏻
It is better to try each method on demo accounts before making real trades.
Of course, you can count on me and ask any questions you may have.🙂💭
In the following posts, I’ll talk more about the things that have been said and introduce you to good trading systems that can be obtained from any method.
I'm by your side so that if you are a beginner, you can find your own way, and if you know the market, we can learn the basics of this market better & together🤝🏻.
Wish you happiness, health & success guys🙋🏻.
How to select effective indicators for your strategyNot all indicators are useful: most are not, and some are downright misleading. Previous posts and studies, such as LuxAlgo's(1), determined that effective indicators need to: 1) produce data to support the trader's decision-making process, not substitute it with automated strategies, 2) produce non-redundant infos. But how do you select indicators in practice? Here, I share my own step-by-step process to select effective indicators for your strategy.
My approach is to use a two-stages process: 1) Expansion, 2) Contraction.
This is the same process that happens in our brains when they develop, first there is neuronal and synaptic expansion, creating lots of new connections that are not necessarily efficient, then there is contraction, which weeds out useless, redundant or ineffective connections. Here, the idea is similar.
## Expansion: try all the indicators you want ##
In the first stage, you just try any indicator that sounds like an interesting idea. The way you select the indicators is up to you, either it can be because it sounds like a good idea, or because it's in line with your main strategy (eg, a volatility indicator when your strategy is contrarian).
Whatever criteria you choose, you should:
1) Remain open to new types of indicators potentially outside your main field, as they can broaden your horizons,
2) Remain skeptic of any claims of effectiveness until you test the indicators and see tha they work for yourself (in the second stage: contraction),
3) Study the indicator to understand how it works and why it works. Don't just blindly use an indicator without knowing what it actually represents precisely, otherwise you will get bit by its limitations and false positives at some point in the future, likely when you will have a lot of money on the table to lose!
Once you have selected a set of indicators, or if you have reached the maximum number of indicators you can add in your TradingView plan (as it happens to me!), then you can go to the next step to weed indicators out.
## Contraction: drop everything that isn't directly useful to you##
In the second stage, we will extensively test the indicators for ourselves, on the assets we are interested in, and in others as well, to "field test" them and see if they work in our strategy. Indeed, trading and investment rely on a balance between collecting enough infos and keeping it simple enough (KISS principle(2)) to support our systematic decision-making process, without information overload which can produce decision paralysis.
The contraction/filtering process is more involved than the first stage, because you have to do the manual, dirty work of testing, it takes time, but this is the only way you can see whether the indicator work as intended and that they work for you. No two people will use the same indicator the same way as I explain in another post (3), so bear in mind that some indicators that may not work for someone else may work for you, and inversely an indicator that works for someone else's strategy may not for you, so the popularity of an indicator is no indication of effectiveness.
Here is a step-by-step outline of my process, feel free to add more steps depending on your needs:
1) Signal-to-Noise test: test on weekly and daily. If the indicator can't be reliable, can't produce good signals with low false positives and high true positives on these long timeframes that are much less noisy than shorter timeframes, then they are useless. Some people claim that there are indicators that work exclusively on lower timeframes, I am not trading such smaller timeframes although I can trade down to 15min, so your mileage may vary, but I remain yet to be convinced that this is true.
2) Redundancy test. If you already found a good indicator that works reasonably well for you, then compare any new indicator to this "best" indicator as a benchmark reference point. This will allow to weed out indicators that cannot provide new, non-redundant data. For example, in the chart of this post, I study correlations, which I compare against the signals generated by my RSI+ (alt) indicator which I consider one of my most reliable. Of course, the signal is of a different kind, but it still provides me a reference point as to whether the correlations can provide me with an additional edge or whether I should just stick to using only the RSI+ indicator. In practice, if the new indicator(s) can provide new, non redundant data, as shown by slightly different predictions in different scenarios or maybe a bit earlier, then great, I keep them. If not, for example the indicator does provide reliable info but it would lead me to take the same decisions at the same time, or worse, later than my best indicator, then I remove it.
3) Generalizabiliy test. Test on multiple markets, on mutiple timeframes, to check generalizability: if it doesn't generalize, the model is overfit on one target market's history, and this likely won't even work for the future if this same market, ie, this is an issue often encountered for models made specifically for bitcoin or ethereum.
4) Misleading test. Use bar replay, to check how the indicator behaves in realtime: does it sprout a lot of false positive in realtime, or is it as useful and predictive, or better, in real-time than when used for historical bars? Or worst being repainting indicators rewriting the past, such as pivots or zigzag, they look super accurate aposteriori but it's only because they cheat (see tradingview pinescript fage about that), using bar replay will help you detect them 100% of the time. Bar replay is one of the best tools you have to test indicators, don't underestimate it. Yes, it's time consuming, but it's well worth it, and you'll become quicker and quicker to use it over time with experience. For more information about the different types of repainting indicators, there is an excellent article in the PineScript documentation, it's worth reading even for non-coders(4).
5) Grouping and intra-class comparison. Finally, group indicators on the same study, so you can quickly answer a question eg about volume and volatility, or about market cycles, etc by checking the adequate chart. Otherwise, if you mix indicators between different charts, it will take you longer to analyze and compare the various signals. Also this allows to compare similar indicators between them to see if they really are useful, non-redundant. For example, in the chart above, it's a Correlations grouped study, so I added almost exclusively correlations indicators; while the delta-agnostic and (pearson) correlation coefficient both provide non-redundant infos, Spearman correlation and Kendall correlation indicators are redundant, although they shouldn't (they should capture non-linear relationships, whereas Pearson can only capture linear ones), their results aren't any different in practice with the pearson correlation coefficient in terms of significant signals they generate that would change my decision process, so we could drop two out of these three correlation coefficients, which would unclutter our chart without losing any data.
## Wrapping-up: continually refine your indicators ##
At the end of the day, it's important to continually try to adapt to the markets. Indicators can continue working, while others may fail, or in the end you find them too difficult to use in practice with your strategy. Your strategy may also evolve over time, and so your indicators should too. Don't ever feel attached to your indicators, you can revisit and question their utility at anytime, and you can go through the steps above again, and drop any indicator at anytime, even if they were useful before, what matters is whether they are still useful now.
There is also a next step for those who are open to learn programming: creating your own indicators. Not so much to create unique opportunities, although they might, but to better understand the market. You should view indicators as a way to better understand some facet of the market, indicators answer the specific questions their authors wanted to find an answer for. So by using indicators of other authors, you are reading the solutions to others questions. But you can also form your own questions, and then the next logical step is to develop your own indicators to find your own answers. And hopefully share them under open-source, so that we can all learn together (and this likely won't impact your profitability, to the contrary, as I explain elsewhere!(3)).
In summary, we can quote Bruce Lee, who described a very similar process for his mastery of martial arts as he taught his own named Jeet Kune Do:
"Absorb what is useful, reject what is useless, add what is essentially your own."
I hope this post was useful to you, and if you have an idea of a criterion or a step you use to select indicators that I didn't list above, please share it in the comments!
Enjoy, Trade Safely!
Tartigradia
(1): Technical indicators: what is useful and what isn't , by LuxAlgo
(2): en.wikipedia.org
(3): Why my indicators are open-source, and why yours should be too , by Tartigradia
(4): Repainting — Pine Script™ v5 User Manual v5 documentation
Fibonacci Analysis - Part 1
A. Fibonacci Series
01. The Fibonacci series is a sequence of numbers starting from zero arranged so that the value of any number in the series is the sum of the previous two numbers.
02. The Fibonacci sequence is as follows:
0 , 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, …
B. Properties Of The Fibonacci Series
03. The series extends to infinity.
04. Divide any number in the series by the previous number; the ratio is always approximately 1.618. For example:
610/377 = 1.618
377/233 = 1.618
233/144 = 1.618
05. The ratio of 1.618 is considered as the Golden Ratio.
06. Further into the ratio properties, one can find remarkable consistency when a number in the Fibonacci series is divided by its immediate succeeding number. For example:
89/144 = 0.618
144/233 = 0.618
377/610 = 0.618
07. Similar consistency can be found when any number in the Fibonacci series is divided by a number two places higher. For example:
13/34 = 0.382
21/55 = 0.382
34/89 = 0.382
08. Also, consistency is when a number in the Fibonacci series is divided by a number 3 places higher. For example:
13/55 = 0.236
21/89 = 0.236
34/144 = 0.236
55/233 = 0.236
C. Fibonacci Retracement
09. Fibonacci analysis can be applied when there is a noticeable up-move or down-move in prices.
10. Whenever the stock moves either upwards or downwards sharply, it usually tends to retrace back before its next move.
11. ‘The retracement level forecast’ is a technique that can identify up to which level retracement can happen.
12. Fibonacci retracements are movements in the chart that go against the trend.
13. In finance, Fibonacci retracement is a method of technical analysis for determining support and resistance levels. It is named after the Fibonacci sequence of numbers, whose ratios provide price levels to which markets tend to retrace a portion of a move before a trend continues in the original direction.
14. A Fibonacci retracement forecast is created by taking two extreme points on a chart and dividing the vertical distance by important Fibonacci ratios.
15. 0% is considered to be the start of the retracement, while 100% is a complete reversal to the original price before the move.
16. Horizontal lines are drawn in the chart for these price levels to provide support and resistance levels.
17. Unlike moving averages, Fibonacci retracement levels are static prices. They do not change.
18. Because these levels are inflection points, traders expect some type of price action, either a break or a rejection.
19. The 0.618 Fibonacci retracement that is often used by stock analysts approximates to the "golden ratio".
D. How should you use the Fibonacci retracement levels?
20. Think of a situation where you wanted to buy a particular stock, but you have not been able to do so because of a sharp run-up in the stock.
21. The most prudent action to take would be to wait for a retracement in the stock in such a situation.
22. Fibonacci retracement levels such as 61.8%, 38.2%, and 23.6% act as a potential level up to which a stock can correct.
YASER RAHMATI
Bullish Engulfing PatternsThe bullish engulfing pattern is a two-candle reversal pattern. The second candle completely ‘engulfs’ the real body of the first one, without regard to the length of the tail shadows.
This pattern appears in a downtrend and is a combination of one red candle followed by a larger green candle. On the second day of the pattern, the price opens lower than the previous low, yet buying pressure pushes the price up to a higher level than the previous high, culminating in an obvious win for the buyers.
How to add an Indicator to you ChartsSomeone asked a question on how to add a trend-line indicator to their chart hence why I made this visual tutorial, so now you can try it out yourself too, it can show you good channels if you try different time-frames.
This is what I used previously until I discovered an even better one. Trend indicators are very useful to incorporate in your technical analysis.
China technology weekly chart insights - CQQQAs we can see from the monthly and weekly chart analysis, AMEX:CQQQ got into a one way run up bullish trend from mid 2016 right up to October 2018, at which point markets got a consolidation stage and bulls were unable to make higher highs and found resistance price peaking near USD 67 levels. At this stage, when you observe the weekly charts carefully, price action formed a Triple to formation and soon the bears tool over and once the pattern was completed, the markets saw a change in trend and CQQQ went into a downward trading channel.
It's interesting to observe how the triple top formation, which is a bearish signal at peaks after sustained long term uptrend, was giving out the signals confirming the break. If you observe the first peak in the formation, the green candle on top shows price action where the bulls tried to push the price higher during the day but the bears closed the lower to the weekly high levels. On the second peak, the green candle shows that the bears pulled the price lower to the open, bu the bulls closed at a high. On the third peak, we see a red candle with a Doji, indicating indecision and a possible change in control between the bulls and bears, which is only confirmed after the break of the support zone at the bottom of the triple top formation. However, do note that while the peaks were rather parallel, the bears were able to pull the price lower at each trough of the formation and mostly the red candles were accompanied with higher volumes
Once the triple top was established and breached, price went into a downward channel, it found support once the price had fallen just below USD 40 levels. At this stage, do note that the RSI indicator had started brushing the oversold space and price found support at these levels and the bulls pushed price back into slight higher zones.
If you correlate the weekly and daily charts, the price is now moving in a rectangle and its interesting to note that the price has entered the rectangle set up from top, likely a continuation pattern, and may have a tendency to exit below. However, critical to observe the direction in which breakout happens.
Currently, the price is sitting above the long tern trend line and this will continue to act as a major support going ahead.
Always remember, trading inside the rectangle is dangerous, look out for breakouts, that's where you have higher probability of positive trades and also higher profit levels
If you have any views, please share. If you like what I share, please leave a thumbs up.
Thanks
The Game of Charts- break out or break down?BITFINEX:BTCUSD
Chart speaks louder than words.
Comment your views.
*This information is not a recommendation to buy or sell bitcoin. It is to be used for educational purposes only.
Simple profitable trading strategy!!I am posting this chart in order to show you how easily you can take profit of the market if you keep the analysis simple.
You don' t need many indicators that could make you confused.
In other words KEEP YOUR CHARTS CLEAN.
Then you would be able to understand in depth what you cant see in a messy chart.
As you can see, first we have a strong bearish move.
So then we expect a retracement that is placed exactly at 0.38.
Now i want to show you the importance of 1.2 fibo extension. In my opinion it is the most important level. It is clear that the price is always lookng for that level before having a retracement.
When the price is above MA50 we expect it to reach 1.2 fibo extension that could be your target level as well.
DON'T FOERGET. KEEP YOUR CHART CLEAN.
Thank you for your time!!
2 TARGETS EXPLAINED - POSITION SIZING - BANKING PROFITS Hi All, I recently have been asked to publish this diagram for executing a 2 target order.
I have labeled the diagram with order sequence in a perfect world scenario. Steps below relate to numbers on chart
I am not telling you this is how everyone does it and this is only based on the questions I have been asked, every strategy has its own order entries stops and targets.
1. Price action comes down to hit your Limit Order Entry/Entries - when we find the reason for entry in this case we have identified this as an advanced pattern. When price action has at least past the B leg and we anticipate that price will continue downwards towards our D completion and predict where the Market is most likely to go after this, we then decide on our entry type and execute the order - The most important thing is to know where your entry stops and targets go before the entry level is reached. We mark these area's out and place 2 Order Entries @ Half position size.
So let's say you would like to buy 20k EURUSD and the spread was 2.3 pips with a pip cost of $1 per 10k (minilot) trade. The cost would be:
2.3 pips * $1 per minilot * 2 minilots = $4.60
Now let's say you bought 20k in EURUSD, but this time, you bought two separate minilots, 10k and 10k. The cost for this would be
Position #1 - 2.3 pips * $1 per minilot * 1 minilot = $2.30
Position #2 - 2.3 pips * $1 per minilot * 1 minilot = $2.30
The 2nd scenario costs the same as the 1st but allows two different sets of stops and limits (one set per ticket).
So now we have the Order in Place with your target 1 and 2 and only exposing you to a stop loss of your original 20k
After D has completed you need to make sure to bring your targets down until D has completed.
2. Now you have your order filled, based on historical data and forward testing results in the most likely of places price will retrace to being the 38.2% for T1 and 61.8% for T2 - now in your testing results you may just take one position and use the 50.0% for your one target. Keep in mind this is just an example. We have already banked our target 1 with 43pips - Price can do 3 things Go up Sideways or down. We hope price would just continue to hit our T2 - in this case price will retrace when sellers have their orders in at the 38.2%
3. We then move our stops up for position 2 to break even.
4. Price action usually will retrace and can indeed come back down to stop you out for a break even trade on position 2 but this has already banked 43 pips at 10k Half Position.
5. Price action doesn't stop us out and we are looking for Target 2 to be acquired, when T2 is obtained we have completed a perfect trade. And target 2 has banked 69 pips
You can also trail a stop when the price action hits T1 if you need to sleep or leave for some reason and don't want to leave the position exposed to loss if it turns in the wrong direction. You can take step number 4 after the retrace and use the LLLC candle wick and trail the stop 5 pips below or above the HHHC candle wick depending on bearish or bullish.
Note: some brokers or platforms do have the feature to have two limits on the one order.
Also note the dollar figure is great that's what we all want is to make money in the market, the most important thing though is to not go broke, protect capital, dont expose yourself to too much risk, bank profits and don't be greedy. Being a consistently profitable trader putting yourself in the highest probable trades, Like Warren Buffett Says The stock market is a device of transferring money from the impatient to the patient.
Their are a million ways to make and lose money in Forex - good luck
I hope this helps for all those who asked to post it
