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…

Heikin-Ashi Candlestick Chart

Heikin-Ashi Heikin-Ashi Candlesticks are an offshoot from Japanese candlesticks. Heikin-Ashi Candlesticks use the open-close data from the prior period and the open-high-low-close data from the current period to create a combo candlestick. The resulting candlestick filters out some noise in an effort to better capture the trend. In Japanese, Heikin means “average” and “ashi” means “pace” (EUDict.com). Taken together, Heikin-Ashi represents the average-pace of prices. Heikin-Ashi Candlesticks are not used like normal candlesticks. Dozens of bullish or bearish reversal patterns consisting of 1-3 candlesticks are not to be found. Instead,…

Bump and Run Reversal

Bump and Run Reversal Chart Pattern As the name implies, the Bump and Run Reversal (BARR) is a reversal pattern that forms after excessive speculation drives prices up too far, too fast. Developed by Thomas Bulkowski, the pattern was introduced in the June-97 issue of Technical Analysis of Stocks and Commodities and also included in his recently published book, the Encyclopedia of Chart Patterns. The pattern was originally named the Bump and Run Formation, or BARF. Bulkowski decided that Wall Street was not ready for such an acronym and changed…

Chart Patterns (2) – The Double Top Reversal

The Double Top Reversal Pattern The Double Top Reversal is a bearish reversal pattern typically found on bar charts, line charts and candlestick charts. As its name implies, the pattern is made up of two consecutive peaks that are roughly equal, with a moderate trough in-between. Note that a Double Top Reversal on a bar or line chart is completely different from Double Top Breakout on a P&F chart. Namely, Double Top Breakouts on P&F charts are bullish patterns that mark an upside resistance breakout. Although there can be variations, the classic…

Gold Bulls In Control

Gold Bulls In Control After Brexit (GLD, PHYS) Gold surged after the Brexit referendum, posting a 2-year high, and could gain considerable ground in coming months. Meanwhile, gold funds are still struggling to clear the tops of rising channels put into place in February when momentum eased after the first round of the recovery rally. These stubborn resistance levels should give way to healthy trend advances, as early as this week. There are many ways to play the gold rally but traders often head straight to the worst choice: Vaneck Vectors Gold Miners ETF (GDX).…

When Not to Trade

Knowing When Not to Trade is Important In my experience, one of the toughest challenges you may face as a trader grapple with is knowing when to keep your powder dry, a Wall Street maxim for staying out of the market – knowing when not to trade.  Essentially, keeping your powder dry means saving one’s resources, and being prepared for when they will be used in the most effective manner. In trading, this translates into only putting capital at risk when the opportunity offers the lowest risk and highest probability.…