Hello, everyone!
Last time we considered the candlestick patterns by Bill Williams(BW). Today we are going to expand the novice trader tools for better understanding the market situation.
To define if the market price is going without obstacles BW use the Market Facilitation Index. It demonstrates how the tick volume can be the market driver. The calculation you can see on the pic.
Just calculated MFI for one bar is not useful for the analysis. We should compare it with the meaning of the previous period. Using this comparison, we can divide 4 profitunity windows.
1. GREEN
Current MFI is GREATER than previous one, current volume is GREATER than previous one too.
This is the breakout signal. It means that more and more traders execute trades in the direction of a bar trend. Your best decision here is to follow this impulse.
2. FAKE
Current MFI is GREATER than previous one, current volume is LESS than previous one too.
The price go in the trend direction without the volume support. This is the sign of possible correction. Here is the time when it is too easy to manipulate the market(especially actual on the Bitcoin market!)
3. FADE
Current MFI is LESS than previous one, current volume is LESS than previous one too.
This is the most valuable indicator. Squat bar usually appears on the end of trend. Here the nice opportunity to enter the market at the beginning of the new trend.
4. SQUAT
Current MFI is LESS than previous one, current volume is GEATER than previous one too.
The market has low volume and volatility. This is the time when the interest is decreasing, we can usually see it of the end of Elliott Wave 1, when the lack of buyers who want to buy with the high price. Here you should be ready for the big move.
Next time I will show some signals with the beginner’s level of Trading Chaos trading system.
DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
Last time we considered the candlestick patterns by Bill Williams(BW). Today we are going to expand the novice trader tools for better understanding the market situation.
To define if the market price is going without obstacles BW use the Market Facilitation Index. It demonstrates how the tick volume can be the market driver. The calculation you can see on the pic.
Just calculated MFI for one bar is not useful for the analysis. We should compare it with the meaning of the previous period. Using this comparison, we can divide 4 profitunity windows.
1. GREEN
Current MFI is GREATER than previous one, current volume is GREATER than previous one too.
This is the breakout signal. It means that more and more traders execute trades in the direction of a bar trend. Your best decision here is to follow this impulse.
2. FAKE
Current MFI is GREATER than previous one, current volume is LESS than previous one too.
The price go in the trend direction without the volume support. This is the sign of possible correction. Here is the time when it is too easy to manipulate the market(especially actual on the Bitcoin market!)
3. FADE
Current MFI is LESS than previous one, current volume is LESS than previous one too.
This is the most valuable indicator. Squat bar usually appears on the end of trend. Here the nice opportunity to enter the market at the beginning of the new trend.
4. SQUAT
Current MFI is LESS than previous one, current volume is GEATER than previous one too.
The market has low volume and volatility. This is the time when the interest is decreasing, we can usually see it of the end of Elliott Wave 1, when the lack of buyers who want to buy with the high price. Here you should be ready for the big move.
Next time I will show some signals with the beginner’s level of Trading Chaos trading system.
DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
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