Cycles in charts, how to anticipate turning points

Introduction to cycles in charts A cycle is an event, such as a price high or low, which repeats itself on a regular basis. Cycles exist in the economy, nature and the financial markets. The basic business cycle encompasses an economic downturn, bottom, economic upturn, and top. Cycles in nature include the four seasons and solar activity (11 years). Cycles are also part of technical analysis of the financial markets. Cycle theory asserts that cyclical forces, both long and short, drive price movements in the financial markets. Price and time cycles…

Bollinger Bands Technical overlay

Introduction to Bollinger Bands Developed by John Bollinger, Bollinger Bands ® are volatility bands placed above and below a moving average. Volatility is based on the standard deviation, which changes as volatility increases and decreases. The bands automatically widen when volatility increases and narrow when volatility decreases. This dynamic nature of Bollinger Bands also means they can be used on different securities with the standard settings. For signals, Bollinger Bands can be used to identify M-Tops and W-Bottoms or to determine the strength of the trend. Note: Bollinger Bands® is…

Relative Rotation Graphs

Introduction to Relative Rotation Graphs (RRG Charts) Relative Rotation Graphs or RRGs, as they are commonly called, are a unique visualization tool for relative strength analysis. Chartists can use RRGs to analyze the relative strength trends for several securities against a common benchmark, and against each other. The real power of this tool is its ability to plot relative performance on one graph and show true rotation. We have all heard of sector and asset class rotation, but it is hard to visualize this “rotation” sequence on linear charts. RRGs…

Long-Tailed Pin Bar Signals

How to Trade Long Tailed Pin Bar Signals on Daily Charts I often get asked if I have a favorite price action chart pattern to trade, and the answer is yes, yes, I do. Today’s lesson is about that chart pattern, it’s what I call my ‘deserted island strategy’ because if I were stranded on a deserted island and could only pick one trading strategy or signal, it would be the one I am going to share with you today, long-tailed pin bar strategy. Pin bars, in general, are my…

Three Line Break Charts

What are Three Line Break Charts Invented in Japan, Three Line Break charts ignore time and only change when prices move a certain amount. In this regard, these charts are quite similar to Point & Figure charts. Three Line Break charts show a series of vertical white and black lines. White lines represent rising prices, while black lines portray falling prices. Prices continue in the same direction until a reversal is warranted. A reversal occurs when the closing price exceeds the high or low of the prior two lines. Construction…

All you need to know about volume

What is ‘Volume’ Volume is the number of shares or contracts traded in a security or an entire market during a given period of time. For every buyer, there is a seller, and each transaction contributes to the count of total volume. That is, when buyers and sellers agree to make a transaction at a certain price, it is considered one transaction. If only five transactions occur in a day, the volume for the day is five. Volume as Indicator ‘Volume’ Volume is an important indicator in technical analysis as…

Avoiding Wicked Bull Traps

5 Tips For Avoiding Wicked Bull Traps When buying into what appears to be a great stock breaking out of a base to claim higher highs there is nothing more frustrating then seeing your investment turn from promising to junk in a matter of days. As an investor you thought you had a potential winner on your end, but the stock falls off after the “breakout”. Congratulations, you were victimized by a bull trap. Bull and bear traps alike are commonly seen and can be very hard to avoid. Whether you…

Introduction To Price Action Trading

Beginners Introduction To Price Action Trading Price Action Trading Explained 1- The Definition Of Price Action Trading 2- Trading with “Messy” Vs “Clean” Forex Charts 3- How to identify trending and consolidating markets 4- How to trade Forex with Price Action Trading Strategies 5- How to use chart confluence and Price Action Signals What is Price Action Trading ? Basic Definition: Price Action Trading (P.A.T.) is the discipline of making all of your trading decisions from a stripped down or “naked” price chart. This means no lagging indicators outside of maybe…

Andrews’ Pitchfork trend channel tool

Andrews’ Pitchfork trend channel tool Introduction Developed by Alan Andrews, Andrews’ Pitchfork is a trend channel tool consisting of three lines. There is a median trend line in the center with two parallel equidistant trend lines on either side. These lines are drawn by selecting three points, usually based on reaction highs or lows moving from left to right on the chart. As with normal trend lines and channels, the outside trend lines mark potential support and resistance areas. A trend remains in place as long as the Pitchfork channel…

Flag Pennant Continuation Pattern

Flag Pennant Continuation pattern Flags and Pennants are short-term continuation patterns that mark a small consolidation before the previous move resumes. These patterns are usually preceded by a sharp advance or decline with heavy volume, and mark a midpoint of the move. Sharp Move: To be considered a continuation pattern, there should be evidence of a prior trend. Flags and pennants require evidence of a sharp advance or decline on heavy volume. These moves usually occur on heavy volume and can contain gaps. This move usually represents the first leg of a…