Get started

DGT

the bottom yet to come - wyckoff accumulation phaseelliott wave analysis of bitcoin on daily timeframe the latest move/wave does not look like an impulsive move but rather a corrective move as a result, the idea of bear continuation and new bottom occurrence probability shall not be ignored. If it is the case, then we may assume that the market might be in a accumulation phase for extended period of time (as displayed in the chart) mainly sideways and probable new bottom to form before the bull run resumes details of the analysis is presented on the chart and you are kindly invited to check the links below for further details of the characteristics of the elliott waves please note that : - these patterns do not provide any kind of certainty about future price movement, but rather, serve in helping to order the probabilities for future market action - trade setups must be confirmed in conjunction with other forms of technical and fundamental analysis - and please remember that this analysis is not a financial advice and presented for educational purpose only Elliott Wave Theory : Motive Waves and Corrective Waves Published Indicators : Indicators page
by dgtrd
73
Timing when day trading can be everythingTiming when day trading can be everything In Stock markets typically more volatility (or price activity) occurs at market opening and closings When it comes to Forex (foreign exchange market), the world’s most traded market, unlike other financial markets, there is no centralized marketplace, currencies trade over the counter in whatever market is open at that time, where time becomes of more importance and key to get better trading opportunities. There are four major forex trading sessions, which are Sydney, Tokyo, London and New York sessions Forex market is traded 24 hours a day, 5 days a week across by banks, institutions and individual traders worldwide, but that doesn’t mean it’s always active the entire day. It may be very difficult time trying to make money when the market doesn’t move at all. The busiest times with highest trading volume occurs during the overlap of the London and New York trading sessions, because U.S. dollar (USD) and the Euro (EUR) are the two most popular currencies traded. Typically most of the trading activity for a specific currency pair will occur when the trading sessions of the individual currencies overlap. For example, Australian Dollar (AUD) and Japanese Yen (JPY) will experience a higher trading volume when both Sydney and Tokyo sessions are open There is one influence that impacts Forex matkets and should not be forgotten : the release of the significant news and reports . When a major announcement is made regarding economic data, currency can lose or gain value within a matter of seconds Cryptocurrency market s on the other hand remain open 24/7, even during public holidays Until 2021, the Asian impact was so significant in Cryptocurrency markets but recent reasearch reports shows that those patterns have changed and the correlation with the U.S. trading hours is becoming a clear evolving trend. Unlike any other market Crypto doesn’t rest on weekends, there’s a drop-off in participation and yet algorithmic trading bots and market makers (or liquidity providers) can create a high volume of activity. Never trust the weekend’ is a good thing to remind yourself One more factor that needs to be taken into accout is Blockchain transaction fees, which are responsive to network congestion and can change dramatically from one hour to the next In general, Cryptocurrency markets are highly volatile, which means that the price of a coin can change dramatically over a short time period in either direction The Bottom Line The more traders trading, the higher the trading volume, and the more active the market. The more active the market, the higher the liquidity (availability of counterparties at any given time to exit or enter a trade), hence the tighter the spreads (the difference between ask and bid price) and the less slippage (the difference between the expected fill price and the actual fill price) - in a nutshell, yield to many good trading opportunities and better order execution (a process of filling the requested buy or sell order) The best time to trade is when the market is the most active and therefore has the largest trading volume, trading all day long will not only deplete a trader's reserves quickly, but it can burn out even the most persistent trader. Knowing when the markets are more active will give traders peace of mind, that opportunities are not slipping away when they take their eyes off the markets or need to get a few hours of sleep You are kindly invited to check the script that helps to identify market peak hours : Day Trading Booster .
Editors' picks
Education
by dgtrd
32
btc - redistribution once againelliott wave analysis of bitcon on daily timeframe looking at the chart there could be a possible zigzag formation (5-3-5 structure), labeled with red ABC on the chart currently, in lower degree abc correction is in play and wave B on higher timeframe. depending on abc formation, here is what to be expected - if abc is forming zigzag formation then we may expect some more bullish price action before any probable reversal - on the other hand, abc could form an expanded flat with a complex b wave and the formation will perfectly fit to wyckoff redistribution sychmatic. in this case we may experience a bearish price action - probably below the local bottom - folowed with a bullish price around the half of wave A in higher degree which will complete abc formation on lower degree. please check details presented on the chart abc completion also means end of wave B in higher degree. based on zigzag rules wave C implies a bearish impulsive (5 waves) price action please note that : - these patterns do not provide any kind of certainty about future price movement, but rather, serve in helping to order the probabilities for future market action - trade setups must be confirmed in conjunction with other forms of technical and fundamental analysis - and please remeber that this analysis is not a financial advice and presented for educational purpose only Peace at Home, Peace in the World
by dgtrd
53
Elliott Wave Theory - Corrective WavesThe Elliott Wave Principle at its core consists of motive waves, movement in the direction of the larger trend, and corrective waves, any correction against the main trend. Market prices alternate between a motive phase, and a corrective phase on all time scales of trend Please refer to Elliott-Wave-Theory - Motive-Waves post covering rules and tendencies of motive waves, participants psychology at every stage of an motive wave and how to identify/forcast them using both fibonacci relations as well as channeling technique (price action). This post is about Corrective waves . Corrective waves have a lot more variety and less clearly identifiable compared to Motive waves and are an important component of the Elliott Wave Theory. Corrective waves needs more attention and to be mastered to become a successfull Elliott wave practitioner Corrective Waves Corrective waves, consist of three—or a combination of three—sub-waves that make net movement in the direction opposite to the trend of one larger degree There are many corrective patterns ranging from simple to complex yet they are just made up of three very simple easy-to-understand formations Disclaimer: below presented figures displays guidelines that elliott waves may form. Guidelines are tendencies, not set in stone rules a - ZigZag Corrective Wave (5-3-5) Consist of three sub-waves against the main trend and labeled as ABC. ZigZag is a 5-3-5 structure internally b - Flat Corrective Wave (3-3-5) Consist of three sub-waves against the main trend and labeled as ABC. The labelling is the same as ZigZag, the difference is in internal structure. Flat is a 3-3-5 structure internally and differs from ZigZag in the subdivision of the wave A. There are three different types of Flats: Regular, Running and Expanded Flats. c - Triangle Corrective Wave (3-3-3-3-3) Triangle formations are corrective patterns that are bound by either converging or diverging trend lines. Corrective structure consist of five sub-waves labelled as ABCDE, subdivision of a triangle is 3-3-3-3-3 Triangle corrective waves types can be listed as : Ascending, Descending, Symmetrical, and Expanding Triangles d - Complex Corrective Waves - Double (3-3-3) and Tripple Three (3-3-3-3-3) Double three is a sideways combination of two corrective patterns, labelled as WXY Triple three is a sideways combination of three corrective patterns, labelled as WXYXZ Please refer to Difference between ABC and WXY , for further details and structures of Complex Corrective waves as well as the differences between Simple corrective structures The Elliott Wave Theory provides constructive insight that can help technical analysts monitor and understand the movements of financial asset prices over the short and long term. Please note that these patterns do not provide any kind of certainty about future price movement, but rather, serve in helping to order the probabilities for future market action. They can be used in conjunction with other forms of technical and fundamental analysis, including technical indicators, to identify specific opportunities. Technical Indicators Ocsillators to detect divergencies (includes 15 different ocsillator) : OSCs Elliott Wave Oscillator : EWO Auto Fibonacci Retrecment/Extentions : Auto Fib Retrecment-Extentions Volume Profile : Volume-Profile-and-Volume-Indicator Other indicators that are referred among elliott wave practitioners Pitchforks ( how to apply ), Pitchfans , FibFans ( how to apply ), FibChannels ( how to apply ), FibTime , Linear-Regression-Channel ( what it is ), Raff Regression Channel ( what it is )
Education
by dgtrd
30
Elliott Wave Theory - Motive WavesElliott Wave Theory , developed by Ralph Nelson Elliott, proposes that the seemingly chaotic behaviour of the different financial markets isn’t actually chaotic. In fact the markets moves in predictable, repetitive cycles or waves and can be measured and forecast using Fibonacci numbers. The very basics of Elliott Wave Theory ; The Elliott wave principle at its core consists of motive waves, movement in the direction of the larger trend, and corrective waves, any correction against the main trend. Market prices alternate between a motive phase, and a corrective phase on all time scales of trend. Wave analysis offers insights into trend dynamics and helps you understand price movements in a much deeper way and offers the trader a level of anticipation and/or prediction when searching for trading opportunities Motive Waves Motive waves in general can be categorized as Impulse and Diagonal waves a- Impulse Waves Impulse waves consist of five sub-waves in the same direction as the trend of one larger degree. Elliott proposed that financial price trends, the waves, are created by investor psychology or sentiment and the waves can be measured and forecast using Fibonacci numbers . In adition to using fibonacci retracments and extetion to forcast probable targets, channeling technique is also presented, where channeling technique is used to forecast wave formations and targets using price action . Disclaimer: besides the rules, the below presented figures displays guidelines that elliott waves may form. Guidelines are tendencies, not set in stone rules b- Diagonal Waves (Wedges) Another form of motive waves are diagonals, they appear in the beginning of a larger trend, called leading diagonal and at the end of the larger trend, called ending diagonal They are five-wave structures in the direction of the main trend within which wave 4 almost always moves into the price territory of (overlaps) wave 1, breaking the rule of impulse motive wave Diagonals take a wedge shape within two converging lines Elliott was careful to note that these patterns do not provide any kind of certainty about future price movement, but rather, serve in helping to order the probabilities for future market action. They can be used in conjunction with other forms of technical and fundamental analysis, including technical indicators, to identify specific opportunities. Technical Indicators Using various technical indicators among elliott wave practitioners is not so common, except few, probably the common one used is a kind of momentum indicator, such as RSI or MACD , to detect divergencies Fibonacci retracement and extension drawing tools are essential for elliott wave practitioners. In todays computerized era many of the darawing tool's auto indicator versions are availabe on the trading platforms, such as Auto Fib ( where and how tp apply ) Elliott Wave Oscillator ( EWO ) , is inspired by the Elliott Wave principle and helps counting the waves Volume and Volume Profile ( Vol / Vol Profile ) combined with price action is esential in technical anlaysis and for elliott wave practitioners helps to identify impulse and correction phases Other indicators that are referred among elliott wave practitioners Pitchforks ( how to apply ), Pitchfans , FibFans ( how to apply ), FibChannels ( how to apply ), FibTime , LinReg Channel ( what it is ), Raff Regression Channel ( what it is ), etc
Education
by dgtrd
37
Difference between ABC and WXY Elliott Corrective WavesElliott Wave Principle , developed by Ralph Nelson Elliott, proposes that the seemingly chaotic behaviour of the different financial markets isn’t actually chaotic. In fact the markets moves in predictable, repetitive cycles or waves and can be measured and forecast using Fibonacci numbers. Elliott wave predicts that the prices of the traded financial instrument will evolve in waves: five impulsive waves and three corrective waves. This educational article aims to present only the difference between ABC and WXY corrective waves and will not cover other wave paterns (triangle corrective waves , or any of the impulsive (motive) wave structures) Both ABC and WXY corrective waves are patterns made of 3 waves (swings) corrective structure and this similarity mostly confuses practitioners while labeling. The main difference between the two is in the internal subdivision of the waves (legs) Each pattern has its own rules, where ABC could be - a ZigZag patern that have 5-3-5 internal stracture - a Flat (Regular, Running or Expanded Flat) patern that have 3-3-5 internal stracture while WXY patern is made of 3-3-3 internal stracture. WXY is combination of two corrective patterns , hence often called as a double three or a double correction. Each wave W, X or Y could have almost any corrective structures (double three, triple three, zigzag, flat, triangle (wave W can’t be a triangle structure), or any complex combinations) WXY is also know as 7 swing stracture even it is made of 3-3-3 internal swings, the X-wave is considered as a connector wave because it binds two corrective waves and is counted as 1, W and Y waves are counted as 3 and hence 7 swings WXYXZ is combination of three corrective patterns, hence often called as a triple three, a triple correction or 11 swing, WXY rules applies also for WXYXZ Tips : An elliott wave practitioner in general may assume a trend continuation once an ABC correction is completed. In todays market complex corrections are more common than simple corrections, the markets are in a correction phase nearly %70-%80 of the time. Hence, once an ABC correction is completed a trend continuation failure must be considered in the trading plan and in fact, this failure is the main characteristic of the X-wave, a trend that has failed. Once X wave is completed another corrective structures is to be expected live examples (not financial advice, just experimental analysis) GOLD BTC Below is a link to Elliott Wave Oscillator study, where the "EWO with Signals" indicator helps traders to track the waves (in lower degrees). It provides insight to traders to observe when an existing wave ends and when a new one begins
Education
by dgtrd
43
Stop Loss HuntingInstitutional investors have a profound impact on financial instruments prices because of their large volume trading activities. They can greatly impact the price of financial instruments, however making a material impact and hence decreasing liquidity to the point where there may be no one to take the other side of the trade is not something they desire. To fill their large in size orders with better price levels, Institutional investors need liquidity, they cannot just enter a trade at once, but they split trades over time and slowly have to build a position by hunting for liquidity. One of their strategic approach and the best way to get liquidity without making a material impact of the price and get filled in better price levels is Stop Loss Hunting . A stop-loss order is an order placed to buy or sell a financial instrument when it reaches a certain price with the aim to limit loss on a position or protect profits. Where do we usually place our stop orders? For a long trade example, usually we set them just below a support level, a trend line, a longer-term moving average, previous day low or a specific ATR percentage etc, which are highly predictable. Institutional investors simply need to trigger stop loss orders of thousand of traders and since a key level is borken new traders joins by entering positions, making them take trades in the wrong direction, which as a result creates a huge supply with enough liquidity to absorb Institutional investor's demand with better prices Some examples Stop Loss houting can be observed frequently
Editors' picks
FX_IDC:XAUUSDEducation
by dgtrd
212
Heikin Ashi candlesticks overview Heikin Ashi candlesticks gives a smoother appearance by reducing some of the market noise, hence making it easier to spots trends and reversals. There is a tendency with Heikin-Ashi for the candles to stay red during a downtrend and green during an uptrend Heikin-Ashi calculation uses a formula based on two-period averages How to read Heikin-Ashi candles Green candles indicate an uptrend and in case with no lower shadows the move can be assumed a strong uptrend Red candles indicate a downtrend and if with no higher shadows a strong downtrend Candles with a small body surrounded by upper and lower shadows indicate a potential trend change or trend pause the Heikin-Ashi candlesticks do not show the exact open and close prices for a particular time period because they are averaged hence who need to exploit quick price moves may find Heikin-Ashi charts are not responsive enough to be useful For whom interested with Higher Time Frame Candle presentation on lower time frame chart including Heikin-Ashi candles are invited to check HTF Candles
Editors' picks
Education
by dgtrd
147
Raff Regression Channel (RRC) The Raff Regression Channel (RRC) The Raff Regression Channel , developed by Gilbert Raff, is based on a linear regression, which is the least-squares line-of-best-fit for a price series, with evenly spaced trend lines above and below . The width of the channel is set by determining the high or low that is the furthest from the linear regression. Because the channel distance is based off the largest pullback or highest peak within a trend, for effectively drawing and using a Raff Regression Channel it is recommend/required that a Raff Regression Channel is applied to “mature” trends. Once The Raff Regression Channel is drawn, covering an existing trend, EXTENSION LINES are drawn to identify support, resistance, reversal points, mean reversion Effectively drawing and using a Raff Regression Channel The trend is up as long as prices rise within this channel. An uptrend may be reversing (not always, but likely) when price breaks below the channel extension . The trend is down as long as prices decline within the channel. Similarly, a downtrend may be reversing (not always, but likely) when price breaks above the channel extension . Moves outside the channel extensions can be indication of a reversal or can denote overbought or oversold conditions breakout example reversal example █  LINK to AUTOMATED INDICATOR VERSION of RAFF REGRESSION CHANNEL █  OTHER CHANNEL CONSEPTS Linear Regression Channels, Fibonacci Channels, Andrews’ Pitchfork,
Editors' picks
FX_IDC:XAUUSDEducation
by dgtrd
52
What Linear Regression Channels are? Introduction to LinReg IndiLinear Regression Channels A brief info of what Linear Regression Channels are and introduction to Linear Regression Channel / Curve / Slope Indicator Study and one example where Linear Regression Channels are involved with other indicators Pick a Pivot Brief Info Linear Regression Channels are useful measure for technical and quantitative analysis in financial markets that help identifying trends and trend direction. The use of standard deviation gives traders ideas as to when prices are becoming overbought or oversold relative to the long term trend The basis of a linear regression channel    Linear Regression Line – is a line drawn according to the least-squares statistical technique which produces a best-fit line that cuts through the middle of price action, a line that best fits all the data points of interest. The resulting fitted model can be used to summarize the data, to predict unobserved values from the same system. Linear Regression Line then present basis for the channel calculations The linear regression channel    2. Upper Channel Line – A line that runs parallel to the Linear Regression Line and is usually one to two standard deviations above the Linear Regression Line.    3. Lower Channel Line – This line runs parallel to the Linear Regression Line and is usually one to two standard deviations below the Linear Regression Line. Unlike Fibonacci Channels and Andrew’s Pitchfork, Linear Regression Channels are calculated using statistical methods, both for the regression line (as expressed above) and deviation channels. Upper and Lower channel lines are presenting the idea of bell curve method, also known as a normal distribution and are calculated using standard deviation function. A standard deviation include 68% of the data points, two standard deviations include approximately 95% of the data points and any data point that appears outside two standard deviations is very rare. It is often assumed that the data points will move back toward the average, or regress and channels would allow us to see when a security is overbought or oversold and ready to revert to the mean please note : Over time, the price will move up and down, and the linear regression channel will experience changes as old prices fall off and new prices appear █  Linear Regression Study Features   Linear Regression Channel     - Linear regression line as basis     - Customizable multiple channels based on Standard Deviation     - ALERTs for the channel levels   Linear Regression Curve     - Linear regression curve as basis     - Optional : Bands based on Standard Deviation or Volatility (ATR). Bands are applied with fixed levels 1, 2 and 3 times StdDev or ATR away from the curve   Linear Regression Slope     - Optional : Up/Down slope arrows for a used defined period █  Volume / Volatility Add-Ons   High Volatile Bar Indication   Volume Spike Bar Indication   Volume Weighted Colored Bars
Education
by dgtrd
9
fibonacci extensions / retracements - how to and where to applyFibonacci tools are in general a method of technical analysis for determining probable support and resistance levels calculated using ratios (23.6%, 38.2%, 61.8%, and 78.6%) that are derived from Fibonacci sequence (0, 1, 1, 2, 3, 5, 8, 13, 21, …). Fibonacci levels are presented in variety of forums, such as horizontal lines, vertical lines, trend channels , fans , arcs, circles, even a spiral. Fibonacci levels also arise in other ways within technical analysis, for example, one of the best known and widely used Elliott Wave theory In this article we will have a closer look to Fibonacci Extensions and Fibonacci Retracements Fibonacci Retracement and Fibonacci Extension levels are in the form of horizontal lines and are calculated in almost similar manner with slight difference. Even tough they look like similar to each other they are quite different and serve for different purpose.   👉 Fibonacci retracement levels indicate how deep a retracement could be, that is, aims to measure the pullbacks within a trend   👉 Fibonacci extension levels indicate how far the next price wave could move following a pullback, that is, aims to measure the impulse waves in the direction of the trend How to apply Fibonacci Retracement and Fibonacci Extension These levels should not be relied on exclusively,Reversals can be confirmed with candlesticks, momentum indicators, volume or chart patterns. Here are the links of educational posts and indicator versions of the Fibonacci Tools that I made, you are kindly invited to check Auto Fib Channels, besides Auto Fib Channels this study include Auto Fib Retracement, Auto Fib Extension and Auto ZigZag indicator Auto Pitchfork, is advised due to its similarities with Auto Fib Channels and also it includes Auto Fib Retracement and Auto ZigZag indicator Auto Fib Speed and Resistance Fans, is an important tool to identify probable support and resistance and especially a powerful tool to identify reversals and retracement levels. The study presents an alternative approach of drawing the fans which enables a visualization quite similar to Gann Box. Auto Fib Retracement and Auto ZigZag indicator is also available Related educational posts that presents a quick guide of the drawing tools as well as introductions for their automatic indicator versions how to apply pitchfork and auto pitchfork study : how to apply fibonacci fans and auto FibFans study : how to apply fib channels and auto fib channels study :
Editors' picks
Education
by dgtrd
82
how to apply fib channels and auto fib channels studyThe Fibonacci Channel is a technical analysis tool that is used to estimate support and resistance levels based on the Fibonacci numbers. It is a variation of the Fibonacci retracement tool, except with the channel the lines run diagonally rather than horizontally. The tool is used to aid in identifying where support and resistance may develop in the future. If the uptrend is expected to continue, the 100%, 161.8%, and other higher levels are potential price targets. The same concept applies to downtrends if a downtrend is expected to continue In an uptrend, the zero-line is like a normal trendline, helping to assess the overall trend direction. If the price falls below it, it may need to be adjusted based on more recent price action, or it could signal that the uptrend is over and that the price is breaking lower. Similarly in a downtrend, the zero-line also acts like a trendline. When the price is below it, it helps confirm the downtrend. If the price moves above it, the indicator may need to be redrawn or the price is moving higher out of its downtrend Difference Between Fibonacci Channels and Andrew's Pitchfork Both these indicators attempt to predict future support and resistance levels based on price levels from the past. Fibonacci channels attempt to do this with percentages of a selected price move. Those percentages are then projected out into the future. Andrew's Pitchfork is simpler in some ways as the angled lines are based on three price levels selected the trader and then extended out into the future. Step By Step Applying Fibonacci Channels Auto Fib Channels ʙʏ DGT ☼☾ LINK to Auto Fib Channels ʙʏ DGT ☼☾
Editors' picks
Education
by dgtrd
178
how to apply fibonacci fans and auto FibFans studyFibonacci Speed and Resistance Fan is an analytical drawing tool used to indicate the support and resistance levels of an existing trend and the price level at which possible changes in the trend may occur. A Fibonacci Speed Resistance Fan consists of a trend line drawn between two extreme points - a trough and opposing peak or a peak and opposing trough - on which a set of sequential speed resistance lines are drawn above (which represents time) and below (which represents price). These lines are drawn based on time/price percentages of the distance between the beginning and the end of the trend line. Speed resistance lines not only help to measure trend corrections but also measure the speed of a trend (the rate at which a trendline ascends or descends) Traders can use the lines of the Fibonacci Speed and Resistance Fan to predict key points of resistance or support, at which they might expect price trends to reverse. Once a trader identifies patterns within a chart, they can use those patterns to predict future price movements and future levels of support and resistance. Traders use the predictions to time their trades Nobody appears to know whether Fibonacci tools work because markets exhibit some form of natural pattern or because many investors use Fibonacci ratios to predict price movements, making them a self-fulfilling prophecy. In any event, key support and resistance levels tend to occur frequently at the 61.8-percent level (0.618) on both uptrends and downtrends Fibonacci Speed and Resistance Fans vs. Gann Fans Gann fans are another form of technical analysis based on the idea that the market is geometric and cyclical in nature. A Gann fan consists of a series of trend lines called Gann angles. Instead of relying on Fibonacci's golden ratio of 1.618, Gann believed the 45-degree angle (geometric angles of time versus price) to be most important. The Gann fan subsequently draws additional angles at 82.5, 75, 71.25, 63.75, 26.25, 18.75, 15, and 7.5 degrees. These angles are superimposed over a price chart to show potential support and resistance levels Step By Step Applying Fibonacci Speed and Resistance Fan Some interpretation examples: Example of how to identify if the move is Reversal or Retracement All the above are now available with the Auto Fibonacci Speed and Resistance Fans Study ʙʏ DGT ☼☾, LINK to Auto Fibonacci Speed and Resistance Fans Study
Education
by dgtrd
40
how to apply pitchfork and auto pitchfork studyPitchfork , is a technical indicator for a quick and easy way for traders to identify possible levels of support and resistance of an asset's price. It is presents and based on the idea that the market is geometric and cyclical in nature   * Developed by Alan Andrews, so sometimes called Andrews’ Pitchfork   * It is created by placing three points at the end of previous trends   * Schiff and Modified Pitchfork is a technical analysis tool derived from Andrews' Pitchfork In general, traders will purchase the asset when the price falls near the support of either the center trendline or the lowest trendline. Conversely, they'll sell the asset when it approaches the resistance of either the center line or the highest trendline. █  Usage Tips :   * Andrews' Pitchfork (Original) best fit in a Strong Trending Market   * Schiff and Modified Pitchfork better with Correcting or Sideways Market. Modified Pitchfork is almost identical to a Parallel Chanel Step By Step Applying Pitchfork Auto Pitchfork Study ʙʏ DGT ☼☾ Besides Auto Pitchfork Pivot, Support and Resistance plotting, study also includes Auto Fibonacci Retracement Levels and Zig Zag indicator Link to the Auto Pitchfork ʙʏ DGT ☼☾ :
Editors' picks
Education
by dgtrd
198
gold forming double correction, does it?we are in correction phase, where the price takes a long time to do almost absolutely nothing! especially for the most part, double threes and triple threes are horizontal in character correction patterns are usually hard to track, they do follow rules but yet not so easy to identify what is forming in advance. the question is "what is the correction pattern forming for gold". the drawing on the chart is an attempt to present some possible scenarios of correction patterns forming finally, correction patterns can be simply considered as a pause within the larger operating trend and we expect trend continuation once the correction patterns are over
FX_IDC:XAUUSD
by dgtrd
20
volume : main force behind major market moves Volume is one piece of information that is often neglected, however, learning to interpret volume brings many advantages and could be of tremendous help when it comes to analyzing the markets. In addition to technicians, fundamental investors also take notice of the numbers of shares traded for a given security. Volume analysis can help to confirm the existence, or a continuation, of a trend - If trading volume increases, prices generally move in the same direction - or trend reversal - If there is no relationship between the trading volume and the price of a security, this signals weakness in the current trend and a possible reversal. Essentially, trading volume can legitimize a security's price action, which can then aid an investor in their decision to either buy or sell that security. So let’s begin by having a closer look at what volume is and how it can help traders! What is Volume? The volume represents all the recorded trades for a security that occurs in a given time interval. It is a measurement of the participation, enthusiasm, and interest in a given security. Think of volume as the force that drives the market. Volume substantiates, energizes, and empowers price. When volume increases, it confirms price direction; when volume decreases, it contradicts price direction. In theory, increases in volume generally precede significant price movements. However, If the price is rising in an uptrend but the volume is reducing or unchanged, it may show that there’s little interest in the security, and the price may reverse. A high volume usually indicates more interest in the security and the presence of institutional traders. However, a rapidly rising price in an uptrend accompanied by a huge volume may be a sign of exhaustion. Traders usually look for breaks of support and resistance to enter positions. When security break critical levels without volume, you should consider the breakout suspect and prime for a reversal off the highs/lows Volume spikes are often the result of news-driven events. Volume spike will often lead to sharp reversals since the moves are unsustainable due to the imbalance of supply and demand Important note: there’s no centralized exchange where trades are recorded, so the volume data represents what happens at a particular exchange only In most charting platforms, the volume indicator, one of the oldest market indicator, is presented as color-coded bars, green if the security closes up and red if the security closed lower, where the height of the bars show the amount of the recorded trades. Additionally, there are many custom studies, available on trading platforms as it is the case for @TradingView, where the volume information is presented with added additional insight, such as adding volume moving average, presenting relative volume with four colored histogram What Else? Apart from the volume itself, your ability to assess what volume is telling you in conjunction with price action can be a key factor in your ability to turn a profit in the market. It makes little sense to analyze the volume alone. To correctly interpret the volume data, it shall be seen in the light of what the price is doing. there are a lot of other indicators that are based on the volume data as well as price action. Analyzing those volume indicators has always helped traders and investors to better understand what is happening in the market. Here are some of the commonly used volume indicators: • On Balance Volume • Money Flow Index • Chaikin Money Flow Shortly; On Balance Volume The On Balance Volume indicator, is a technical analysis indicator that relates volume flow to changes in a security’s price. It uses a cumulative total of positive and negative trading volume to predict the direction of price. The OBV is a volume-based momentum oscillator, so it is a leading indicator — it changes direction before the price Granville, creator of OBV, proposed the theory that changes in volume precede price movements in a measurable way. He believed that volume was the main force behind major market moves and thought of OBV’s prediction of price changes as a compressed spring that expands rapidly when released. It is believed that the OBV shows the interactions between the institutional and retail traders in the market If the price makes a new high, the OBV should also make a new high. If the OBV makes a lower high when the price makes a higher high, there’s a classical bearish divergence — indicating that only the retail traders are buying. Another type of bearish divergence occurs when the price remains relatively quiet and fails to make a higher high but the OBV soars higher than the previous high — indicating that the institutional traders are accumulating short positions. On the other hand, if the price makes a lower low and the OBV makes a higher low, there is a classical bullish divergence, showing that the institutional traders don’t believe in that move Money Flow Index The Money Flow Index indicator (MFI) is a tool used in technical analysis for measuring buying and selling pressure. This is done through analyzing both price and volume. When the MFI rises, this indicates an increase in buying pressure. When it falls, this indicates an increase in selling pressure. The Money Flow Index can generate several signals, most notably: overbought and oversold conditions, divergences, and failure swings The MFI is essentially the RSI with the added aspect of volume Chaikin Money Flow The Chaikin Money Flow indicator (CMF) is a volume indicator that measures the money flow volume over a chosen period. The money flow volume is a measure of the volume and where the price closed relative to the trading session’s range. It comes from the idea that buying pressure is indicated by a rising volume and recurrent closes in the upper part of the session’s price range while selling pressure is demonstrated by an increasing volume and repeated closes in the lower part of the price range. Both buying and selling pressures are accompanied by an increase in volume, but the location of the closing prices are in accordance with the direction of price There are many others, that you may be interested to check further • Price-Volume Trend (PVT) • Volume Price Confirmation Indicator (VPCI), Dormeier’s awarded study • Ease of movement • Accumulation/distribution, base for Chaikin Money Flow • Volume-Weighted Average Price • Volume-Weighted Price Bars, present if price movements are supported by Volume • … Additional example custom studies to the one presented with the idea Conclusion Volume analysis is very important to traders and investors. There are numerous volume indicators out there, but we have discussed some of the commonest ones. Study them and add them to your analysis tools to improve your trading.
by dgtrd
20
Evolution of MACDMoving Average Convergence Divergence – MACD The most popular indicator used in technical analysis, the moving average convergence divergence (MACD), created by Gerald Appel. MACD is a trend-following momentum indicator, designed to reveal changes in the strength, direction, momentum, and duration of a trend in a financial instrument’s price Historical evolution of MACD, - Gerald Appel created the MACD line, - Thomas Aspray added the histogram feature to MACD - Giorgos E. Siligardos created a leader of MACD MACD employs two Moving Averages of varying lengths (which are lagging indicators) to identify trend direction and duration. Then, MACD takes the difference in values between those two Moving Averages (MACD Line) and an EMA of those Moving Averages (Signal Line) and plots that difference between the two lines as a histogram which oscillates above and below a center Zero Line. The histogram is used as a good indication of a security's momentum. Mathematically expressed as; macd = ma(source, fast_length) – ma(source, slow_length) signal = ma(macd, signal_length) histogram = macd – signal where exponential moving average (ema) is in common use as a moving average (ma) fast_length = 12 slow_length = 26 signal_length = 9 The MACD indicator is typically good for identifying three types of basic signals; Signal Line Crossovers A Signal Line Crossover is the most common signal produced by the MACD. On the occasions where the MACD Line crosses above or below the Signal Line, that can signify a potentially strong move. The standard interpretation of such an event is a recommendation to buy if the MACD line crosses up through the Signal Line (a "bullish" crossover), or to sell if it crosses down through the Signal Line (a "bearish" crossover). These events are taken as indications that the trend in the financial instrument is about to accelerate in the direction of the crossover. Zero Line Crossovers Zero Line Crossovers occur when the MACD Line crossed the Zero Line and either becomes positive (above 0) or negative (below 0). A change from positive to negative MACD is interpreted as "bearish", and from negative to positive as "bullish". Zero crossovers provide evidence of a change in the direction of a trend but less confirmation of its momentum than a signal line crossover Divergence Divergence is another signal created by the MACD. Simply, divergence occurs when the MACD and actual price are not in agreement. A "positive divergence" or "bullish divergence" occurs when the price makes a new low but the MACD does not confirm with a new low of its own. A "negative divergence" or "bearish divergence" occurs when the price makes a new high but the MACD does not confirm with a new high of its own. A divergence with respect to price may occur on the MACD line and/or the MACD Histogram Moving Average Crossovers , another hidden signal that MACD Indicator identifies Many traders will watch for a short-term moving average to cross above a longer-term moving average and use this to signal increasing upward momentum. This bullish crossover suggests that the price has recently been rising at a faster rate than it has in the past, so it is a common technical buy sign. Conversely, a short-term moving average crossing below a longer-term average is used to illustrate that the asset's price has been moving downward at a faster rate and that it may be a good time to sell. Moving Average Crossovers in reality is Zero Line Crossovers, the value of the MACD indicator is equal to zero each time the two moving averages cross over each other. For easy interpretation by trades, Zero Line Crossovers are simply described as positive or negative MACD False signals Like any forecasting algorithm, the MACD can generate false signals. A false positive, for example, would be a bullish crossover followed by a sudden decline in a financial instrument. A false negative would be a situation where there is bearish crossover, yet the financial instrument accelerated suddenly upwards What is “MACD-X” and Why it is “More Than MACD” In its simples form, MACD-X implements variety of different calculation techniques applied to obtain MACD Line, ability to use of variety of different sources, including Volume related sources, and can be plotted along with MACD in the same window and all those features are available and presented within a single indicator, MACD-X Different calculation techniques lead to different values for MACD Line, as will further discuss below, and as a consequence the signal line and the histogram values will differentiate accordingly. Mathematical calculation of both signal line and the histogram remain the same. Main features of MACD-X ; 1- Introduces different proven techniques applied on MACD calculation, such as MACD-Histogram, MACD-Leader and MACD-Source, besides the traditional MACD (MACD-TRADITIONAL) • MACD-Traditional, by Gerald Appel It is the MACD that we know, stated as traditional just to avoid confusion with other techniques used with this study • MACD-Histogram, by Thomas Aspray The MACD-Histogram measures the distance between MACD and its signal line (the 9-day EMA of MACD). Aspray developed the MACD-Histogram to anticipate signal line crossovers in MACD. Because MACD uses moving averages and moving averages lag price, signal line crossovers can come late and affect the reward-to-risk ratio of a trade. Bullish or bearish divergences in the MACD-Histogram can alert chartists to an imminent signal line crossover in MACD The MACD-Histogram represents the difference between MACD and its 9-day EMA, the signal line. Mathematically, macdx = macd - ma(macd, signal_length) Aspray's contribution served as a way to anticipate (and therefore cut down on lag) possible MACD crossovers which are a fundamental part of the indicator. Here come a question, what if repeat the same calculations once more (macdh2 = macdh - ma(macdh, signal_length), will it be even better, this question will remain to be tested • MACD-Leader, by Giorgos E. Siligardos, PhD MACD Leader has the ability to lead MACD at critical situations. Almost all smoothing methods encounter in technical analysis are based on a relative-weighted sum of past prices, and the Leader is no exception. The concealed weights of MACD Leader are such that more relative weight is used in the more recent prices than the respective weights used by the components of MACD. In effect, the Leader expresses more changes in average price dynamics for the recent price movement than MACD, thus eventually leading MACD, especially when significant trend changes are about to take place. Siligardos creates two less-laggard moving averages indicators in its formula using the same periods as follows Indicator1 = ma(source, fast_length) + ma(source - ma(source, fast_length), fast_length) Indicator2 = ma(source, slow_length) + ma(source - ma(source, slow_length), slow_length) and then take the difference: Indicator1 - Indicator2 The result is a new MACD Leader indicator macdx = macd + ma(source - fast_ma, fast_length) - ma(source - slow_ma, slow_length) • MACD-Source, a custom experimental interpretation of mine, MACD Source, presents an application of MACD that evaluates Source/MA Ratio, relatively with less lag, as a basis for MACD Line, also can be expressed as source convergence/divergence to its moving average. Among the various techniques for removing the lag between price and moving average (MA) of the price, one in particular stands out: the addition to the moving average of a portion of the difference between the price and MA. MACD Source, is based on signal length mean of the difference between Source and average value of shot length and long length moving average of the source (Source/MA Ratio), where the source is actual value and hence no lag and relatively less lag with the average value of moving average of the source . Mathematically expressed as, macdx = ma(source - avg( ma(source, fast_length), ma(source, slow_length) ), signal_length) MACD Source provides relatively early crossovers comparing to MACD and better momentum direction indications, assuming the lengths are set to same values For further details, you are invited to check the following two studies, where the first seeds were sown of the MACD-Source idea Price Distance to its Moving Averages study, adapts the idea of “Prices high above the moving average (MA) or low below it are likely to be remedied in the future by a reverse price movement", presented in an article by Denis Alajbeg, Zoran Bubas and Dina Vasic published in International Journal of Economics, Commerce and Management First MACD like interpretation comes with the second study named as “P-MACD”, where P stands for price, P-MACD study attempts to display relationship between Price and its 20 and 200-period moving average. Calculations with P-MACD were based on price distance (convergence/divergence) to its 200-period moving average, and moving average convergence/divergence of 20-period moving average to 200-period moving average of price. Now as explained above, MACD Source is a one adapted with traditional MACD, where Source stands for Price, Volume Indicator etc, any source applicable with MACD concept 2- Allows usage of variety of different sources, including Volume related indicators The most common usage of Source for MACD calculation is close value of the financial instruments price. As an experimental approach, this study will allow source to be selected as one of the following series; • Current Close Price (close) • Average of High, Low, and Close Price (hlc3) • On Balance Volume (obv) • Accumulation Distribution (accdist) • Price Volume Trend (pvt) Where, -Current Close Price and Average of High, Low, and Close Price are price actions of the financial instrument -Accumulation Distribution is a volume based indicator designed to measure underlying supply and demand -On Balance Volume (OBV), is a momentum indicator that measures positive and negative volume flow -Price Volume Trend (PVT) is a momentum based indicator used to measure money flow 3- Can be plotted along with MACD in the same window using the same scaling Default setting of MACD-X will display MACD-Source with Current Close Price as a source and traditional MACD can be plotted eighter as a companion of MACD-X or can be selected to be plotted alone. Applying both will add ability to compare, or use as a confirmation of one other In case, traditional MACD Is plotted along with MACD-X to avoid misinterpreting, the lines plotted, the area between MACD-X Line and Signal-X Line is highlighted automatically, even if the highlight option not selected. Otherwise highlight will be applied only if that option selected 4- 4C Histogram Histogram is plotted with four colors to emphasize the momentum and direction 5- Customizable Additional to ability of selecting Calculation Method, Source, plotting along with MACD, there are few other option that allows users to customize the MACD-X indicator Lengths are configurable, default values are set as 12, 26, 9 respectively for fast, slow and smoothing length. Setting lengths to 8,21,5 respectively Is worth checking, slower length moving averages will lead to less lag and earlier reaction to price actions but yet requires a caution and back testing before applying Highlight the area between MACD-X Line and Signal-X Line, with colors emphasising the direction Label can be added to display Calculation Method, Source and Length settings, the aim of this label is to server only as a reminder to trades to be aware of settings while they are occupied with charts, analysis etc. Here comes another question, which is of more importance having the reminder or having the indicators with multi timeframe feature? Build-in Multi Time Frame features of Pine is not supported when labels and lines introduced in the script, there are other methods but brings complexity. To be studied further, this version will be with labels for time being. EPILOGUE MACD-X is an alternative variant of MACD, the insight/signals provided by MACD are also applicable to MACD-X with early and clear warnings for the changes in the trend. If MACD is essential to your analysis, then it is my guess that after using the MACD-X for a while and familiarizing yourself with its unique character and personality, you will make it an inseparable companion to other indicators in your charts. The various signals generated by MACD/MACD-X are easily interpreted and very few indicators in technical analysis have proved to be more reliable than the MACD, and this relatively simple indicator can quickly be incorporated into any short-term trading strategy
Education
by dgtrd
22
Feedback, concept common in Electronic EngineeringAn experimental application of feedback concept common in Electronic Engineering, attempting to present additional value/insight to the Indicators The above chart presents example of negative and positive feedback applied on momentum adjusted moving average (MaMA) and rate of return (RoR). Feedback concept in Electronic Engineering Negative feedback (or balancing feedback) is applied to reduce the fluctuations, whether caused by changes in the source or by other disturbances. The applied negative feedback can improve performance, gain stability, linearity and reduce sensitivity to parameter variations due to environment. Whereas positive feedback tends to lead to instability via exponential growth, oscillation or chaotic behaviour Mathematical approach explained in description of "Rate of Return (RoR) by DGT" added as link to this idea, and an additional application of feedback efect presented in "Momentum adjusted Moving Average by DGT" also linked to the idea
by dgtrd
2