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Wave Analysis

Gold Update: Post-Election WeaknessThe price of gold typically drops after U.S. elections, and this time is no different. This weakness coincides with the expected wave count on the chart, as Wave 4 correction was anticipated. (see related) Wave 3 is extended, and so is sub-Wave 5 within it, which is a common pattern for commodities. Wave 4 has now begun, and there are two ways to measure its potential target: 1. Wave 4 typically retraces Wave 3 by around 38.2%. 2. The trend channel formed through the peaks of Wave 1 and Wave 3, and the valley of Wave 2, suggests a potential bottom for Wave 4. This chart shows an amazing alignment of these two factors: the 38.2% Fibonacci retracement is at $2,428, and the bottom of the channel is around $2,450. These levels provide a strong double support for gold prices. The final upward impulse should at least retest the all-time high of $2,802 (the peak of Wave 3). The Cup & Handle pattern (see related ideas) has a target of $3,000.
COMEX:GC1!Education
by aibek
EURUSD map: Down to 1.04-1.00 Then Up to 1.16-1.21EURUSD is in the second leg down to complete a complex correction (red down arrows). There are three crucial target points for drop to watch: 1) Valley of red leg 1 at 1.0448 and 50% Fib at 1.0406 2) 61.8% Fib at 1.0200 3) Touch point of the throwback to broken trendline around parity Next is the reversal to upside within the large leg 2 up (blue up arrows). The possible targets depend on the depth of the current drop, the deeper the lower the upside target. From the first point of drop EURUSD could hit 1.21 area. From the lowest valley of parity it could reach 1.16 handle.
Education
by aibek
ALT Analysis request for November 2024Dear all, We are thrilled to announce that your special extensive ALTCOIN ANALYSIS REQUEST is now open for the month of November 2024. REQUEST Deadline: November 10TH, 2024. In order to ensure efficiency and accuracy in our analysis, we kindly request each member to submit only ONE (1) Altcoin request. Please follow the format samples provided, such as ETHBTC, ETHUSDT, or ETHUSD, and include the exchange name of the coin. This will greatly streamline our analysis process. Our goal is to provide insights for a maximum of 30 Altcoins based on the requests received. Let's work together to navigate the market and uncover potential opportunities. To get an idea of our previous analyses, you can navigate through our previous alts requests by clicking on the corresponding links below: #JANUARY REQUESTS: #FEBRUARY REQUESTS: #MARCH REQUESTS: #APRIL REQUESTS: #MAY REQUEST: #JUNE REQUEST: #JULY REQUEST: #AUGUST REQUEST: #SEPTEMBER REQUEST: #OCTOBER REQUEST: We deeply appreciate your ongoing support, which is incredibly valuable to us. Take the time to review all our analyses, share your comments, and don't forget to click the like button as you go through them. Thank you to everyone for your continued support. You can trust us to always give our best. Best regards. WESLAD
Education
by weslad
64
The U.S. Election: Why Investor Psychology Outweighs Politics?As the 2024 U.S. presidential election between Donald Trump and Kamala Harris draws to a close, discussions on its potential impact on the stock market are intensifying. The common belief is that elections like these have significant influence on market direction, with some expecting substantial shifts based on which candidate emerges victorious. Yet at Vital Direction, our perspective is that the market’s underlying forces—those stemming from social mood, collective psychology, and well-established cycles—play a far greater role than any singular political event. The Market’s Independence from Political Events There exists a widespread assumption that major political events, such as presidential elections, are central drivers of long-term market trends. This belief, though popular, fails to account for the market’s inherent self-direction. Stock markets don’t respond as simply as a cause-and-effect model would suggest; instead, they operate according to internal patterns and psychological shifts within the investor community. The Elliott Wave Theory offers an invaluable lens into this perspective. Developed as a way to understand market movements, it proposes that markets progress in identifiable cycles driven by waves of investor optimism and pessimism. These waves transcend individual events and reflect broader, longer-term patterns. Whether in response to an election or any other newsworthy event, the market’s primary direction remains bound to these underlying cycles, not to short-lived political fluctuations. Elections: Short-Term Volatility, Not Long-Term Direction The 2024 election will no doubt introduce some degree of short-term volatility. Markets may experience fluctuations in response to immediate reactions, whether from policy expectations or from shifts in investor sentiment. However, such volatility is more indicative of temporary emotional responses than a change in the overall trend. Historically, markets have witnessed reactions to elections, but these are typically fleeting. A notable example is the 2016 election: though it spurred temporary market movement, the longer trend was driven by broader cyclical forces, unaffected by any one political outcome. This view echoes what is outlined in Socionomic theory, which suggests that markets are less about reaction to events and more about reflecting the underlying social mood. This perspective implies that it is not political events but rather the collective psyche of investors that drives market cycles. In other words, while elections can spark volatility, they do not chart the course of long-term market movement. The Role of Investor Psychology and Cycles At Vital Direction, we place considerable emphasis on investor psychology as the core driver of market behaviour. Techniques such as Elliott Wave Theory and technical analysis allow us to understand this psychology in action, mapping market movements as a series of waves that reflect collective emotional shifts. Whether optimism, fear, or greed, these emotions unfold in repeating cycles, showcasing the natural rhythm of the market. Likewise, Socionomics further reinforces the concept that social mood—bullish optimism or bearish fear—shapes markets from the ground up, regardless of political events. By viewing the market through this lens, we see that people’s collective psychology builds self-perpetuating cycles that continue regardless of transient events. This view aligns with the insights of technical analysis, including the application of Fibonacci retracements and Hurst cycles, which help reveal recurring investor cycles. These analytical methods enable us to anticipate market behaviour based not on who wins an election but on how collective sentiment evolves over time. Tools like these reveal that the stock market has its own rhythm, largely impervious to the outcomes of political events. Concluding Thoughts: The Market’s Own Path To conclude, the U.S. presidential election, while undoubtedly an important social and political event, has a limited impact on the stock market’s overall direction. Political events might momentarily capture the headlines and trigger brief volatility, but the primary market trend persists, following its own inherent cycles. Whether Trump or Harris wins, we at Vital Direction expect the market to continue adhering to its established patterns, driven by the deeper forces of investor psychology. For investors, understanding this can be a powerful tool amidst the noise of election speculation. By focusing on the patterns and cycles inherent to investor psychology, traders can engage the market with a clear view that looks beyond short-term fluctuations, aligning instead with the stable, cyclical forces that guide the market’s enduring direction. In short, trust in the cycle, not the headlines. The market’s true course is set not by elections but by the collective sentiment of those who invest in it.
SP:SPXEducation
by VitalDirection
SMHI - Can an ugly chart actually be a good play?This is one of those charts I had on a watchlist titled "Waiting For Bottom". I checked in on Friday and it was touching the bottom of the channel. Boom! Is this post a prediction? Nope. Do I think this Elliott Wave count is for sure accurate? Nope. So what is this? First of all, remove all of the markings and look at the chart with nothing but price action. What do you see? If your answer is a "a complete mess that was generally melting up until the middle of 2024", you'd be correct. This is not a trending stock with a high probability setup. There is no clear 5-waves up pattern playing out. In fact, there is no clear anything pattern playing out. But that's exactly why I think this "might" be a diagonal and might be an interesting play for a solid risk/reward. What is a diagonal you ask? Let's make sure you understand. In Elliott Wave, there are only TWO types of bullish patterns. The first is the classic 5-wave impulse where the underlying trends up in odd numbered waves and correcting each one in the even numbered waves. Think of a lightning bolt. 1 - Up off a low. 2 - Corrects 1, can't move below it. 3 - The breakout, usually the most impulsive and powerful wave. 4 - Corrects 3, can't break below the top of 1. 5 - The final move up, can be powerful, can be weak, but will almost always give a higher high. 5-wave impulsive moves start when the underlying is very bearish. Wave 1 starts by getting back to or breaking a key resistance area. Those who jump in during it are considered early adopters. The only support is the previous low. The vast majority of market participants are avoiding. Once it tops and rolls over, the majority are convinced new lows are coming. Some early adopters sell out or take profit. But a successful Wave 2 holds above the previous low, giving a higher low setup. It is followed by a consolidation as momentum builds up in the beginning of the 3rd wave. Once Wave 3 breaks out above Wave 1, smart technical traders start jumping in. Maybe it happens on an earnings report and some fundies jump in. It starts to really trend as more heads start to turn and realize that not only did it hold a higher low, buts its also working on a higher high. And if it is powerful enough, it will break more resistance and more and more participants will jump in. Eventually though, Wave 3 tops. Many early adopters take their profit and leave. It consolidates into a Wave 4, holding another higher low above the Wave 1 top. But as it starts Wave 5, the majority of the participants are now the late adopters and retail traders, with a spattering of early adopters who still have a small tranche left, already being in the green on smart sales at the top of Wave 3. Wave 5 then completes, often trapping late adopters who were sure it was going to the moon. Well this stock doesn't seem to be that. This thing overlaps all over the place. It could be an upward corrective wave of some sort before a drop to new lows. But as of now, it's playing along nicely with what its called a diagonal. A diagonal is a 5-wave structure. But this one is different. With diagonals, Wave 3 "can" overlap below the top of Wave 1. And one of the leading clues you might be in a diagonal is when the subwaves break down into segments of 3 wave moves instead of 5 wave moves. Why does this exist? Well, it starts off similar to a standard 5-wave move. A low is formed and a move is commenced off of it. But the succeeding retracement of that move is VERY deep, retracing almost all of the first move up. The next higher high is then around 100-161.8% of the first move, with the retracement that follows also very deep. All of this is likely happening within Wave (1) and Wave (2) of the diagonal. See, market participants are so polarized with the underlying, that they are whipping it back and forth, neither side able to ultimately win very long, yet the bulls slightly nudging out the bears with marginal higher highs and higher lows. It continues this whipsaw with every move, slowly melting upward. Instead of the whole 5-wave pattern targeting the 176.4%-200% extension of Wave 1 from the bottom of Wave 2 (what happens in a standard 5-wave impulse), it targets lower extension levels, typically the 161.8% level. Diagonals are either LEADING or ENDING moves. They CAN NOT be 3rd waves in larger patterns. So you will either get one as a first wave of a larger move, or you will get one to finish a larger move. In this case, it would be a leading diagonal of something much larger. So back to this specific stock. Thanks for enduring the educational section. Let's talk why I think this is a diagonal. You can see the wave labels clearly outlining the 3-wave moves within the larger 5-wave diagonal. They are labeled ABC within the (1)(2)(3)(4)(5). At present, this is within $1 of the ideal retracement level of the (3)rd wave for Wave (4). And it's clearly the 3rd segment of the ABC we would expect for a corrective (4)th wave. Not only that, it's holding the channel (but that's not required, just an area of support). Diagonals do often retrace deep, so I wouldn't be surprised to see it continue to the 76.4% correction area around $4.50. If you are risk averse, you could enter in the current area with stop just under $4.49. But as long as it holds the Wave (2) low, the diagonal stays valid. Ideally, it would be either contracting (trendline connecting (1), (3), and (5) contracting toward trendline connecting (2) and (4)) or expanding (same thing, but trendlines diverging away from each other), with expanding diagonals being pretty rare, but possible. They can tend to run in channels as well. So ideally, this doesn't get much lower as that would turn it into an expanding diagonal, which we know is rare, and leads to future bullish action being even MORE unreliable. Standard supply and demand zones are on the chart representing major support and resistance areas. If this holds support, it likely finds renewed strength up toward resistance and will bounce around in mostly unpredictable, overlapping structures that generally melt up. But once it engages the next C Wave, you should be able to track a standard 5-wave pattern within that C, as C-waves are always 5-wave structures. As I stated at the beginning, in no way is this a reliable structure. But you see things like this fairly often, and anywhere from second to monthly charts. The longer the duration, the more confusing, as you can have years of price movement that seem to make no sense. Ultimately, you have to watch supports and play smart. Is this something you want to align a lot of your money in? Probably not. It's unpredictable at best. And it could fail at any moment at worst since diagonals are "technically" corrective structures even when bullish. But is a chart like this giving up a setup for potentially phenomenal risk/reward? You bet. Just make sure and manage your risk. And you do that with your position sizing, using an appropriate stop *and if you get stopped, stay stopped. You set it for a reason, don't second guess), and understanding your targets, making sure to de-risk as quick as possible by selling enough at key levels to get your original equity back should it move upward. Feel free to ask questions. This was meant to be educational and shed some light on a complicated chart structure while providing a thesis for how to potentially play it. Standard disclosures: 1. This is 100% my idea. It was not sourced from any other avenue. 2. I am not invested in this company, though I am likely buying shares soon. 3. I am not paid to post content nor do I receive any contributions of any kind. 4. While this is outlining a potential profitable setup, this article is not investment advice. You should do your own due diligence on any company you invest in and apply your own trading strategies. 5. I know nothing about the fundamentals of this company. I suggest doing your due diligence if fundamentals are important to you. 6. Readers should always remember that markets are their own creature made up of millions of individuals and institutions each following some combo of inherent bullishness, inherent bearishness, fundamentals, technicals, stupidity, and pure emotion. Elliott Wave, and specifically Fibonacci Pinball (developed by Avi Gilburt at elliottwavetrader.net and prominent Seeking Alpha author), merely provide a framework based on the observed price action to date. 7. I know that while my wave outline is based on years and years of data and application from not only me, but some of the best in the game, I also know that markets do not follow a set path and that sentiment can remain irrational far longer than I can remain rational. That is why you MUST consider the alternatives and manage risk appropriately. Know the pivot zones that could lead to the primary path failing. I warrant that the information created and published by me on TradingView is not prohibited, doesn't constitute investment advice, and isn't created solely for qualified investors. My analysis is not a recommendation for a specific trade. My analysis outlines a potential scenario and provides risk assessments for multiple alternate scenarios. My analysis is purely educational.
NYSE:SMHIEducation
by mazag08
Be an expert at losing..Trading is a complex venture that involves understanding financial instruments, charts, patterns, market conditions, risk management and other factors. Becoming a successful trader requires more than technical knowledge. You also need to develop the right mindset to navigate the psychological intricacies of trading. Human emotion, instinct, and behavior can profoundly impact your decision-making process. That’s why it’s important to understand trading psychology. ~ OGwavetrader
Education
by OGwavetrader
Increase the difficulty level on yourself. Often, traders like to make things a lot harder for themselves than they need to. Everyone is seeking a silver bullet, truth is "less is actually more". Dow Theory is actually the Grandfather of technical analysis. If you have never heard of this, or even if you have and brushed over it, you are missing out. Some people will say things like "it's over 100 years old it can't work in today's market" Yet, humans have changed very little in those last 100+ years. Sentiment driven by fear and greed is where the secret is hidden. Let me explain by saying Dow theory has 6 "rules" (tenets). 1) Market Moves in Trends Markets have three types of movements: primary trends (long-term trends that last for years), secondary trends (medium-term trends that retrace parts of the primary trend), and minor trends (short-term trends that are typically noise). You will notice I used the weekly for the larger and the daily for the second. When I journal my trade setups; I simply use a traffic light system red lines size 4 for primary, then orange line 3 for secondary and green size 2 for the trigger phase. In addition to that, I mark the trends with 3 boxes and arrows pointing up down or sideways. The second rule; Each trend has three phases: Accumulation Phase. In this phase, informed investors start buying or selling, counter to the general market opinion. Public Participation Phase, more investors notice the trend after it is already underway, and media coverage expands, driving the trend further. (Wyckoff called this a mark-up or mark-down phase) Excess Phase (or Distribution): At this point, speculation is rampant and detached from actual value, leading informed investors to prepare an exit. This is where a lot of Wyckoff, Elliott and other tools such as Smart money concepts all overlap. Then, the 3rd rule. The market reflects all available information, such as economic conditions and sentiment. Therefore, movement in the market averages considers and reflects this information. (in simple terms, discount the news). 4) For a trend to be validated, different market averages must confirm each other. For example, the trend in the Dow Jones Industrial Average should be confirmed by the Dow Jones Transportation Average. If one index moves to a new high or low, the other should follow suit to confirm the trend. (I like this one less, but in some instances it can make the next move very obvious.) Rule 5) The trend is your friend, until the end. Until you see a clear change in the direction, a market shift. The trend is still in play. This one, I feel most just can't comprehend. As you can see below, I have marked up the extreme high and low, I know both my primary and secondary trends are down. So now, I can use my EW bias or start looking for a Wyckoff schematic. (if I believe we are about to see a shift in the trend.) You can start to look for information for areas of interest, look into volume and volume profiles. The last rule. Confirming the trend volume expanding in the direction of the primary trend. For an uptrend, volume should increase as prices rise and decrease during corrections. In a downtrend, volume should increase as prices fall. In this example, the Fibonacci levels line up, the volume is slowing, the EW count makes some sense and zoomed out you can see a shift. Now, with all of this info - we could look at "areas of interest" We are in a demand zone on the higher time frame. At this stage, there is no trade entry, but if we were to view a change in the character we could simply take a trade as a pullback on the primary trend down. Something like this; You see, all you are doing is following the trend and taking a look at other tools, auction areas, fib extensions, an EW bias, and hints of a Wyckoff schematic. But under the hood, the 3 trend principle is a simple-to-follow process. Disclaimer This idea does not constitute as financial advice. It is for educational purposes only, our principle trader has over 20 years' experience in stocks, ETF's, and Forex. Hence each trade setup might have different hold times, entry or exit conditions, and will vary from the post/idea shared here. You can use the information from this post to make your own trading plan for the instrument discussed. Trading carries a risk; a high percentage of retail traders lose money. Please keep this in mind when entering any trade. Stay safe.
Editors' picks
Education
by Mayfair_Ventures
7
Enhancement of the SK SystemI developed an innovation for the SK system by integrating the Inducement concept from the ICT system. Traditionally, in SK, breaking the zero point is seen as a sign to abandon the sequence. However, with this innovation, I interpret the break as a liquidity trap rather than a signal to end the sequence. This development: 1. Enhances market predictability by helping to avoid potential price traps. 2. Improves liquidity utilization by treating the false break as a new entry opportunity. 3. Increases system flexibility and accuracy by using the break as a continuation signal. 4. Combines SK and ICT methodologies, adding a stronger analytical layer. This enhancement provides traders with a competitive advantage, marking an advanced step in liquidity and price trap analysis. Developed by Engineer Mohammed
OANDA:XAUUSDEducation
by Engineer2008
Recognize the problems that you have..Trading is a complex venture that involves understanding financial instruments, charts, patterns, market conditions, risk management and other factors. Becoming a successful trader requires more than technical knowledge. You also need to develop the right mindset to navigate the psychological intricacies of trading. Human emotion, instinct, and behavior can profoundly impact your decision-making process. That’s why it’s important to understand trading psychology. ~ OGwavetrader
Education
by OGwavetrader
MATH - This is how you REALLY use Elliott WaveThis is a great example of a beautiful setup and how to lay out a low risk, high reward trade, especially for those that are still learning and wondering how to apply Elliott Wave. Or maybe you are unfamiliar with Elliott Wave or someone who thinks it's nonsense. Well let me show you how I do it and hopefully help you learn the best technical strategy. These are the setups I salivate on. And I don't care if I lose 8 out of 10, because the 2 that hit will more than pay off the losers. Support box is clear. Below the September low and I'd be out as we'd be below the reliable 61.8% retracement. Breaking that fib retracement level means that it can do anything from bullish, to diagonal, to sideways, to bearish moves. And we don't want to waste our time with stocks that aren't trending. Nothing is reliable anymore - therefore, we don't want to trade it below that. Toss it away. Move on to the next one. For this play, you could accumulate shares under $2.25 which is the previous high. I have it labeled as a Wave (1) but it could easily just be an (A) wave. As a quick refresher, trending impulsive moves happen in 5-wave moves. Since we don't know for 100% certainty that this will become that, we have to prepare for the other likely scenarios. We are already protected from significant downside with our stop below the 61.8% retracement, so I just don't care what might happen in a bearish count. So for bullish, I want to accumulate under the last high and catch the breakout. Once broken out, minimum target is $4.25. That's the 100% extension of (1) from the bottom of (2), the first resistance. If this ends up being a 3-wave (A)(B)(C), it would top out there at the 100%, so we want to make sure we have all of our money back by then. A full bullish follow through could take it anywhere between $12 (161.8% fib) and $22.50 (200% fib, which is where a standard impulsive 5-wave rally is expected to end with no extensions). If you buy a stock like this with stop below the 61.8%, you can go net free (return of original equity) by selling however many shares are needed to get your original money back at the previous high around $2.25 which should reject at first try (as it is the most likely landing spot for Wave 1 inside of Wave (3). Once a higher low forms from there (Wave 2 of (3)) between $1.20 and $1.75, you could go in even harder, buying more shares, and moving your stop on all shares to that higher low, providing a very low risk scenario. By the time $4.25 is hit, you should be completely net free with plenty of shares left and maybe even take some good profits. Remember, this is an outline NOT A PREDICTION. That's why we have a stop, a plan, and multiple targets. As it plays out, we gain more clarity and update our outline. Probably even find a trend channel. This is Elliott Wave. This is Fibonacci Pinball (the creation of Avi Gilburt at elliottwavetrader,net). It's not telling you what's going to happen. It's telling you what could happen, laying out the most probable path, limiting your risk, and telling you when it might be wrong and how to pivot. And don't go thinking this will happen all at once. Keep good notes of your entry and all sales. This likely takes 1-3 years. Standard disclosures: 1. This is 100% my idea. It was not sourced from any other avenue. 2. I am not invested in this company, though I am likely buying shares soon. 3. I am not paid to post content nor do I receive any contributions of any kind. 4. While this is outlining a potential profitable setup, this article is not investment advice. You should do your own due diligence on any company you invest in and apply your own trading strategies. 5. I know nothing about the fundamentals of this company. I suggest doing your due diligence if fundamentals are important to you. 6. Readers should always remember that markets are their own creature made up of millions of individuals and institutions each following some combo of inherent bullishness, inherent bearishness, fundamentals, technicals, stupidity, and pure emotion. Elliott Wave, and specifically Fibonacci Pinball (developed by Avi Gilburt at elliottwavetrader.net and prominent Seeking Alpha author), merely provide a framework based on the observed price action to date. 7. I know that while my wave outline is based on years and years of data and application from not only me, but some of the best in the game, I also know that markets do not follow a set path and that sentiment can remain irrational far longer than I can remain rational. That is why you MUST consider the alternatives and manage risk appropriately. Know the pivot zones that could lead to the primary path failing. I warrant that the information created and published by me on TradingView is not prohibited, doesn't constitute investment advice, and isn't created solely for qualified investors. My analysis is not a recommendation for a specific trade. My analysis outlines a potential scenario and provides risk assessments for multiple alternate scenarios. My analysis is purely educational.
Editors' picks
NASDAQ:MATHEducation
by mazag08
1
Take a look at this strategy"Video Idea: A complete beginner-to-pro guide on using TradingView's advanced charting tools, technical indicators, and customizable features for market analysis. The video will cover setting up your workspace, reading charts, creating trading strategies, and navigating the social community. Perfect for traders looking to maximize their TradingView experience!" "Video Idea: A complete beginner-to-pro guide on using TradingView's advanced charting tools, technical indicators, and customizable features for market analysis. The video will cover setting up your workspace, reading charts, creating trading strategies, and navigating the social community. Perfect for traders looking to maximize their TradingView experience!"
Education
by salahmouhanned
if you use technical analysis you owe a lot to these individualsTHE HISTORY AND ORIGIN OF TECHNICAL ANALYSIS I am a firm believer that as investors/traders we need to know the historic and major events that have occurred in this magnificent field of ours that have shaped how it is today. Today i want to shed light of knowledge on the history/origin of technical analysis as this is a widely used concept that is used by majority of traders/investors to analyse/predict future market moves through the evaluation of historic market data especially price, volume and implied volatility and many have made a living and good returns on the financial markets using the various technical analysis tools and concepts but not knowing where it all started. many do believe that technical analysis was initiated by Charles Dow in the 1800s but this is not true as evidence of Technical Analysis dates far back as to the 17th century from basic and underdeveloped methods as compared to the more evolved ones used in Morden-day times. Let's get straight into it: 17th CENTURY -- 1. the Dutch east India Company traders The Dutch East India Company which was formed in the Dutch Republic, Amsterdam in 1602 which is known to be the first publicly traded company, trading mainly in spices, Indigo and cotton, which gave way to the first financial market the Amsterdam Stock Exchange. Here is when the earliest forms of technical analysis came to show when the Dutch traders would graph record/keep track of the various price fluctuations of their stock but in a basic form. 2. José or Joseph Penso de la Vega still in the 17th century a Spanish diamond merchant, philosopher and poet best known also as Joseph de la Vega, born 1650 in Spain also considered one of the earliest financial market expert published a marvellous financial read called "Confusion De Confusiones" which provided detailed awareness of how the Dutch financial market participants operated focusing on their illogical behaviour and price patterns they used further more hinting on technical analysis with his descriptions of technical analysis concepts such as puts, calls and pools which are still relevant in Morden-day technical analysis and how he used these in the Amsterdam Stock Exchange. 18th CENTURY Homma Munehisa Homma Munehisa, born 1724 in Sakata, Japan a Japanese rice merchant trading in Dōjima Rice Exchange developed what i consider the most popular form of technical analysis which proved high standards of acceptance as traders/investors world-wide still use it in modern-day times, he initiated the Japanese Candlestick/ K-Line (primarily known as Sakata Charts), which is a price chart that's represents the open, close, high and low prices of a security for a specific time period which was introduced in his book "THE FOUNTAIN OF GOLD- THE THREE MONKEY RECORD OF MONEY" which also shared insights about chart patterns, markets trends and traders human emotions. LATE 19TH AND EARLY 20TH CENTURY Charles Henry Dow considered father of technical analysis born 1851 Charles Dow is the one that first to induct modern-day technical analysis in the United States Of America, he was an American journalist who co-founded Dow Jones and Company which is a publishing firm along ide Edward Davis Jones and Charles Bergstresser. He also co-founded The Wall Street Journal which its first publication was on July 8, 1889 which became the the most reputed financial publication and first of it's kind which was a series of texts that discussed his observations of the U.S stock market especially the industrial and transportation stocks listed in the U.S stock market this gave way to the Dow Jones Industrial Average and Dow Jones Transportation Average, he also held a strong believe that "the stock market as a whole was a reliable measure of overall business conditions within the economy" he also developed the Dow Jones Theory which states that the market has 3 trend phases which was a significant breakthrough in technical analysis as this theory aids traders/investors in identifying the major, intermediate and minor trends in the market. after his passing many other technical analysis developers came from studying his work/publications which include the likes of William Hamilton who later become the editor of the wall street journal, others notable followers of his work include Robert Rhea, George Shaefer and Richard Russel. another prominent figure in the development of modern-day technical analysis is Ralph Nelson Elliot born 1871 whose financial career started as an accountant, Mr. Elliot was famously known for studying 75 years of historical stock market data and recording his research and findings manually as computerized systems where limited which i believe is very outstanding. his work is based on a theory that market movements are not random and that the markets moves in specific trends and patterns (waves) which are influenced by traders/investors psychology. his wave theory gained traction in March 13, 1935 when he stated that the the market will make a bottom and indeed the following trading day the Dow Jones Industrial Average made it's lowest closing price, which proved his Elliot Wave Theory to be a significant technical anaysis concept. 20th CENTURY Technical Indicators with the aid of computerized systems technical analysis evolved into technical indicators which are computer systems backed by mathematical calculations of price data which apply these calculations to analyse large volumes of market data incorporated by algorithms which overlap on charts to forecast future price movements. hope you have a fun read and learned something new. “In learning you will teach, and in teaching you will learn.” Phil Collins put together by Pako Phutietsile as @currencynerd
COINBASE:BTCUSDEducation
by currencynerd
What Is Money Flow In & Out of a Stock? And Why Should You Care?Professionals often speak of money flowing in or out of a stock, but how can that be if there is an equal number of buyers and sellers? It is because “Money Flow” comes from the balance of the lot sizes. There are four possible positions in any one stock: Buy Buy to Cover Sell Sell Short Each investor and trader in the stock has their own separate agenda. Each may come from a different Market Participant Group. There are now 9 Stock Market Participant Groups, starting from those who buy first, at the bottom of a new upward cycle: The giant Buy Side Institutions who invest Mutual and Pension Funds and/or create ETFs and other kinds of stock market derivatives. The Sell Side Institutions, aka the big banks and major market makers Wealthy Individual Investors Corporations Institutional/ Pro Traders High Frequency Traders (HFTs) Small Funds Individual Small-Lot Investors, Investment Groups and Individual Retail Traders Odd-Lot Investors Buyers are anticipating that the stock is going to move up. Their stock order types span the spectrum, for example: Market Orders, Limit Orders, Stop Orders. Buy to Cover Orders are placed by traders who sold short and are now taking profits. Those who are selling the stock are anticipating that the stock is going to move down. In an uptrending stock, this is profit-taking near the top of the run. It can also be similar in a downtrending stock because the seller is afraid that the stock is going to move down more, and they have been holding through what they thought was a short retracement. Most of these stock order types will be “Sell at Market” (SAM). Sell Short Traders are anticipating that the stock is going to move down, and they can place a variety of orders just like the buyers. Both Buyers and Sell Shorters are entering the trade, while Buy to Covers and Sellers are exiting the trade. It is the mix of these different types of buying and selling coupled with the kind of investor or trader and the size of their share lots that causes money to flow in or out of a stock. If the buyers are mostly large lots and the sellers are mostly small lots, who is in control? The buyers purchasing large lots . This is because, at some point, there will not be enough small-lot sellers, and those who are Selling Short will turn and start Buying to Cover, creating more of a shortage of sellers. Consequently, this will put more pressure on the buy side. There are always latecomers to a stock run, and they are usually small-lot buyers. As the stock moves up in price, more of the small-lot buyers will step in, pushing the price up even further. Most small-lot buyers typically use a “Buy at Market” Order, which is the worst kind to use to control the entry price. As the stock moves up further in price, the last of the Short Sellers will panic and Buy to Cover, causing the stock to gap up or jump even higher. This then triggers the large-lot buyers to start selling for profit. As profit-taking begins, the stock dips in price. This causes the odd-lot buyer, who is the last in the market participant cycle to buy, to rush into the stock and buy because they have been told to “Buy the Dip.” By now, the news media has been talking about this stock and its great run. Consequently, the odd-lot uninformed investor finds the dip irresistible and buys on pure emotion without any analysis of the stock. This causes the final gap up and exhaustion pattern. Now, while all of those odd-lot latecomers are buying, who is selling to balance the equation? Market Makers are Selling Short and the Smart Money, who were the first to enter, are selling to take profits. Suddenly, the large lots are now shifting to the downside, and what happens? The control switches to the sellers who are moving larger lots. Now, money is flowing out of the stock, yet the price may go up briefly before a downtrend develops. Large lots are usually wiser investors and traders who know more than the other investors and traders. So the giant Buy Side Institutions investing Mutual and Pension Funds, who have access to information often not yet available to Individual Investors and Retail Traders, are called the Smart Money. It can be assumed that the smaller the lot size, the less the investor or trader knows and understands about the market. As smaller lots move in, a shift of power occurs due to the large lots moving to the sell side, and thus money shifts to flowing out of the stock. As the stock collapses and reaches a price or equilibrium near a base or bottom, those smaller lots who held through the collapse reach an emotional point of extreme pain of loss and begin to sell in panic. In response, the Smart Money and Market Makers switch roles again, Buying to Cover their profitable shorts and buying to hold as the stock moves up again. Summary: Every time you take a position in a stock, there are also three other positions in that same stock. You need to be aware of each of these and make sure that you are with the right group. Most of the time, traders who are having problems with their trades are simply trading with the wrong group. It is important, then, to learn about today's stock market structure and what I call the "Cycle of Market Participants." When traders can trade with the flow of the Smart Money, they have a decided advantage.
NASDAQ:AAPLEducation
by MarthaStokesCMT-TechniTrader
Can You Use Math to Elevate Your Trading Strategy?In the world of trading, understanding market movements is crucial for success. One of the most effective frameworks for interpreting these movements is Wave Theory, a concept that helps traders identify price trends and potential reversals. By incorporating mathematical projections, traders can enhance their analysis and make informed decisions. In this article, we’ll explore the fundamentals of Wave Theory and demonstrate how to project price movements using wave measurements—specifically, measuring Wave 1 to project the size of Wave 3. Understanding Wave Theory Wave Theory, popularized by Ralph Nelson Elliott, posits that financial markets move in repetitive cycles or waves, driven by collective investor psychology. Elliott identified two primary types of waves: Impulse Waves: These are the waves that move in the direction of the prevailing trend, typically comprising five waves (labeled 1, 2, 3, 4, and 5). Corrective Waves: These waves move against the prevailing trend and consist of three waves (labeled A, B, and C). In a typical bullish market, you will observe a series of impulse waves followed by corrective waves. Understanding these waves allows traders to identify potential entry and exit points based on price patterns. The Mathematics Behind Wave Projections One of the key aspects of Wave Theory is using mathematical relationships to predict future price movements. A common approach is to measure the length of Wave 1 and use that measurement to project the size of Wave 3. Research indicates that Wave 3 often ranges between 1.0 to 1.68 times the length of Wave 1. Steps to Project Wave 3: Identify Wave 1: Begin by determining the starting point of Wave 1 and measuring its length. This can be done by noting the price levels at the start and end of Wave 1. Calculate the Length of Wave 1: Length of Wave 1 = End Price of Wave 1 - Start Price of Wave 1. Project Wave 3: To project Wave 3, multiply the length of Wave 1 by the desired factor (1.0 to 1.68). Projected Length of Wave 3 = Length of Wave 1 × (1.0 to 1.68). Determine the Target Price: Add the projected length of Wave 3 to the endpoint of Wave 2 to determine the target price for Wave 3. Target Price = End Price of Wave 2 + Projected Length of Wave 3. Example: Applying Wave Theory in a Trading Scenario Let’s say we’re analyzing a stock and identify Wave 1 as follows: Start of Wave 1: $50 End of Wave 1: $70 Step 1: Measure Wave 1: Length of Wave 1 = $70 - $50 = $20 Step 2: Project Wave 3: Using the range of 1.0 to 1.68: Minimum Projection = $20 × 1.0 = $20 Maximum Projection = $20 × 1.68 = $33.60 Step 3: Determine the Target Price: Assuming Wave 2 has an endpoint of $80: Minimum Target Price = $80 + $20 = $100 Maximum Target Price = $80 + $33.60 = $113.60 Thus, based on Wave Theory, we would anticipate that Wave 3 could reach between $100 and $113.60. Wave Theory, combined with mathematical projections, provides traders with a structured approach to understanding market dynamics and predicting future price movements. By accurately measuring Wave 1 and projecting Wave 3, traders can make informed decisions based on calculated price targets, improving their chances of success in the financial markets. As you incorporate Wave Theory into your trading strategy, remember that no system is foolproof. Always combine technical analysis with sound risk management practices to protect your capital. With patience, discipline, and a strong mathematical foundation, you can leverage Wave Theory to enhance your trading prowess and navigate the markets with greater confidence. How can you see yourself incorporating mathematical projections like Wave Theory into your trading strategy, and what has been your experience with predicting market movements using these techniques? Let me know in the comments. Happy trading!
Education
by TLTurnerTV
Actual Success Rates of Ascending and Descending TrianglesActual Success Rates of Ascending and Descending Triangles Here is an analysis of the actual success rates of ascending and descending triangles in trading, based on the information provided: Success Rates Ascending and descending triangles generally have fairly high success rates as continuation patterns: -The ascending triangle has a success rate of approximately 72.77%. -The descending triangle has a slightly higher success rate of 72.93%. These numbers come from a study that tested over 200,000 price patterns over a 10-year period. Factors Influencing Success Several factors can influence the success rate of these patterns: -The trader's ability to execute the strategy correctly -Market conditions at the time the triangle formed -Market liquidity -Overall market sentiment Important Points to Consider -Triangles are considered reliable continuation patterns, especially in trending markets. -The ascending triangle in an uptrend is statistically more reliable than the descending triangle. -To validate the pattern, the price must touch at least twice each of the upper and lower lines. -An increase in volume during the breakout is an important confirmation sign. Strategies to improve the chances of success -Wait for the triangle to fully form before entering a position1. -Confirm the breakout with a close above/below the resistance/support level. -Use additional technical indicators to confirm the signal. -Pay attention to the volume, which should increase during the breakout. Conclusion Although ascending and descending triangles have relatively high success rates, it is important to use them in conjunction with other technical analysis tools and to take into account the overall market context to maximize the chances of success.
COINBASE:BTCUSDEducation
by Le-Loup-de-Zurich
Rules of Motive WavesMotive Waves are the components of Elliot Wave structure. Motive Waves consists of 5 sub-waves of which 3 are impulse (In the direction of trend) and 2 corrective waves. The Motive Wave in the upward direction will start with Swing High, Ends with Swing High and consists of 3 Higher Highs and 2 Higher Lows representing strong upward trend. Motive Wave in the downward direction will start with Swing Low, Ends with Swing low and consists of 3 Lower Lows and 2 Lower Highs representing strong downward trend. 🎲 Types of Motive Waves Motive Waves are broadly classified by two types: Impulse Waves Diagonal Waves Diagonal Waves are further classified into Contracting and Expanding Diagonals. These can fall into the category of either leading diagonal and ending diagonal. 🎲 Rules of Motive Waves 🎯 Generic Rule of any motive waves are as follows Should consist of 5 alternating waves. (Swing High followed by Swing low and vice versa) This can start from Swing High and end in Swing High or start from Swing Low and end in Swing Low. Wave-2 should not move beyond Wave-1. This means, the Wave-2 is always shorter than Wave-1 with respect to distance between the price of start and end. Wave-3 always moves beyond Wave-1. This means, the Wave-3 is always longer than Wave-2 in terms of price Among Wave-1, Wave-3, and Wave-5, Wave-3 is never the shortest one. This means, either Wave-1 or Wave-5 can be longer than Wave-3 but not both. Wave-3 can also be longest among the three. Here is the pictorial representation of the rules of the Motive Waves For a wave to be considered as motive wave, it also needs to follow the rules of either impulse or diagonal waves. 🎯 Rules for a 5 wave pattern to be considered as Impulse Wave are: Wave-4 never overlaps with Wave-1 price range Wave-1, Wave-3 and Wave-5 should not be either expanding or contracting. Meaning, we cannot have Wave-1 > Wave-3 > Wave-5 , and we cannot have Wave-1 < Wave-3 < Wave-5 Pictorial representation of the impulse wave rules are as below: 🎯 Rules for the Diagonal Waves are as follows Contrary to the first rule of impulse wave, in case of diagonal wave, Wave-4 always overlaps with Wave-1 price range. Wave-1, Wave-3 and Wave-5 are either in expanding formation or contracting formation. That means, we need to have either Wave-1 > Wave-3 > Wave-5 OR Wave-1 < Wave-3 < Wave-5 Pictorial representation of the Contracting Diagonal Wave is as below. Here, the Wave-1, Wave-3 and Wave-5 are in contracting formation. Pictorial representation of the Expanding Diagonal Wave is as below. Here, the Wave-1, Wave-3 and Wave-5 are in expanding formation.
Editors' picks
Education
by Trendoscope
5
3 Standard Deviation Setup on Micro 10-Year Yield FuturesIntroduction The Micro 10-Year Yield Futures contract has caught the attention of many traders recently, as its price action reached the upper 3 standard deviation of the Bollinger Band® in the daily time frame. This rare occurrence presents a potential mean reversion setup, where the price could revert back toward its historical average. This article explores what mean reversion is, why it matters in trading, and how the 3 standard deviation Bollinger Bands® setup may indicate an opportunity to short this market. We’ll also discuss key price levels, contract specifications, and a potential trade setup for shorting Micro 10-Year Yield Futures. What is Mean Reversion in Trading? Mean reversion is a trading concept based on the idea that asset prices fluctuate around a central value or mean over time. When prices move too far away from this mean, they often correct or revert back toward that average. This is particularly useful in markets that experience high volatility or extreme price movements, as those extremes tend to reverse at some point. In simple terms, mean reversion strategies involve selling (or shorting) assets when they are significantly above their historical average, with the expectation that prices will return to normal levels. Conversely, buying when prices are significantly below the mean can also be a valid strategy. The 3 Standard Deviation Bollinger Band® Setup Bollinger Bands® are a popular technical indicator used to measure volatility and price extremes. The bands are plotted a certain number of standard deviations away from a moving average. The further away prices move from the average, the more extreme the movement. Reaching the upper 3 standard deviation Bollinger Band® is a rare occurrence that suggests extreme overbought conditions. Historically, when an asset reaches this level, the likelihood of a price pullback increases, as market participants may see it as an unsustainable level. In the case of Micro 10-Year Yield Futures, the recent rally has pushed prices to this rare zone, setting the scene for a potential mean reversion. Key Price Levels and Resistance Zones As the Micro 10-Year Yield Futures price approaches extreme levels, there are two key resistance zones which traders should be aware of: 4.174-4.021. These levels represent areas where selling pressure might intensify, pushing prices down and aiding in the mean reversion process. Traders looking to capitalize on this potential mean reversion setup can consider initiating short positions within this resistance range. These resistance zones act as psychological and technical barriers, providing an opportunity for traders to place their entries. Additionally, these levels help to manage risk, as they define a clear area to set stop-loss orders just above the upper resistance. Contract Specifications and Margin Requirements Understanding the specifications of the Micro 10-Year Yield Futures contract is crucial for traders looking to execute any trade. Here are some of the key details: Tick Size: The minimum price fluctuation is 0.001, which equates to $1 per tick. Margin Requirements: Margin requirements vary. Currently, the initial margin for Micro Yield Futures is around $320 per contract, making it accessible to a wide range of traders. Check with your broker for specific margin amounts. This knowledge is essential in calculating potential profit and loss in dollar terms, as well as determining the appropriate position size based on your available margin. Trade Setup Example Let’s now move on to a practical trade setup based on the discussed conditions. Entry Point: Shorting Micro 10-Year Yield Futures within the resistance range between 4.174 and 4.021. Stop Loss: A stop should be placed just above the upper resistance, say around 4.175, to protect against further price appreciation. Target: The target for this mean reversion trade would be around the mean of 3.750, where prices are expected to revert based on historical behavior. Reward-to-Risk Calculation: If a short entry is made at 4.021, with a stop at 4.175 (154 basis points risk) and a target at 3.750 (271 ticks potential gain), the reward-to-risk ratio would be approximately 1.76:1. A higher entry point closer to the upper resistance at 4.174 would significantly improve the reward-to-risk ratio, but it also increases the likelihood of missing the entry if the market reverses before reaching that level. In dollar terms, each tick (0.001) is worth $1, so the 154-tick stop loss represents a risk of $154 loss per contract, while the potential reward of 271 ticks equates to $271 worth of gains per contract. Risk Management Considerations Risk management is a critical aspect of any trading strategy, especially in futures trading. While the 3 standard deviation Bollinger Band® setup provides a compelling case for mean reversion, it's essential to manage risk carefully to avoid significant losses. Stop-Loss Orders: A well-placed stop-loss is crucial to protect against unexpected market moves. In this case, placing the stop above the resistance zone (around 4.175) ensures that risk is controlled if the market continues to rally instead of reversing. Position Sizing: Given the volatility of futures contracts, it is important to adjust position sizes according to the trader’s risk tolerance and available margin. Overleveraging can lead to large losses if the market moves against the trade. Moving Averages Can Shift: It’s important to remember that the moving average (the mean) can change as new data comes in. While the target is currently around 3.744, this level may adjust over time, so traders need to monitor the mean as the trade progresses (which is why we have set the target to initially be slightly higher at 3.750). Resistances as Reinforcements: The resistance zone between 4.174 and 4.021 can act as reinforcements to the mean reversion. Traders should observe price behavior at these levels to confirm rejection signals before entering the trade. Conclusion In conclusion, the Micro 10-Year Yield Futures contract presents a unique trading opportunity as it has reached the rare 3 standard deviation Bollinger Band® on the daily time frame. This extreme price level indicates potential overbought conditions, making it a candidate for mean reversion back to the mean at approximately 3.750. The trade setup involves shorting within the resistance range, with a well-defined stop and target, and offers a favorable reward-to-risk ratio. However, as always, caution is advised, and traders should manage risk effectively using stop-loss orders and appropriate position sizing. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
CBOT_MINI:10Y1!Education
by traddictiv
The 45 Degree Line: A Very Effective Tool in Trading.The 45 Degree Line: A Very Effective Tool in Trading. When the ppix of an asset explodes and forms a very steep slope, the 45 degree line, also known as the 1x1 Gannangle, is an important and very useful tool in technical analysis, used to identify and predict market corrections. Meaning of the 45 degree line: The 45 degree line represents an equilibrium trend in technical analysis. It is considered an average support or resistance line, indicating a balance between time and price. This line is particularly important because it suggests a constant and balanced progression of the market. Main characteristics -Angle: The 45 degree line forms an angle of 45° with the horizontal axis of the chart. -Notation: It is often noted 1x1, which means that it represents a movement of one unit of price for one unit of time. -Interpretation: A trend following this angle is generally considered strong and likely to continue in the same direction. Use in Technical Analysis Traders use the 45-degree line in several ways: -Identifying trend strength: A trend that follows or exceeds the 45-degree angle is considered strong. -Support and resistance: The line can act as a dynamic level of support in an uptrend or resistance in a downtrend. -Forecasting movements: Traders can anticipate trend changes when price deviates significantly from the 45-degree line. -Multi-timeframe analysis: The line can be applied on different time frames, from short-term to long-term, for a more comprehensive analysis. Integration with other tools The 45-degree line is often used in conjunction with other technical analysis tools for a more robust analysis. It can be combined with indicators, chart patterns, or other Gannangles to confirm trading signals and improve forecast accuracy. In conclusion, the 45-degree line is a powerful but often underestimated tool in technical analysis. Its simplicity and versatility make it a valuable tool for traders looking to identify and follow market trends with precision.
COINBASE:BTCUSDEducation
by Le-Loup-de-Zurich