Five of the Best Volume IndicatorsUnderstanding volume and volume indicators is crucial for anyone looking to understand the financial markets. This article offers traders insights into the five of the best volume indicators, allowing them to gauge market trends, momentum, and potential reversals.
Understanding Volume and Volume Indicators in Trading
In trading, volume refers to the quantity of a financial instrument, such as shares or contracts, that are bought and sold within a specified time frame. Often displayed as a bar graph beneath the price chart, volume shows traders the strength or weakness of price movements. A surge in volume generally indicates strong interest, which can validate a trend, while low volume might signify a lack of conviction or impending reversal.
Volume indicators are computational tools designed to assess volume data. They work alongside traditional price indicators to offer a fuller understanding of market behaviour. They can help traders identify changes in momentum and shifts in market sentiment, acting as a secondary measure to confirm signals from price action.
Best Volume Indicators List
With an understanding of how volume works and why it’s important, let’s take a closer look at the list of volume indicators favoured by traders.
To gain the best understanding of how these volume technical indicators work, head over to FXOpen’s free TickTrader platform. There, you’ll find each indicator described waiting for you.
On-Balance Volume (OBV)
On-Balance Volume (OBV) is a powerful tool that gives traders a cumulative measure of buying and selling activity in a financial asset. Originating from the idea that volume precedes price movements, the OBV adds the period’s trading volume to a running total when the asset closes higher than the previous period and subtracts it when the asset closes lower. This running total serves as a way to quantify the force or pressure of buyers and sellers.
Traders use the OBV line, usually plotted below the price chart, to confirm trends and identify potential reversals. When the OBV line rises, it signifies dominant buying pressure, often reinforcing an upward trend in the asset's price. On the other hand, when the OBV line is in decline, it signals that selling pressure outweighs buying pressure, which may herald a downward trend. OBV divergences – when the OBV trend conflicts with the asset's price trend – are considered strong indicators of an impending reversal.
Accumulation/Distribution Line (A/D Line)
The Accumulation/Distribution Line (A/D Line) serves as a momentum indicator that tracks the flow of capital into or out of an asset by evaluating both price and volume. Unlike the On-Balance Volume, which uses daily up or down volume in its calculation, the A/D Line utilises the asset's closing price relative to its high-low range for the period, along with the period's volume. This results in a more nuanced representation of buying and selling pressure.
Traders often examine the trajectory of the A/D Line to confirm existing trends or to spot emerging ones. An ascending A/D Line typically suggests a buildup of buying pressure, supporting a bullish outlook. Similarly, a declining A/D Line indicates increased selling activity, pointing toward a bearish sentiment. The A/D Line is particularly useful when used in tandem with other indicators to strengthen trading signals.
Fixed Range Volume Profile
The Fixed Range Volume Profile is a unique volume indicator that plots volume on the vertical axis of a price chart rather than the traditional horizontal display. Unlike indicators like the On-Balance Volume or the Accumulation/Distribution Line, the Fixed Range Volume Profile focuses on identifying high-volume nodes over a specified price range, typically between key swing highs and lows. It showcases where the most trading activity has occurred and helps to highlight significant support and resistance levels.
Traders use this profile to understand where the majority of trading has taken place within a set range, often revealing "value areas" where price is most likely to trade. Fixed Range Volume Profile is particularly useful for spotting imbalances in supply and demand, making it a critical tool for assessing the potential strength or weakness of future price movements.
Chaikin Money Flow (CMF)
The Chaikin Money Flow (CMF) is a volume-weighted average oscillator that takes both price and volume into account to assess money flow over a specified period. The CMF provides a snapshot over a designated time frame, commonly 20 or 21 periods. The calculation involves summing Accumulation/Distribution values and dividing them by the total volume for the same duration.
Traders use CMF to discern short-term trends and money flow direction. A positive CMF value, hovering closer to 1, usually signals bullish sentiment, indicating that money is flowing into the asset. A negative CMF value, closer to -1, suggests a bearish sentiment and a potential outflow of capital. This makes CMF a strong tool for identifying potential breakouts or breakdowns.
Money Flow Index (MFI)
The Money Flow Index (MFI), considered one of the best volume indicators for day trading, is an oscillator that offers a quick glimpse into the buying and selling pressure on an asset. It combines both price and volume to create a more comprehensive view of market sentiment. The calculation involves a typical price for each period multiplied by the volume for that period, resulting in raw money flow. The index ranges from 0 to 100, providing clear overbought or oversold signals.
Traders often use MFI to detect market extremes. A reading above 80 signifies an overbought condition, suggesting a potential downturn. A reading below 20 indicates oversold conditions, often followed by a price uptick. MFI is also proficient in spotting divergences, serving as a useful tool for predicting reversals.
The Bottom Line
In closing, volume indicators can be indispensable for traders looking to capitalise on market trends and shifts in momentum. While there are many volume indicators to choose from, it’s worth experimenting with some to enhance your trading outcomes.
To experience the power of these tools in real-time, consider opening an FXOpen account. Once you do, you’ll gain access to hundreds of markets, competitive trading costs, and lightning-fast execution speeds. Good luck!
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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The Power of the Opening Range: Mastering Trading StrategiesWelcome to my video on "Trading Using The Opening Range: The Power of the Opening Range - Mastering Trading Strategies." In this informative session, I dive into the powerful concept of utilizing the opening range to enhance your trading strategies.
Understanding the opening range is critical for successful trading, as it sets the tone for the rest of the trading day. By familiarizing yourself with this key market phase, you gain an edge in predicting potential price movements and identifying profitable entry and exit points.
In this video, I walk you through various techniques for effectively utilizing the opening range in your trading decisions. I discuss how to interpret price action during this phase, identify key support and resistance levels, and spot profitable breakouts or pullbacks. By mastering these strategies, you can significantly increase your chances of profitable trades.
I provide step-by-step guidance on how to develop a personalized trading plan with the opening range as its foundation. Creating a well-defined plan tailored to your trading style and risk tolerance is crucial for consistent success in the dynamic world of trading.
CME_MINI:ES1! AMEX:SPY
Navigating Rocky Oct After a Crushing Sept in US EquitiesSeasonality is pervasive in financial markets. Some are benign while others are not. The “September Effect” refers to a month when equity returns gets crushed. Typically, this is followed by a volatile October.
Other well-established pattern in equity markets is the "Santa Claus Rally" which is known to occur during December. Equities go bullish with increased optimism, holiday spending, and portfolio rebalancing before the end of the year. Then, there is also the "January Effect" where small-caps tend to outperform large-caps in the early part of the year.
Essential to remember that historical trends do not guarantee future performance. This paper delves into the September Effect followed by the volatility which tends to be witnessed during the month of October.
Portfolio managers can prudently position their portfolios to gain from rising volatility and sharp price moves in October and the rest of the final quarter.
WHAT EXPLAINS POOR EQUITY RETURNS IN SEPTEMBER?
There is no exact rationale explaining why September is historically the worst month of the year for equities. Over the last 94 years, September is the only individual month that has declined at least 50% of the time.
Scott Bauer, CEO of Prosper Trading Academy surmises in an opinion note that three drivers plausibly explains this:
1. Post Summer Vacation: In the lead up to summer in Europe, average trading volumes grind lower resulting in lower volatility from June to August. When portfolio managers and investors return in September, their collective rebalancing of portfolios cause panicked exits as they create space for new holdings. This mass-exodus of selling shares pushes prices lower making September the worst month for stocks.
2. Year-end for Mutual Funds: Many mutual funds close their fiscal year in September. These funds purge their portfolios during this ill-fated month.
3. New Bond Issuances: Like equity trading activity, bond issuances ease during summer and return with vengeance and spikes in September. New issuances channel existing money into bonds forcing investors to rotate out of equities and into bonds.
SEPTEMBER US EQUITY MARKET PERFORMANCE IN THIS MILLENNIUM
Does the September effect prevail in the current millennium? Since start of 2000, September indeed is the worst month for S&P 500 stocks with average returns of -1.8%.
Surprisingly, the months with the highest occurrence of negative returns is not September but January. Over the last 23 years, January had 13 months of negative returns. June along with September rank second with 12 occurrences of negative returns during the same period.
The chart below summarises average monthly returns of S&P 500 index. Clearly, on average, September stands out as a poor performer while April is the best .
Interestingly, the S&P 500 shares tend to deliver positive returns with average upside performance of 3.22% in the fourth and final quarter of the year.
Likewise for Nasdaq 100, the September Effect is even more pronounced with index plunging 2.61% on average.
Unlike S&P 500, February (14 of 23) has the highest number of months with occurrence of negative returns. The month with the second highest occurrences of negative returns are September, June, and December with 12 of 23 years marking a negative return.
The chart below summarises average monthly returns on the Nasdaq 100 index. While September crushes Nasdaq stocks, October is the best month thus far this millennium.
October and November deliver positive returns with a pullback in December. On average, Nasdaq 100 upside performance stands at +2.44% in the fourth quarter.
A CRUSHING SEPTEMBER IS FOLLOWED BY A ROCKY OCTOBER
While September is the king of worst month for stock returns, October claims the crown for being the most volatile.
Over the last 23 years, the S&P 500 equity returns show the largest exaggeration in October. Range as used below is defined as the high minus the low of the month and then expressed as a percentage as month’s opening level.
Analysis shows that equity returns move by 9.1% in October compared to 6.9% on average for the rest of the months in the year.
Similarly, observations in Nasdaq-100 also point to exaggerated range of returns during the month of October.
Range in Nasdaq monthly returns stand at 11% in October compared to 9.2% on average for the rest of the months in the year.
Based on expected returns and volatility, investors in S&P 500 can expect large swings in returns in October as evident from the chart below.
Likewise, Nasdaq 100 investors can expect large swings in October returns based on observations over the last 23 years.
OUTLOOK FOR FINAL QUARTER OF 2023
Twenty-three years of historical observations point to a positive upward bias in equity returns for the last three months of the year. This time however, the outlook going into the final quarter is beset with head winds. Not one but five of them approaching in parallel. Risk lurks in many places.
Strong dollar. Oil skirting near $100/barrel. Resumption of student loan repayments. Record high mortgage rates driven by higher for longer policy stance. Automotive workers striking at multiple plants potentially leading to higher labour costs and automotive inflation.
Dollar is trading at 10-month highs. The US 30-year mortgage rates at record high levels unseen in 23-years. The 10-year US yield are at levels last observed during 2007.
Gathering of these dark clouds are starting to show up in the University of Michigan’s US Consumer Confidence index. Since June, American exceptionalism boosted the index to 71.73 clocking a 52-week high. However, with a raft of concerns weighing on the consumers, the index has started to drop the last two months.
HARVESTING VOLATILITY EXPANSION USING CME MICRO OPTIONS ON S&P 500 AND NASDAQ 100 INDEX
In times of uncertainty, where seasonality leans towards a bullish rally but fundamentals signal a bearish grind, portfolio managers can position to gain from volatility expansion and sharp index moves in either direction.
Options can be used to engineer a convex portfolio. Convexity in finance refers to portfolio strategies which enjoy outsized and solid gains while limiting downside risks. Convex strategies deliver non-linear returns with substantially higher gain for every unit of pain.
LONG STRADDLE USING OPTIONS ON CME MICRO E-MINI S&P 500 FUTURES
Long straddles involve holding a simultaneous long call and long put position at the same strike price for the same expiration period.
Let’s look at a hypothetic long straddle using Micro E-Mini S&P 500 Options expiring on 29th December 2023 at a strike price of 4400. The straddle pay-off is visualised in the chart below.
This trade will generate positive returns when (a) index rises above 4655, or (b) index falls below 4145, or (c) volatility expands .
The premium required for this trade (as of 2nd October 2023): (Premium for Call Option + Premium for Put Option) = (USD 631.7 + USD 636.65) = USD 1268.35.
If index rises 10% to 4840: Call option would pay out ~USD 1568 = ((4840 – 4400) x 5 – Premium for Call Option) = (440 x 5 – 126.34) while the put option would expire worthless, so, net profit would be: (Net PnL from Call leg – Net PnL from Put Leg) = (1568 – 636.65) = ~USD 932
By the same measure, the long straddle will suffer losses if the index remains flat or its moves are muted. It also loses money if volatility remains flat or contracts.
If index remains at 4400: Both options would expire worthless, so, the position would lead to a net loss of the premium paid = Loss of USD 1268.35.
LONG STRADDLE USING OPTIONS ON MICRO E-MINI NASDAQ 100 FUTURES
Let’s look at another hypothetic long straddle using Micro E-Mini Nasdaq 100 options expiring on 29th December 2023 at a strike price of 15250. The straddle pay-off is visualised in the chart below.
This trade will generate positive returns when (a) index rises above 16416, or (b) index falls below 14084, or (c) volatility expands.
The long straddle will endure losses if the index remains flat or its moves within a narrow range. It will also lose if volatility remains flat or shrinks.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Watch TLT Support at Multi-Decade LowsPrimary Chart : Monthly Chart of TLT Showing Multi-Decade Support Levels.
A fair amount of charts have been published lately on the importance of interest rates, and conversely, long-term bonds, government or high-yield bonds. One well-known TradingView publisher @scheplick went so far as to describe the chart of the US 10-year yield as the most important chart for understanding financial markets in this season. His post was entitled, " The Most Important Chart in the World :
TLT is an iShares ETF that tracks the performance, generally speaking of long-term US Treasury bonds. Specifically, iShares describes TLT as an ETF that "seeks to track the investment results of an index composed of U.S. Treasury bonds with remaining maturities greater than twenty years."
TLT has been in a severe downtrend since March 2020. Bonds yields move inversely to price, and TLT represents, in a rough sense, the price of an index or basket of long-term US government bonds with maturities greater than 20 years. So if long-term bonds remain in a downtrend, then this corresponds to the uptrend in long-term yields that has continued to break higher than anyone expects.
The Primary Chart shows TLT having reached long-term, major support at 2009-2010 lows. But a careful examination of TLT's recent lows reveals that it broke slightly below those lows, which isn't a good look for bond bulls in the long term. Supplementary Chart A shows 2009-2010 lows on a monthly chart (similar to the Primary Chart above).
Supplementary Chart A
However, TLT's reaching such a major support level, with a lower wick forming (at least initially), could imply a move higher in bonds and a concomitant move lower in yields in the near term. But remember that fighting a predominant trend (mean reversion) when it becomes extended can be one of the trades having the lowest success rate. But it can also have a higher reward rate if risk is managed well. SquishTrade does not recommend being long bonds here but rather commenting on how traders may react to major support levels in TLT's downtrend. They may be right or wrong—recall that no one likely expected long bonds to fall as far as they have, and many have been positioned long bonds since TLT was in the upper $90s!
The next few supplementary charts emphasize the nature and severity of the downtrend in long-term bonds, as represented here by TLT. The first shows TLT's 200-day simple moving average (SMA). Price is about –12.11% below the 200-day SMA as of mid-session on Friday, September 29/
Supplementary Chart B
Next, the VWAP anchored to TLT's long-term cycle high is shown in black. This confirms a long-term, and extreme downtrend in long duration US Treasury bonds. Long-term VWAPs do not always have such a noticeable downward slope. Even a bounce to $125 could present just a mean reversion (retracement) within this downtrend despite creating an uptrend on the daily or even weekly chart, which would be necessary to reach that distant level.
Supplementary Chart C
A Fibonacci channel below has been applied to a weekly TLT chart. Notice how the channel shows support right where the weekly lower wick formed—the 1.618 level of the channel. To be sure, this does not necessitate a long-term trend reversal (though anything is possible, and this could be the spot). But it does suggest the potential for a near term bounce in the shorter cycles.
Supplementary Chart D
Anyone wondering whether a long-term uptrend is still in place from the start of TLT's price history should consider the following chart. This shows decisive breaks of several long-term (and progressively accelerating) uptrends.
Supplementary Chart E
Year-end flows can be supportive of equities, though not always—note the late 2019 exception for CBOE:SPX and $NASDAQ:NDX. If some relief materializes in long-term to intermediate-term bonds, then this could coincide with some support in broader equity markets into year end, though this is by no means guaranteed.
Consider the following posts and charts on yield curve inversions posted by @SPY_Master and this author on TradingView:
These charts of yield-curve inversions should give one serious concerns about the near-term (3 months to 2 years) health of the stock market.
This post is in no way advocating any particular investing or trading strategy. Short-term trading and long-term investing can both be either devastating or profitable (or somewhere in between those extremes) to the person engaging in it.
And thanks for reading this and for your encouragement and support.
________________________________________
Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
VeChain OverviewIntroduction to VechainThor
Initially launched as a private consortium chain in 2015 to enable enterprise blockchain ecosystems, the team quickly realized the value-add of trustless, immutable, and decentralized information. With this realization, Vechain began the process of going public, launching a foundation, and conducting an Initial Coin Offering (ICO) in 2017. VechainThor is the public blockchain launched in 2017 and built by the Vechain Foundation. It was conceived with a focus on enterprise use cases and designed to foster the proliferation of business-oriented decentralized applications (dApps). The network was specifically designed to overcome technical hurdles posed by other public blockchains such as scalability, unpredictable gas fees, and an unwillingness by businesses to handle crypto assets directly. Initially conceived to solve problems in supply chain management - a vision born from CEO Sunny Lu’s experiences as Chief Information Officer at Louis Vuitton China - Vechain launched its mainnet in 2018, embracing Ethereum’s technology framework but with additions aimed at tackling issues like high transaction costs and scalability. Vechain’s blockchain delivers instant visibility, traceability, and transparency within business operations, enabling blockchain adoption with adherence to local regulatory regimes. In turn, Vechain has allowed companies to save on costs and time while increasing operational efficiency.
In March 2023, Vechain announced its partnership with Boston Consulting Group, considered a Top Two Global Management Consultant with specialisms in the fields of ESG and sustainability. Between them, the pair outlined their approach to helping enterprises and individuals act more sustainably through ecosystems that reward and incentivize specific user engagement. An early prototype of this approach to sustainability can be found here, developed alongside BYD and DNV, rewarding drivers of electric vehicles with credits that could be spent with participating retailers...
For our full 20-page+ report, click here
Gold Tracks Purchasing PowerYES, gold does track your purchasing power over LONG PERIODS of time.
It tracks the inflation ADJUSTED US Dollar more accurately than it does either the US Dollar OR Inflation.
It is a better way to understand macro tides which move the price of gold.
While there are periods of lower/diminishing correlation... you should really keep your eye on what has been happening now!
Gold has been in a period of INCREASING, statistically significative correlation with Purchasing Power.
WHAT DOES THIS MEAN?
Well, when gold sniffs out the end of the current rally for US Dollar versus Inflation, then it will tell us on its price chart.
You might want to reshare this post and maybe pin it.
I will.
========
Below is why I did this post.
What makes gold move?
I see soo many focus too much on either inflation or the US Dollar.
They are often wrong for 2 reasons:
1- Gold tracks neither per say, but inflation adjusted US Dollar (purchasing power).
2- Gold has a tendency to move 3 to 6 months ahead of the next move in purchasing power.
Use charts for unbiased, objective evidence gathering.
Forget headline news, stories, and narratives.
#gold #usdollar #dxy #purchasingpower #inflation
Peter Lynch's Timeless Investing Principles
Introduction
Peter Lynch, one of the most celebrated investors of all time, is renowned for his remarkable track record managing the Fidelity Magellan Fund from 1977 to 1990. Under his stewardship, the fund generated average annual returns of approximately 29%, outperforming the S&P 500 by a substantial margin. Lynch's success was not just a stroke of luck; it was the result of a well-thought-out investment philosophy and principles that remain relevant to this day. In this five-page article, we will delve into the core principles that underpin Peter Lynch's approach to investing and explore how these principles can be applied by individual investors seeking to achieve their financial goals.
I. Invest in What You Know
One of the foundational principles of Peter Lynch's investment philosophy is to "invest in what you know." This principle emphasizes the importance of understanding the companies and industries you invest in. Lynch believed that individual investors have a natural advantage over professional fund managers because they can leverage their everyday experiences and knowledge to identify promising investment opportunities.
Lynch often cited examples from his personal life to illustrate this principle. For instance, he famously discovered the potential of the Hanes Corporation when he noticed his wife buying their products. He reasoned that if his family liked the company's products, there was a good chance that others did too. This simple observation led to a highly profitable investment.
II. Long-Term Perspective
Lynch advocates taking a long-term perspective when it comes to investing. He discouraged frequent trading and market-timing, believing that such strategies often led to poor performance and excessive transaction costs. Lynch's approach focused on identifying fundamentally strong companies and holding them for the long haul.
He often remarked, "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." This means that in the short term, stock prices can be influenced by emotions and market sentiment, but over the long term, the fundamentals of a company will ultimately determine its stock price.
III. The P/E Ratio
The Price-to-Earnings (P/E) ratio is a fundamental metric Lynch frequently employed in his investment analysis. He believed that the P/E ratio could provide valuable insights into a company's valuation. A low P/E ratio might indicate an undervalued stock, while a high P/E ratio could suggest an overvalued one.
However, Lynch cautioned against relying solely on the P/E ratio. He emphasized the importance of considering a company's growth prospects, industry dynamics, and competitive position when evaluating its stock. A low P/E ratio might be justified if a company has strong growth potential.
IV. Diversification and Concentration
Peter Lynch had a nuanced approach to diversification. While he recognized the benefits of spreading risk across different investments, he also believed in concentration when you have high conviction in a particular investment opportunity. This approach is sometimes referred to as "diworsification" – spreading investments too thin, which can dilute returns.
Lynch advocated holding a concentrated portfolio of your best ideas while still maintaining a level of diversification to mitigate risk. He noted that over-diversification could limit potential gains and lead to mediocre performance.
V. Be Patient and Contrarian
Lynch's investment philosophy often aligned with being patient and contrarian. He suggested that investors should not be swayed by short-term market fluctuations or popular trends. Instead, they should have the patience to wait for the market to recognize the value of their investments.
Moreover, Lynch saw value in going against the crowd when necessary. He believed that some of the best investment opportunities could be found in out-of-favor industries or companies that others were avoiding. Contrarian thinking often led him to uncover hidden gems.
VI. Stay Informed and Do Your Homework
Despite his emphasis on simplicity and "investing in what you know," Lynch was a firm advocate of doing thorough research and staying informed. He advised investors to study financial statements, read annual reports, and understand the ins and outs of the companies they invested in.
Furthermore, Lynch recommended paying attention to economic indicators and industry trends. Being well-informed allowed him to make informed investment decisions and identify potential risks and opportunities.
Conclusion
Peter Lynch's principles of investing continue to resonate with both novice and experienced investors. His common-sense approach, emphasis on knowledge and patience, and focus on long-term value have stood the test of time. By adhering to these principles, individual investors can navigate the complex world of finance with confidence and increase their chances of achieving their financial goals. Whether you are a seasoned investor or just starting on your investment journey, Peter Lynch's timeless wisdom provides a solid foundation for success in the world of investing.
How to Altseason Cycle || Cheat Sheet || Bitcoin DominanceMonitoring Bitcoin dominance (BTC-DOM) is a valuable tool for crypto traders. It provides insights into the relationship between Bitcoin (BTC-USD) and altcoins (ALT-USD), helping you make bette decisions about your altcoins and tokens.
Spotting Altcoin Seasons:
Altcoin seasons are periods of heightened interest in different cryptocurrencies and tokens, often causing their total market cap to surpass that of Bitcoin.
Understanding BTC-DOM's movements can help you anticipate how the market might react:
1. BTC-DOM Goes UP:
When BTC-DOM rises and BTC-USD also climbs, it often indicates a bullish phase for Bitcoin. During this time, ALT-USD may stay relative stable and face sideways.
If BTC-USD experiences a decline while BTC-DOM is on the upswing, ALT-USD might witness a significant dump.
When BTC-USD moves sideways and BTC-DOM follows suit, ALT-USD tends to maintain a stable course.
2. BTC-DOM Goes SIDEWAYS:
If BTC-DOM remains relatively stable and BTC-USD sees an uptrend, ALT-USD often mirrors this upward movement.
Conversely, if BTC-USD takes a dip while BTC-DOM remains flat, ALT-USD tends to follow suit with a decline.
When both BTC-USD and BTC-DOM exhibit sideways patterns, ALT-USD typically remains in a state of relative stability.
3. BTC-DOM Goes DOWN:
A decrease in BTC-DOM coupled with a rising BTC-USD often leads to a pumps for ALT-USD.
When BTC-USD experiences a decrease while BTC-DOM falls, ALT-USD may stabilize or enter a sideways phase.
If BTC-USD moves sideways while BTC-DOM declines, ALT-USD often witnesses an upward movement.
Remember that while these trends offer valuable insights, the crypto market is highly volatile. Low cap altcoins can behave unexpectedly even when Bitcoin dominance suggests a particular trend. Therefore, use Bitcoin dominance as one of many tools in your investment strategy, and always conduct thorough research before making decisions.
NIKE | JUST BUY ITNike topped Wall Street estimates for first quarter profit on Thursday as higher prices of its sneakers and apparel helped offset a hit from waning demand and persistent cost pressures, sending its shares up about 8% in extended trading.
Nike (NKE) is the largest apparel company in the world, with leading positions across different categories and regions. The company is currently facing challenges such as elevated inventory levels, inflationary pressure, and slow growth in China. Such issues have resulted in the stock dropping by 19% YTD. Although these headwinds are serious, I believe the company's durable brand, leading position, and high-quality products should allow it to come out stronger on the other end.
'Nike is a brand that is of China and for China' -John Donahoe
Like every other apparel and retail company, Nike thought post-pandemic demand would continue, so it increased production, which led to inventory levels hitting an all-time high in Q1-FY22, but as we know, that wasn't the case. Although NKE's inventory level is down from all-time highs, investors are still concerned, especially when inflation is eating into people's pockets and growth in China is slowing.
Inflation in North America has come down to 3.7% from its peak in June at 9.1%, but it is still a concern in Europe (6.1% in the EU union). As you can see from the graph below, sales in China have been decreasing for the past two years. There are multiple ways one can explain this: COVID related lockdowns resulted in the shuttering of some stores. Plus, Nike and other apparel companies started facing a backlash in China in 2021 due to the alleged use of forced labor in cotton production. However, if the company is successful at expanding into China, then we can expect a lot of room for growth.
Now that I have addressed the problems that are facing Nike, let me explain why I believe the company will overcome them. Nike sponsors the most well-known athletes such as Cristiano Ronaldo (+600 million Instagram followers), LeBron James, Michael Jordan, the late Kobe Bryant, Rafael Nadal, Tiger Woods, and more. This has helped the company build a loyal customer base and further boost its brand equity. With a loyal customer base comes pricing power, and as Warrant Buffet said:
Nike's pricing power is no joke. Its shoes have reached a level where they are considered luxury, with some selling for more than the $10,000 mark. In 2017, Nike's median price for a shoe regardless of gender was $80, which is $10 more than its biggest competitor, Adidas. I know 2017 was a long time ago, but shoe prices have increased since then, and I believe Nike is still in the lead given their dominant market position. Plus, Nike targets mostly the age demographic of 25 and 34. These are people who have not settled in yet. They just graduated college with extra income to spend on things such as expensive shoes. I believe this pricing power will continue as the company continues to sponsor talented upcoming athletes to build trust with customers.
Another way to measure Nike's brand power is by comparing its marketing spending against its peers. Nike's marketing budget in FY 23 was $4 billion, or 7.9% of revenue. On the other hand, Adidas spent 38% and Under Armour 11%. These companies have been allocating more of their revenue towards marketing but have experienced nowhere near the growth Nike has. NKE's association with well-known athletes in the U.S. has allowed them to have a 96% awareness rate, 53% usage rate, and 43% loyalty rate. Going forward, I expect the company's brand will remain high-quality due to sponsorships, high-quality products, and market-leading technology.
Founded by Bill Bowerman and Phil Knight in 1994, Nike has come a long way from its first store in Portland, Oregon. As of May 31, 2023, the company had 369 stores within the U.S. and 663 internationally, operating in more than 190 countries. Stores include franchised stores and third-party retailers. The firm owns multiple brands such as Jordan, Converse, and Nike. The company derives sales from four main segments and across four regions. I excluded Converse (4.74% of revenue) from the graphs below because I wanted to focus on the Nike brand. The company's app, NikePlus, has more than 160 million users.
On a trailing free cash flow basis, the stock yields over 3.3% relative to its enterprise value. My ~$104 May 24 PT implies a 28.00x P/E and 20.00x EV/EBITDA. Both multiples are below the ten-year NTM average and in line with the median. I project revenue to compound at a rate of 6.47% over the next three years, driven by market growth and new products, while shares decrease at a rate of 2.67%, driven by stock buybacks. The company is forecast to spend $12.1 billion on share repurchases over the same period.
Additionally, I believe the company still has room for margin improvement driven by price increases and DTC mix (direct-to-consumer). In FY 2019, DTC sales constituted 31% of revenue, and that figure stood at 44% in FY 2023. Although NKE is trading at a premium compared to peers, I believe it is reasonable considering its scale, high-quality products, and strong brand.
The first risk that I would associate with NKE is competition. The company competes with conglomerates such as Addidas, Puma, New Balance, Under Armour, and more. Additionally, e-commerce has made it very easy for anyone to start their own footwear brand. Other key risks to my rating include supply chain distributions, a recessionary environment, and slow growth in China.
Finally, we can point out that NKE appears technically oversold heading into the Q1 earnings report. From the chart , there has been relentless selling pressure over the last four months since NKE was trading at $130 per share.
The potential that NKE delivers a "good" earnings report with encouraging guidance, brushing aside fears the company is facing a deeper deterioration in its operating environment could be enough for shares to reprice higher. Simply put, our take is that NKE bears have gone too far, opening the door for bulls to take control.
The bottom line is that Nike is currently experiencing headwinds such as elevated inventory levels, inflationary pressure, and slow growth in China. Every business goes through similar challenges at one time or another, but I believe Nike is well-positioned to overcome these issues due to its durable brand, high-quality products, and leading position. I expect the company to keep endorsing high-quality athletes to elevate its brand equity and further strengthen its pricing power. My valuation implies a price target of ~$104 for May 31, 2024.
If you into NIKE brand you can watch Air film and read Shoe Dog book as well
EUR/CAD Long and EUR/USD LongEUR/CAD Long
• If price corrects and a tight flag forms, then I'll be looking to get long with either a reduced risk entry on the break of the flag or a risk entry within it.
• If my entry requirements are not met then I will simply wait until another setup which meets my plan materialises.
• If there's any ambiguity then I will not place a trade on this pair.
EUR/USD Long
• If price corrects and a tight flag forms, then I'll be looking to get long with either a reduced risk entry on the break of the flag or a risk entry within it.
• If my entry requirements are not met then I will simply wait until another setup which meets my plan materialises.
• If there's any ambiguity then I will not place a trade on this pair.
Is the Finnish Bank OmaSp about to collapse?The charts are suggesting caution. On the above 10-day chart:
1) Double top in price.
2) Regular bearish divergence.
The higher the timeframe you look the more ugly this divergence is.
Laterally I’m wondering if the small banking crisis that hit the US is now venturing to other parts of the world. OmaSp does not appear to be in isolation.
There were some tell-tell signs before the collapses of Silicon Valley and Signature Banks. (No one in Europe heard of those banks!) They were:
1) Strong bond market exposure.
AND
2) Same TA as above.
“OmaSp has been active in the bond market since 2013” says their website. Very true..
Until recently you could get the information on their Bond market exposure.. You click on the WebPage today and you get:
www.omasp.fi
“Unfortunately the webpage you were looking for can not be found”
Oh dear…
Ww
Type: Trade, short
Risk: <=3%
Timeframe: Candles closing at 19 and under.
10-day Silicon Valley Bank
before
after
10-day Signature Bank
before
after
WHAT IS A PRICE DECELERATION?✴️ What Is A Price Deceleration?
A price deceleration is when the market slows down after a trend movement. It occurs when the price of an asset begins to slow down its ascending or descending impulse. It usually occurs at key levels, such as support and resistance. The price finds it difficult to make highs at resistance and lows at support. It all looks like an upward or downward wedge at levels or just channels. Price deceleration can occur at the end of a trend movement or at the end of a pullback.
When the price approaches key levels, the bulls are reluctant to buy and the bears are reluctant to sell, which is characterized by price deceleration and poor highs and lows trading. As a result, this leads to a pullback or a complete reversal of the trend. Therefore, this one works well for price reversals.
✴️ Price Deceleration Identification
One of the key features of a deceleration and then a price reversal is divergence. The pattern is formed when the price touches the channel border for the fourth time. Thus, we determine the first clues of the future price reversal or price continuation. Another important sign of deceleration is a decrease in the slope angle or steepness of the trend line, as well as a decrease in the size of price swings. It means that the price is squeezed before the impulse movement. Price usually shoots up and accelerates after the squeeze.
✴️ Confirmation Of Price Deceleration
Oscillators are used to confirm the deceleration. For example, the relative strength index (RSI) shows divergence very well. Price, after a strong movement like a big ship, still makes some motion moving forward. So, it does not stop immediately. At this time, RSI shows that there is no strength in this movement and goes in another direction, confirming divergence and a soon reversal. Once we have four touches forming the channel, we can look for entry opportunities. Usually the 3rd or 4th touches of the border lead to reversal IF it is confirmed by RSI divergence.
✴️ Plan Your Entry and Exit Points
Once we have identified the price deceleration, we need to plan entry and exit points. If the price touches the upper channel and the oscillator shows a bearish divergence, it can be called a confirmation. Usually, if there is a divergence, the price immediately goes in the opposite direction. The engulfing candlestick or pinbar can be used as a trigger to enter the market, as it perfectly shows the current market sentiment and the dominance of one of the sides, be it bulls or bears.
The optimal risk/profit ratio in trades is 1:2, because if the trade is counter-trend, there is a probability that the price will go further along the trend.
More Examples
BTC/USD
USD/CAD
XAU/USD
Crude Oil is Unchanged since 1985Adjusted for inflation as measured by FRED:CPIAUCSL , the price of crude oil hasn't changed since the price peak in 1985.
The back and forth oscillations in supply and demand over the decades has left us right where we started back when I was in college 38 years ago!
The price of a first class stamp in 1985 was 13 cents and is now 66 cents. So, the price of a stamp is up 5-fold but the nominal price of crude oil was $31/barrel back in 1985 and is just over $90 now for a 3-fold increase.
So when you hear over and over in the general media that "crude oil is up" and devastating the economy, you can rest assured that "we have been here before". Yes, prices aren't as low as they were when we had Covid-Crash prices of $25/barrel but at least we don't have $140+ that we had back in 2008 prior to the deleveraging crash called the GFC.
Nvidia Hasn’t Done This Since JanuaryNvidia is on pace for its worst month in a year, but some dip buyers may see opportunity in the semiconductor giant.
The first pattern on today’s chart is the 100-day simple moving average (SMA). NVDA has been holding that line since Thursday, one session after the Federal Reserve hammered the stock under $410. It was the first test of the SMA since early January, when the shares were under $150. Is the long-term trend still intact?
Second, the current price range is near the lows of late June and mid-August. Intermediate-term support may remain in effect.
Third, a falling trendline marks the decline that began in early September. But NVDA made a lower low on Monday and a higher high. That kind of bullish outside day may suggest that short-term slide is nearing an end.
Finally, stochastics are trying to rebound from an oversold condition.
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How to Head and ShouldersGreetings, Financial Enthusiasts! 🌟 If you appreciate our charts, give us a quick 💜💜
The Head and Shoulders pattern is a well-known chart formation in technical analysis. It indicates a reversal from a bullish to a bearish trend, usually at the end of an upward trend.
Key Points:
- Head and Shoulders: Chart pattern signaling trend reversal.
- Formation: Three peaks on a baseline - two lower outer peaks and a higher middle peak.
- Bullish to Bearish: Suggests a shift from an upward trend to a downward one.
- Applicability: Seen on all timeframes, suitable for various traders and investors.
- Entry Levels: Easily identifiable, aiding in trade implementation.
Why It Matters:
The Head and Shoulders pattern provides traders with a visual representation of a trend reversal. It's widely used due to its simplicity and applicability across different timeframes.
The Pattern:
- Formation (Market Tops):
1. Left Shoulder: Price rises, forms a peak, then falls.
2. Head: Price rises again, forming a higher peak.
3. Right Shoulder: Price falls again, then rises but forms a lower peak than the head.
- Formation (Market Bottoms):
1. Left Shoulder: Price falls, forms a trough, then rises.
2. Head: Price falls again, forming a lower trough.
3. Right Shoulder: Price rises again, then falls, forming a higher trough than the head.
Neckline:
- For Market Tops: Connect the low after the left shoulder to the low following the head to create the neckline.
- For Market Bottoms: Connect the high after the left shoulder to the high after the head to form the neckline.
Trading the Pattern:
- Wait for the pattern to complete before trading.
- Entry when price breaks below the neckline (tops) or above it (bottoms).
- Stops placed above the right shoulder (tops) or below it (bottoms).
- Profit targets calculated based on the head-to-shoulder difference and added (bottoms) or subtracted (tops) from the breakout level.
Why It Works:
- Sellers enter as price falls from its peak, reducing aggressive buying.
- The neckline marks a point where traders exit positions, driving price toward the target.
- A lower right shoulder (tops) or higher right shoulder (bottoms) signals a trend shift.
- Profit target assumes forced exits by those in losing positions.
- The neckline prompts many traders to exit, pushing price towards the target.
- Volume analysis helps confirm patterns; expanding volume (bottoms) shows increased buying interest.
Pitfalls:
- Waiting for pattern completion may require patience.
- Not all patterns lead to successful trades.
- Profit targets aren't always reached.
- External events can disrupt patterns.
- Patterns can be subjective; traders should define their criteria.
The Head and Shoulders pattern, though not foolproof, provides a structured approach to identify and act on trend reversals.
Introduction to Relative Strength or Ratio 1-1This is part one of a series on relative strength ratios.
Part One:
Relative Strength Ratio (RS) analysis is used to compare one markets performance with that of another. The RS line provides a direct comparison of strength or weakness relative to the another. RS analysis is particularly useful for active institutional managers who are judged relative to a benchmark as opposed to individual investors who are constrained by producing an absolute return. But understanding ratios opens a world of spread or pairs trading and provides valuable insight into the market environment. To be clear, the relative strength ratio has nothing to do with Welles Wilders Relative Strength Index (RSI). RSI is a momentum oscillator designed to evaluate a single security as opposed to a ratio comparing one security to another.
Using ratio analysis, bonds can be compared to equities, commodities to bonds, domestic equities to global equities, gold to copper, country to country, currency to currency, industry sector to industry sector, specific companies or sectors to broader indices, country to country and even individual equities. Choices of pairs are extensive. Importantly, once charted, the RS line can be analyzed as any other security. Support and resistance, channels, and momentum indicators can all be applied to the RS line. With literally thousands of securities to be compared the limits of RS analysis is only limited by the imagination of the analyst. The analyst does need to be careful. There needs to be a clear and intuitive economic linkage between the two securities before setting up ratio charts. There can also be issues when two securities, despite having a clear linkage, have a dynamic third variable such as currency translation or large differences in duration such as the LQD/HYG example that we will cover in future parts.
Relative Strength is calculated by dividing one security's price by a second security's price (the "base" security). The result of this division is the ratio, or relationship, between the two securities. When the RS line is rising, the numerator (top) security is outperforming the denominator (bottom) security. When the numerator security is falling, the numerator is underperforming the denominator security. If the RS is moving laterally, there is no performance advantage to either the numerator or denominator.
When looking at spreads I mostly prefer to use the ratio rather than the net price difference between two markets. Using ratios allows the analyst to make comparisons between markets priced in different units. For instance, Oil and Gold or cotton and the CRB. One exception to this would be when directly comparing one ratio to another ratio. In this case both ratios need to be normalized to a common starting value (I use 100) to adjust for large differences in numerators that could skew the RS line higher or lower relative to the RS line.
I find ratios most useful over longer time perspectives for business and economic insight. However, many traders/investors use them in shorter time perspectives as they create spread trades or aggressively switch between sectors. When I was actively trading bond/note futures I used extremes and technical analysis of the RS line on the hourly chart to help manage my curve trades.
In this series we will explore the construction of relative strength ratios, their best use, and make technical evaluations of several ratios and what that analysis implies.
And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum.
Good Trading:
Stewart Taylor, CMT
Chartered Market Technician
Taylor Financial Communications
Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
ADX indicator suggest BTC price prepared for huge move very soonThe 3-day daily ADX reading of 11 is RARELY seen in Bitcoin. The last 3-day ADX reading in the 11s was July 2020 just as Bitcoin began its rally from 9,200 to 64,000. Remember, a super low ADX reading does NOT mandate an advance, but only suggests a BIG move either up or down. A violation of the upper or lower boundary of the recent trading range is likely to tell the story.
S&P Double TopHistory and Introduction
Everyone in the market today remembers broadly the financial response to C19. It We see it every time that we look at the price chart and we see the spike down and the V recovery. What a lot of people may not remember is the investigation into SoftBank for essentially causing a short squeeze by use of call options and gamma hedging. When that news story came out my long term assumption was we would be returning to the C19 low and that has informed every idea I have put out since then.
News story
www.investmentwatchblog.com
An Explain Like I am 5 From Reddit
When you write a call as a seller you essentially take a short position against the stock delta wise When SoftBank bought loads of calls that were out of the money then the writers had large negative delta positions against these tech stocks.
One common way to offset a negative delta is you can hedge with owning shares to offset the negative position from the calls you write. As the calls were heavily wrote then shares were added to offset risk which contributed towards momentum. As the stock positions were entered it drove up price of stock which put those out of the money options closer to the money leading to more share purchases while SoftBank continued to purchase more and more calls leading to an increased share price between delta hedging and general market momentum. Someone can correct me if I’m off but that’s my broad description
www.reddit.com
Essentially when that news story came out I, personally, understood all these gains were unsustainable and were going to be given back. This was in addition to all of the other stimulus spending that was going on. There was still gains to be made or lost speculating in swing trading but my ultimate goal was to not buy the top and not to sell bottoms.
Main Chart Analysis
The main chart has been left pretty simple. We have the Gaussian Channel on top and we can see that in the 70s there were two points in time investors or traders got to buy below the gaussian channel. Fortunes could be made by buying below the channel and merely selling above the guassian channel. Loading up on dividend stocks would have also been very prudent. We can also see the opportunity came again in the 2000s.
We can also see in purple the tops where the ADX has been at 20 or below. The 70s dip had the low ADX but the 2000s did not. It is not a necessary condition that the ADX be low for price to go below the gaussian channel, but it is suggestive that with the current low monthly ADX we have a fair shot of getting there.
We also see that similar to the 1970s the ADX has been declining over each high for over the last decade. Not a good set of circumstances to be in.
The right side of the chart shows the double top itself without any indicators and on the weekly time frame. As it stands right now it looks like a “lower high” double top but price could rally up 17% from the current level and this idea is still valid. The last top took over 300 days to develop and start to sell off to create the valley low. We can still have a significant amount of sideways as bulls get exhausted.
Double Tops
Double tops are suppose to have a flat base before the uptrend begins and then return to the flat base per Bulkowski, who is broadly considered to have written one of the modern trading “bibles.” www.thepatternsite.com
The chart below shows what I consider the flat base to be. The fib draw on the double top does get us right into that range. Another thing to remember is that we don’t need to see an impulse that looks strait down. It is quite probable that price action takes out the valley low and then rally to test previous support as resistance.
Here is an example of a double top on bitcoin from the 2018 bear market. The 4-hour chart provides the detail of a double top that developed over 25 days from the time the began to top to rejection oat previous support.
So, not only could price action go sideways for some 300 days as the second half of the double top is created, but once price sells off we could spend considerable time in a suckers rally as price returns to previous support and tests it as resistance.
Quarter Chart
Long term, we have a chance to buy in the quarterly gaussian channel. This would require significant sidewise-ish or channel-ish price action for a decade.
Dow Theory
Basic Dow theory on bull markets has three phases, accumulation (smart money), public participation, and excess. From there we enter distribution, public participation, and panic. One tenant of Dow theory is indices must confirm one another. www.investopedia.com
My linked idea will show that I thought that NDX would have a bull trap. That idea has been invalidated because rather than forming a classic bull trap NDX is likewise in a double top. But having both NDX and SPX in a topping formation suggests that we are in distribution.
Since we are talking about Dow theory lets look at the DJI. T Guess what? he Dow looks like it is in a double top as well. Having all three indices appear to be topping within 5 percent of previous ATH is pretty bad.
NASDAQ/S&P
Since the Nasdaq is more volatile than the S&P we can look for bearishness in the NDX/SPX pair to see broader bearishness in the market. I am personally staying away from the Nasdaq as an investment as possible until it reaches its own double top target against the S&P.
Crypto Assets
Since I believe the SPX is a index that could be topping for over 300 days and having several consolidations on the way down I would expect some assts to go crazy as investors rotate and individual assets have blow off tops. I expect some massive rallies with some select cryptos and then a lot of despair. A lot of movement can happen in crypto over the lifespan of this idea.
Here is bitcoin. What is the traditional target of a rising wedge? The beginning of the wedge. And there is no guarantee that bitcoin will set a higher high. If it does I am selling and probably never returning.
Conclusion
As someone who thinks the United States have been off sound money since the creation of the Federal Reserve I see all of this as the consequences of late-stage socialism. Subsidies to support government initiatives, transfer payments, bloated public services, debasement of the money supply all lead to public excess in the stock market. The United States as been more resilient than a lot of other countries in warding off the pernicious influence of socialist actors but once the Federal Reserve was created the ultimate conclusion was clear, it was just a matter of timing. Of course, due to inherent theory and model failure of most socialists they don’t realize it is the socialist policies that got the market here. Just like most don’t realize we are in distribution.
The distribution phase can take a long time and I expect to be ignoring a lot of news. It’s a distraction. I am going to make the trades and investments as I see them. The main chart focuses on what happened to the SPX in two bear markets, one in the 70s and another in the 2000s. What happened to sound money (precious metals) in the 70s and 2000?
Quite simply they went crazy. What happened to the Gold/SPX ratio? They reached muti-decades lows. If the SPX is topping then I would expect to see a massive upside pattern on gold. And I do. There is a cup and handle or ascending triangle. Based on that the time for me to rotate back into the S&P generally would be when the SPX/Gold ratio hits a double bottom from the low of 2011
Likewise with Silver and the S&P
I think it is a decent time to take my kids to the precious metals store.
Rising and Falling Wedges ExplainedWelcome to the world of trading patterns. If you appreciate our charts, give us a quick 💜💜
Today, we'll explore two important ones: the Rising Wedge and the Falling Wedge . These patterns can signal shifts in market trends. Let's dive in and see how they work.
Rising Wedge:
In an uptrend, the Rising Wedge hints at a bearish turn. It takes shape as prices find a middle ground between two upward-sloping lines, one as support and the other as resistance, both inching closer. As the price inches towards the wedge's tip, its upward push tends to fade, suggesting a potential shift to a downward trend.
Your sell signal triggers with a bearish break beneath the wedge's support.
Set a stop loss just above the wedge's highs.
Aim for the next significant support level.
Falling Wedge:
Unlike the Rising Wedge, the falling wedge spells optimism in a downtrend. It emerges as prices consolidate between two downward-sloping lines, one providing support and the other resistance, both drawing nearer. As prices approach the wedge's apex, the downward momentum loses steam, hinting at a potential shift towards an upward trend.
Your buy signal activates with a bullish breakout beyond the wedge's resistance.
Place a stop loss just below the wedge's lows.
Target the next notable resistance.
Feel free to let us know your thoughts and if you have any questions. Your feedback is valuable and helps us improve. Happy trading!
HOW-TO evaluate volatility quality?The Volatility Quality Index (VQI) is an indicator used to measure the quality of market volatility. Volatility refers to the extent of price changes in the market. VQI helps traders assess market stability and risk levels by analyzing price volatility. This introduction may be a bit abstract, so let me help you understand it with a comparative metaphor if you're not immersed in various technical indicators.
Imagine you are playing a jump rope game, and you notice that sometimes the rope moves fast and other times it moves slowly. This is volatility, which describes the speed of the rope. VQI is like an instrument specifically designed to measure rope speed. It observes the movement of the rope and provides a numerical value indicating how fast or slow it is moving. This value can help you determine both the stability of the rope and your difficulty level in jumping over it. With this information, you know when to start jumping and when to wait while skipping rope.
In trading, VQI works similarly. It observes market price volatility and provides a numerical value indicating market stability and risk levels for traders. If VQI has a high value, it means there is significant market volatility with relatively higher risks involved. Conversely, if VQI has a low value, it indicates lower market volatility with relatively lower risks involved as well. The calculation involves dividing the range by values obtained from calculating Average True Range (ATR) multiplied by a factor/multiple.
The purpose of VQI is to assist traders in evaluating the quality of market volatility so they can develop better trading strategies accordingly.
Therefore, VQI helps traders understand the quality of market volatility for better strategy formulation and risk management—just like adjusting your jumping style based on rope speed during jump-rope games; traders can adjust their trading decisions based on VQI values.
The calculation of VQI indicator depends on given period length and multiple factors: Period length is used to calculate Average True Range (ATR), while the multiple factor adjusts the range of volatility. By dividing the range by values and multiplying it with a multiple, VQI numerical value can be obtained.
VQI indicator is typically presented in the form of a histogram on price charts. Higher VQI values indicate better quality of market volatility, while lower values suggest poorer quality of volatility. Traders can use VQI values to assess the strength and reliability of market volatility, enabling them to make wiser trading decisions.
It should be noted that VQI is just an auxiliary indicator; traders should consider other technical indicators and market conditions comprehensively when making decisions. Additionally, parameter settings for VQI can also be adjusted and optimized based on individual trading preferences and market characteristics.
British Pound Plunges as Bank of England Holds Interest RatesI bring today is far from uplifting. As you may already be aware, the British Pound (GBP) has taken a significant hit in the wake of the recent decision by the Bank of England (BoE) to hold interest rates steady. This unforeseen turn of events has left many traders like yourself feeling disheartened and uncertain about the future of GBP.
The BoE's decision to maintain interest rates has sent shockwaves throughout the financial markets, triggering a substantial decline in the value of the British Pound. This unfortunate turn of events has left the currency vulnerable and exposed to further downside risks. While it is indeed disheartening to witness such a decline, it is crucial for us to adapt and seize opportunities even in the face of adversity.
Given the current state of affairs, I would like to encourage you to consider taking advantage of the situation by exploring short positions on GBP. The downward trajectory of the British Pound may present an opportunity for you to potentially profit from this unfortunate turn of events. However, please remember that trading involves risks, and it is essential to conduct thorough analysis and consider your risk tolerance before making any investment decisions.
In times like these, it is crucial for traders like yourself to stay informed and adapt to the ever-changing market conditions. Monitoring economic indicators, central bank decisions, and geopolitical developments will be key in navigating the turbulent waters of the foreign exchange market.
If you require any further information or assistance regarding shorting GBP or any other trading-related queries, please don't hesitate to comment below. We are here to support you and provide you with the necessary guidance to make informed trading decisions during these challenging times.
Remember, even in the face of adversity, the trading world remains full of opportunities. By staying informed, adapting your strategies, and seeking professional advice, you can navigate these uncertain waters and potentially turn this unfortunate situation to your advantage.
