How to use HODL Stick

BITFINEX:BTCUSD   Bitcoin / Dollar
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I'd like to show you how to properly use HODL Stick and the difference between HODL Stick Bitcoin             version.
HODL Stick uses data from chosen exchange only while the Bitcoin             version uses data from 9 different Bitcoin             exchanges, which is configurable in properties.
I chose Bitcoin             on Bitfinex on 1H timeframe just because there are more examples to discuss about.

Bull div: Higher High (HH) on price and Lower High (LH) on Stick OR LH on price and HH on Stick
Bear div: Higher Low (HL) on price and Lower Low (LL) on Stick OR LL on price and HL on Stick

  • The last tick (green, red) doesn't matter! It's there just to entertain you! Always wait for candle to close and Stick becomes orange (yellow).
  • Always compare peaks / lows, either on price or Stick. Note that peaks or lows on Stick are usually one tick earlier.
  • Don't compare peaks / lows too far away, you should use higher timeframe instead.
  • There is still no rule on how strong the move will be after the div! But div             on higher timeframe generally makes stronger move.
  • If you spot opposite divs on different tf (ie: bear div             on higher tf and bull div             on lower tf), expect that div             on lower tf will be weak or not play out at all.
  • Don't expect strong moves in dead markets.

Channels / 'sentiment' (I'm aware sentiment might not be the right word but I will use it anyway):
We talk about channels when we can draw upper and lower trendline to a Stick.

Channels tell us current market 'sentiment'. There are different scenarios:
  • Channel pulls up, price goes up: Perfect Bullish .
  • Channel goes sideways or pulls down, price goes up: Bear pressure in play. If this state lasts too long, expect strong move down OR bull trend is coming to an end.
  • Channel pulls down, price goes down: Perfect Bearish
  • Channel goes sideways or pulls up, price goes down: Bull pressure in play. If this state lasts too long, expect strong move up OR bear trend is coming to an end.
  • It's a strong signal when Stick falls out of the channel either bullish or bearish .
  • Channels on higher timeframes have bigger influence.
  • Adjust timeframe if looking far back in history (ie: don't use 1H if looking 1 month of data, use higher timeframe instead).

We can draw trendlines on Stick, just like we do it on price. From highs to highs or lows to lows.
If Stick pierces trendline weakly, wait for confirmation.
Shorter the trendline , weaker reaction to expect.

Don't rely on Stick that is open for too long OR last tick (red or green) is longer then one tick. Refresh the chart regularly. It's a TV bug.
I published HODL Technical Analysis screencast with HODL SR and HODL Stick.
You can find it on support website: http://hodl.org/#hodl_stick_screencasts
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