I want to separate a couple items that are often in my opinion misleading to new investors and traders.
#1 Indicators: Indicators no matter how many are thrown up on a chart are only as good as the person interpreting. If it was as simple as seeing a crossover of the or EMA's everyone would be rich. These indicators provide in my opinion a gauge of market sentiment but since they all lag the market do not provide adequate information for swing and positional trades. Day traders and scalpers find these tools more useful as they are looking at smaller time frames, but in larger time frames these will often do more to misguide a positional trader or investor then provide any insight.
#2 Patterns: Patters are often misused in TA. Whenever looking at patterns or trends, you must keep in mind the time frame and more importantly how it relates to current market conditions and prevailing trends. Again, if trading and investing was as easy as seeing a patter and going short we would all be rich! Often the context of the formation is misunderstood which leaves new traders/investors on the wrong side of a trade. The formation must be taken into context of the prevailing trend, and not just recognizing a pattern.
#3 Sentiment: Market sentiment is always the underlying factor in determining positioning. This is where indicators can be helpful when used properly. I want to be positioned to the longer-term market sentiment and use shorter term market sentiment to trade. For example, as hard as the bears have tried to push the strength of the market down, throughout this correction the daily 14bar has not touched 30. Even though we have had a pullback of 30-40%+ the is still showing us that the market is strong. At least in my opinion. Therefore, I had no issue adding yesterday and holding my previous trade. and Fibonacci levels are psychological levels often provide better insight to market sentiment when used properly.
#4 Price Action: @MarcPmarkets is a guru when it comes to price action. You can trade on price action alone if you have a simple understanding of market conditions. You do not need MACD's HMA's EMA's Oscillators that are all lagging the market, when you can recognize price action. Now this takes time to master and is mainly for trading in shorter time frames but used in conjunction with market sentiment is a powerful tool.
In closing I see so many "TA"'s with , butterflies, triangles, etc, and not that these are wrong, but these are guesses and nothing more if not used in conjunction with Market Sentiment and Price Action.
We will be providing some more in-depth examples of how to use Market Sentiment and Price action so stay tuned!!!
#1 the resistance trend line has not been broken. - Bearish even though we are testing it now. We have three now four points so we can call this a trend. This is the sole reason I have NOT added the second position of this trade yet. I want to break out of this resistance area with confirmation (one or two closing bars)
#2 The Fat blue line is the linear regression median trend line. Note that we are now trending above this line. bullish
#3 The Cyan line is the trend line I drew looking at support and resistance points. We tested the line recently and have started a shorter term uptrend (blue line). bullish
So though in the near term the trend line is still negative the trend itself is showing signs of change towards bullishness. As I am a longer term investor I am looking always towards the longer term trend for overall portfolio position, and the mid and shorter term for positional trades. Now add market sentiment which is slightly negative, yet we are starting to show bullishness, and the fact that most traders are late to the game, I am willing to take some risk here.
Again and I can not emphasize this enough. Trading corrections is risky period. So you must do your own homework. But this was a great comment and I do not want anyone to think I have lost sight of the trend.
Seems like if Amazon is a buy here, then Bitcoin is definitely on sale!!! Both are disrupters but which one is the bigger disrupter? I think bitcoin is much more of a disrupter personally. Can we go lower? Sure. Do we have to before we move higher? Absolutely NOT!