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Horizontals and Breakouts: Using ETH as an ExampleThis is an education based on the LTCUSD chart that I posted today. I have also linked my previous education idea down below where I want to drill down one key fundamental: Participation matters, price DOES NOT. DO NOT get emotional seeing price (low or high), look at the participants to see how many people are buying/selling at these levels. Price DOES NOT always imply that there is participation. And Prices at bubble tops NEVER imply participation. Most people have bought/sold before these bubble top levels arrive. Here I show another example where the VPVR (Volume profiles at various price levels) predicted the correct line of resistance. Most charters DO NOT understand this. Patterns lie all the time. A lot of charters on Tradingview and REAL traders use the price tops/ ATHs to draw trend lines. PLEASE do not do this if there isnt meaningful participation/volume at these levels. Hope this helps clarify some arguments that people continue to have on where to draw trend lines from and if you are correctly capturing the wicks. Result: ETH while BOOM above 740 USD while most traders kept drawing harmonics and all sorts of short term pattern crap. Dont believe me? I have linked the idea to LTCUSD vs BTCUSD comparison down below. BTC breakout was at 12.4k when most people thought we will see resistance as we approach 20k. BTC blasted through all these levels.
COINBASE:ETHUSDEducation
by brotoshee
5
The Gap Up (1)Stock price has a gap up, how to confirm it is a true break out or a false break out? Maybe a tight consolidation is a method. Tips: This is forex, not a stock. But the tips should apply as well. Before the gap 2017 May, there were several times the price tried to challenge the resistance line. Once gap up, a false break out then followed by a tight consolidation, can say the resistance became support. After the consolidation, price broke out using a way called red three soldier.Then the second break out can be treated as buy hint.
Education
by yunwangvvv
Why S and R works so good - Spring & Upthrust WyckoffWelcome Traders to a new Educational Posts. Today we will have a deeper look at Support and Resistance. One of the most popular chart techniques out there, but the question?! Do they really work? Absolutely YES. But probably not like most of the traders think they do. That simple Break and Retest Strategy. NOOO! I would like to introduce you to the extended version of Support Resistance. The Wyckoff Spring and Upthrust. Wyckoff Spring and Upthrust In other words they are simply the Fake Outs at Support and Resistance Levels. The idea behind it is to get an entry exactly there where most of the trader will put their SL. -> WHY?! because of the LIQUIDITY The whole market is based on Liquidity (Supply Demand). The bigger fish will always win. Those who have the bigger amount will always dominate here. Just FACTS . So how do you want to position yourself in the market. Exactly there were 95% of the Retail Traders will put there SL? Or do you want to change your perception on how you view the market. This will completely change your view on the Forex Market. Supply Demand What I also do is I use my own style of Supply Demand to identify exactly those areas where most of the trader will put there SL and I will place exactly my Entry there with a very tight SL to get bigger Risk Reward. Of course I will not have that much of valid entries for my setups as they do not occur as often as Support Resistance Setups but the Total Risk Reward is a complete new Level. WHY? Example Upthrust Because you are rocking the market with the market movers. You are always clearing with these entries both sides. #1 Sellers at Resistance because of Upthrust #2 Breakout Trader(buy) because of Upthrust Sell is the right decision in this case but most of the Traders will lose that Trade due to SL hit. Everybody is placing the Entry and SL different but the majority is losing this trade. Spring Example This was the bigger manipulation as the price did a strong move to the downside through the level of Support. This level was a very interesting level for Retail Traders to buy. Doji occured for Price Action Confirmation but the price dropped down to the level of Demand. Why? -> Liquidity. All SL were located there so Market Movers had there buy limit order placed exactly there. Conclusion With this Post I do not want to judge Retail Traders using Support Resistance. Maybe you found a nice Strategy with that and you are profitable. I am also using Support Resistance but simply in a different way as you can see. I just wanted to share with you my thoughts behind Support Resistance and how I use them to be profitable Please leave a LIKE if you found this Post useful and share your thoughts below!
Education
by DariusFxTrading
3
Break support/Resistance , give confirmation?Break support/Resistance , give confirmation? - We usually trade base on S/R to find the entry point, exit or to predict the trend. - One of an effective and simple way in trading is to trade when price breakout from a S/R level - However, to identify an area or a point of good S/R in trading is mostly based on trading style, knowledge and trading experiences from each individual. Today I would like to talk about Breakout in trading. When it is breakout, when it is failed breakout. Before talking about breakout, we need to identify price closes above a S/R level or below a S/R level . Examine the below chart: However, in the chart we also find the situations that market didn't follow the mentioned rule. In the above case, if we carefully examine, we would see a pair of candle close below a resistance zone and make price go down. And price is still following rule of breakout and give confirmation as usual. There are a lot of S/R appear in trading market. So, we have to choose by our own which is the S/R zone to play in each situation depending on our own experiences. No situation is exactly the same with each other! In the same above situation, at the same S/R level that we identified and used before, prices move differently (at that points, mostly our stoploss is hunted) Here, experienced traders would easily recognize failed breakout based on trend analysis, or the way prices breaks, or at least don't follow the breakout. We can analyze in a simple way as follow: And then price continues its trend I have presented some simple cases of successful breakout, failed breakout or fake breakout in the above chart. I would like to receive the contributions from the community to learn from each other. Noone is right or wrong all the time. Every wrong or right cases have its own price. Hope that people would not keep silence instread of telling what you know or learned. Nothing has its own value unless it spent some prices. I hope that people would give a way their knowledge, don't try to hide for your own if not we are all failed to this market. More information www.investopedia.com
Education
by DatTong
14
EDUCATION: Simple Support LineHello, dear subscribers! Today we start our Educational series. We are going to public some elements of technical analysis every day. Definition The support level is the level which is likely not to be broken down by the price. It is a high probability of the bounce off this level. It occurs because when the price decreases, the demand is rising and the supply is decreasing. As a result the higher demand push the price up. How to trade with support We can get into the position on the support line level. For example, at the point (D) we already know that blue line is support (because of points (A) and (B). Also we have to use the stop loss level, if the price will substantially break this level down. If the price broke down the blue support (G), we can wait the yellow line price level to enter the position (3). It is also widely known that the price is likely to return back to the previous support (H) Summary 1)To define several support levels 2)To get into position on the first one 3)To fix a profit in case of price bounce 4)To fix small stop loss in case of huge breakdown 5)To buy again at the lower support. It is very effective strategy but there are a lot of cases, when support level definition is impossible.
Education
by Skyrexio
Chande Kroll Stop for validating breakoutI want to share a little trick for validating breakout from a narrow range. If more people use this method then it can become even more effective ;-) 1. Price crosses below both lines of Chande Kroll Stop and the area between two lines of Chande Kroll Stop is shaded, indicating price is breaking out of a narrow range 2. Bull bear power histogram paints red below 0 The shaded area is when the width between 2 lines of Chande Kroll Stop measures less than 2*atr(10)
Education
by priceactionta
J Shape FormationHello Traders! Have you ever wonder why the market turns back after the clear breakout of the trendline and even after a perfect retest?? Here is your answer. There must be The J shape above that trendline or above that resistance because this J shape mostly forms above the resistance. This J shape pattern occurs again and again and it's easy to find because of its clean and clear formation. These are the three shapes that form after the J Formation and the head and shoulder pattern is one of them. Formation 1 You can catch the drop at the peak by selling on the reversal candle or if there are continuous bullish candles then wait for the first bearish candle and go for the sell. In formation 1 it always drops hard. If Market already dropped hard then wait for the market to retest the bottom of the J pattern and sell it and target will be the same size as the J shape. Formation 2 In a rare scenario, it bounces back because there must be some strong support. This is also tradeable when you see the market turning back at support you can go for the buy. Formation 3 It's the Head and shoulder pattern and it can be traded when it's half completed with the help of this formation But it is not compulsory that Head and shoulder formation always have a clear J shape.
FX:XAUUSDEducation
by Aadil1000x
LendingTree: Bullish Technicals and Fundamentals ExplainedIn this analysis, I'll be providing an in-depth analysis on LendingTree, as well as an explanation on megaphone patterns and its bullish upside. What is LendingTree Inc.? Lendingtree (TREE) is a company that offers a platform for borrowers and multiple lenders, offering the opportunity for its users to find the best possible deal on their loans. Business Model - Users of TREE gain access to multiple loan offers, and TREE’s clients gain the benefit of a cost-efficient customer acquisition. - Essentially, LendingTree is a platform where people shop for money. - Lendingtree works with major banks such as Citibank, Wells Fargo, as well as mortgage brokers, p2p specialty finance institutions, and small businesses. - Their clients’ pain point is that borrower acquisition is a key constraint to growth. - They offer a personalized platform called My LendingTree in which users can track their financial credit and performance - Their cumulative user growth has been increasing at an exponential rate - One fact many people misunderstand is that LendingTree does not take a markup fee. - Their revenue comes from the payments made by lenders (their institutional clients), who pay to join the LendingTree marketplace. - TREE also gets paid by their clients when its users sign up for their loans or services. - While mortgage loans are their main focus, they are expanding into areas of: personal loans, auto loans, business loans, student loans, credit cards, saving accounts, and home equity loans. Financials - LendingTree’s revenue has tripled to $1.1 Billion by the end of 2019, almost triple the revenue of 2016. - They continue to demonstrate tremendous growth as consumers shop for mortgages over time - While their revenue was dominantly mortgage based, they have managed to diversify into generating revenue from non-mortgage related loans and services. - However, their operating expenses have also significantly increased due to huge marketing budgets, and their operating income is not as exponential as their revenue growth - Their quarterly revenue changes have been showing inconsistencies, and reported negative earnings for 2020 Q2. - However, the company demonstrates steady and strong free cash flow Technical Analysis - We can take a look at TREE’s weekly chart for long term insight - To begin with, the chart is currently trading within a textbook megaphone pattern - A megaphone pattern can be a continuation or reversal pattern depending on how prices react near the resistance - This pattern demonstrates 5 distinct swings, each getting larger than the previous one, - As demonstrated above, we are currently in the middle of the fifth swing - We can see that a reverse head and shoulders pattern has been forming since the third swing. - We have temporarily broken out of the descending trend line resistance (marked by the dotted blue line), and forming what seems to be the right shoulder - The formation of the right shoulder can also be seen as a bullish flag pattern, where prices are consolidating before a breakout - On the short term, we are consolidating below the 0.618 Fibonacci retracement resistance. - We have tested the pivot line support, as prices look to break out - Even if we see a rejection at the trend line resistance on the fifth swing, there is a 60% upside potential based on the megaphone pattern structure Conclusion With the Fed having said that interest rates will remain at near zero, and considering the fact that the US housing market is still in an uptrend, given that we see more recovery in the economy, we could anticipate huge growth for LendingTree as more users seek to get loans. The technicals demonstrated on LendingTree’s chart are also extremely bullish, making this stock a solid mid-term investment. If you like this analysis, please make sure to like the post, and follow for more quality content! I would also appreciate it if you could leave a comment below with some original insight.
NASDAQ:TREEEducation
by Michael_Wang_Official
2
The PitchFork - a great way to define and trade channelsThis is how I use pitchforks and I hope it is an inspiration for you too. I like trading channels and the pitchfork is a great way to identify them early on and to confirm these channels. It is not always straightforward to find the right points (1-2-3, see below), but I think the pitchfork is quite powerful and for me a handy tool in addition to other indicators and tools. If you have not tried it before, give it a go! Please leave your comments and thoughts so we can all learn and get inspired by each other!!! ************************************ HOW TO SET the PITCHFORK? A Pitchfork can help identifying a channel in a fairly early stage. Three points need to be used: 1. a previous pre-channel high/low 2. the new channel high 3. the new channel low If 2 is closer to 1 compared to 3 (vertically) then you will see a descending channel. Otherwise ascending. Point 1 will become the mid-line of the channel and serves as an additional support/resistance HOW TO DEFINE OPPORTUNITIES? Opportunities exist when the price touches the boundaries. #SELL - In this case we see 3 SELL opportunities when the price touches the upper bound #LONG - we see 3 LONG opportunities, one of which (partly) failed as it got resisted by midline, which is not uncommon and always a watch out. #BREAK OUT - We also see a clear break out that can be traded as well, especially after retest. As always with channels - I prefer to only take LONG opportunities for ascending channels and SHORT for descending. This channel is fairly flat, so both were possible. Always use this technique in conjunction with other signals. **************************************
Education
by channel-man
Double Top Chart PatternThe Double Top or Bottom Chart Pattern is a reversal pattern as its name implies, the pattern is made up of two consecutive peaks or troughs that are roughly equal, with a moderate trough or peak in-between. This reversal could signal an end of an uptrend or downtrend. ( Double top with an end to an uptrend in this case). Double Top Chart Pattern A Double Top chart pattern is comprised of three main components: After a long bullish trend , the price reaches the highest point of the current uptrend After the highest point, there is a decline in price getting support from the support line After this trough the price again increases and reaches another peak falling to the same support line The long bullish trend is the prior trend which is reversed once the pattern is completed, with reaching the highest point of the current trend marking the 1st peak followed by a trough which gets support from the support line i.e. the neckline. Later the price further increases to reach the 2nd peak which gets resistance from the resistance line of 1st peak (usually). Once the price falls and breaks the neckline the formation is complete. The target price for the same is taken as the difference between the neckline and the 2nd peak, with the neckline acting as resistance after the pattern completion. Volume is a confirmatory indication that increases substantially as the breakout is observed and confirms the double top pattern completion! There are few limitations as well to the Double Top Pattern: Can be extremely harmful if identified incorrectly Sometimes the peaks or the trough could be just normal resistance than long-lasting change Might get converted to Triple top, so pay attention to the volume carefully Therefore, one must be extremely careful and patient before jumping to conclusions. Go Trading!!! Further, there are four different types of Double Top pattern based on their respective average rises and failure rate percentage, namely: Adam-Adam; Adam-Eve; Eve-Eve, and Eve-Adam. Where the average is the measure of the price movement from the breakout point to the prime point i.e. 1st peak or the Ultimate high. ---------------------------------------------------------------------------------------- If you find the post useful, please like and share our ideas with the community! - Mudrex
COINBASE:BTCUSDEducation
by Mudrex
6
Three Drives Harmonic Chart PatternThe three drivers chart pattern is a well known harmonic chart pattern that acts as a trend reversal. The pattern consists of either three higher highs or lower lows which is an indication of a potential trend reversal. There are two different types of three drives pattern: Bullish Bearish Bullish Three Drives Pattern There are three different waves in the pattern as the name suggests, three drives. With the subsequent drives, there are lower lows that are being formulated in the pattern with three different bottoms. Once the third wave is completed and the low point has been observed, a buy signal can be created with formulating the Fibonacci levels and generating the buy signal with a Fibonacci extension of 1.27 or 1.628. For the stop-loss and take profit levels, you can formulate a new Fibonacci level with the start and end of the pattern and keep 161.8% as the stop-loss level and 61.8% as the take profit level. The important point that confirms the drives is a similar time period between the uptrend after the 1st wave and 2nd wave also a similar time period between the 2nd wane and 3rd wave for the downtrend. The bearish three drives pattern is completely opposite of the bullish three dives pattern and can be spotted in a similar manner. The three drives pattern belongs to the family of harmonic patterns and thus makes use of not just chart patterns but also technical retracement levels to validate the pattern. A three-drive pattern that does not meet the retracement criteria can be discarded. The pattern is therefore qualitative as well as quantitative in nature. ---------------------------------------------------------------------------------------- If you find the post useful, please like and share our ideas with the community! - Mudrex
COINBASE:BTCUSDEducation
by Mudrex
5
The Cup and Handle Chart PatternCup and Handle Chart Pattern The cup and handle chart pattern is a bullish continuation pattern that marks a consolidation period followed by a breakout. It can help to predict future price movements. A cup and handle chart pattern is comprised of three main components: -A prior trend, as to qualify as a continuation pattern it has to have a prior trend -The cup, "U" shaped resembling a bowl or rounding bottom with almost equal heights on the either side -The handle, as the cup formation is completed, a trading range develops on the right-hand side forming the handle, usually 1/3rd of the size of the prior advance In this chart pattern, there is a prior trend followed by a cup forming with almost of the equal heights on either side with a low in observed nearly in the middle. After the low, the rice consolidates to reach near the high of the start of the cup, followed by a pullback forming a handle, similar in shape to a flag or pennant. Once the handle reaches back to the same level of the cup highs, a breakout is expected, confirming with spikes in the volume observed. Traders can use the cup and handle to buy when the breakout is observed i.e. at the candle when price breaks the highs formed by the cup. For confirmation, traders can use the sudden increase in volume as the cup and handle completes and the breakout is observed. Traders can put stop loss at the low of the handle in order to minimize the losses if the pattern fails, There are few limitations as well to the Cup and Handle Pattern: -Can be difficult to be observed for novice traders -Often might require assistance from other technical indicators -The cup and handle might take extensive periods to play out and complete the formation ---------------------------------------------------------------------------------------- If you find the post useful, please like and share our ideas with the community! - Mudrex
COINBASE:ETHUSDEducation
by Mudrex
7
Inverse Head and Shoulder Pattern using BTCUSDThe head and shoulders chart pattern is a price reversal pattern that helps traders identify when a reversal may be underway after a trend is exhausted. It is of two types: Head & Shoulder and Inverse Head & Shoulder. This reversal could signal an end of an uptrend or downtrend. (Inverse Head & Shoulder with an end to downtrend in this case) Inverse Head & Shoulder: An inverse head & shoulder pattern is comprised of three main components: -After a long bearish trend, the price falls to a trough and subsequently rises to a peak -The price again falls to form a second trough substantially below the initial low and rises again to the same peak -The price falls for the third time but to the level of the first trough only before rising back to the same peak again In this chart pattern there are three trough in which a large trough (the head i.e. the second trough) has a slightly smaller trough on either side of it (right and left shoulder that are the first and third peak), with all of the trough increasing to a same level of resistance i.e. the peak until where all the troughs had risen, called as neckline in the pattern. Once the third trough (right shoulder) moves back to neckline it is likely to breakout to a bullish uptrend indicating a trend reversal hereby, which is the basic explanation of Head and Shoulder. Traders can use Inverse head and shoulder to buy when the breakout is observed i.e. at the neckline after the right shoulder reached there completing the Inverse Head & Shoulder formation. For confirmation traders can use the drop in volume as the Inverse Head & Shoulder is forming and a sudden increase in the volume as breakout is observed suggesting a shift from sellers before the pattern to buyers after the pattern. There are few limitations as well to the Head & Shoulder Pattern: -Sometimes false breakouts might be observed -The time duration for formation of the pattern might be too long -Trough or peak might be pretty far from the neckline resulting in large stop loss distances which might have o reviewed consistently -The price may see pullback after the third peak or trough often confusing few traders ---------------------------------------------------------------------------------------- If you find the post useful, please like and share our ideas with the community! - Mudrex
COINBASE:BTCUSDEducation
by Mudrex
12