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Technical Analysis

Technical Analysis 101: Support and Resistance In this video I cover the basics of the support and resistance levels and how to chart it out, If you enjoyed this video please like it and share it with your friends. Also please drop a comment, feedback, suggestion for me to cover or just to work on, and that would be much appreciated. Next video I'll cover the Fibonacci retracement and extension to plot targets. So we covered the trend lines and support and resistance levels, so please practice with those and send me charts if you need someone to look over it! As the main goal is for all of us to learn from each other and become better chartist and traders!
NYSE:WMTEducation
by jUiCE_Trades
5
Bearish patterns in tradingThe second part of my post is about patterns in trading. Today we will talk about "bearish" after the formation of which the price falls. 1. Three falling peaks Not the most popular, but possible pattern. A special condition - the highs of the price must be united by one trend line, which is located with a slope to the right. As in most patterns, the formation of a pattern is preceded by a clear trend. Selling - after falling behind the bottom line. 2. Double top Two equivalent price highs with an emphasis on the price level. You should open a sell after the price completely forms a figure and breaks the bottom line. In some cases, the formation of a Triple Top pattern is possible. 3. Head and shoulders Consists of three peaks: right and left shoulder and head. All three rest on one level - the neck. The pattern is preceded by an obvious upward trend. After the formation of the second shoulder and breaking through the neckline (or better - fixing on it), we can expect a fall by the volume of the previous trend. 4. Inverted cup with handle "Soft" price reversal in an arc based on the base line. It is important to remember that after the "cup" is formed, a "handle" is also formed, usually with a volume of 1/3 of the main movement. Do not rush to enter the trade, wait for the breakdown of the base line. 5. Descending triangle The conditions for the formation of a pattern are a clear uptrend before entering the pattern + at least 5 touches of trend lines. After the breakdown of the trend support, we wait for consolidation and start selling. 6. Wedge This pattern is very similar to the "Triangle" with the difference that trend lines do not cross in the foreseeable future and price fluctuations do not get much weaker closer to the completion of the pattern. But in general, the logic of selling is the same - consolidation after the breakdown of the support line and a fall by the volume of the previous trend. These are not all possible patterns, of course. -------------------- Share your opinion in the comments and support the idea with likes. Thank you for your support!
Education
by DeGRAM
13
5 steps for building technical analysis by time framesYou sometimes ask me how I structure my forex technical analysis. Today I will share 5 simple steps that I go through myself to determine the direction of the price. So. Step 1 - start with a large TF to analyze the global price movement and mark major levels. Step 2 - Go to Week 1 TF to find major trends and recurring items. Step 3 - I use the daily timeframe to mark strong trend lines, find patterns and determine the approximate entry area. Step 4 - then I use the 6h 4h and 1 hour timeframes - this helps to clarify the last price movement and pay attention to small trades. Step 5 - minute TFs to test your hypotheses and find an entry point. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
29
KNOW WHEN TO ENTER, LADIES AND GENTS 🧙‍♂️Knowing patterns is one thing, knowing when to enter the trade is another. A lot of traders start learning bazillion amount of chart patterns not paying attention to the most important part: when to properly enter the trade. Without too many words here is an illustration of entry points that are most suitable for different types of patterns. In reality, when you miss a breakout there is 60-70% of a retest back from a previous major line. That's also another great place where we tend to execute our trades. Warning: ALWAYS! LIKE ALWAYS! wait for confirmations. For example, this can be an H4 candle closing above or below a certain level that you're interested in. Safe trades and all the best, friends!
BITSTAMP:BTCUSDEducation
by Investroy
42
Why does technical analysis work?Introduction If you're here on TradingView, it's probably because you believe that charts and technical analysis can give you an edge in the trading of currencies, metals, cryptocurrencies, and stocks. Granted, sometimes technical analysis doesn't work, but it works often enough to keep hundreds thousands of traders coming back here day after day. The larger question is why . Four Reasons Technical Analysis (Sometimes) Works To a fundamental trader like me, technical analysis can sometimes seem like voodoo. Why should lines on a chart tell me anything useful about the total value of future dividends and cash flow for a stock? I admit I especially roll my eyes at Fibonacci ratios. Personally, I feel they're about as scientific as using divination or horoscopes to buy and sell stocks. But then again, if a lot of people believed that their horoscopes could help them win at stocks, you'd be a fool to ignore them. In fact, you could then gain a large edge by using astronomical data to forecast future horoscopes, getting tomorrow's horoscopes today. Which brings us to the first and most basic reason that technical analysis works: It works because people believe it works. If a lot of traders believe that Fibonacci ratios apply to stock markets, then a lot of traders will set their buy and sell orders at significant Fibonacci retracement levels. And then there's another whole contingent of traders who don't believe in Fibonacci numbers, but they know that lots of other people do, so they set their buy and sell orders there anyway. It becomes a self-fulfilling prophecy. Active trading is largely about predicting what other traders will do, and technical analysis is their playbook. And predicting other people's behavior brings us to the second reason that technical analysis works: It works because human psychology follows patterns. For instance, trend-following strategies might work, in part, because of "bandwagoning" and the "Fear of Missing Out" (FOMO). If traders see their friends getting rich off of Tesla or Bitcoin, they will fear being left behind. Speculative enthusiasm cascades through social networks until it has saturated them and everyone is leveraged long to the gills. Only when there's no one left to convert does the momentum finally stall. (Wall Street traders often quip that when their barber starts giving them stock tips, the market is saturated and it's time to sell.) As for support and resistance levels, they work partly because of regret. People remember the price they paid, or the price they wish they had paid, and that memory then shapes their behavior. For instance, if traders remember that they missed several opportunities in 2020 to buy an SPY dip to $323, then they are more likely to buy that level in the event of a future dip. What about oscillators? Well, perhaps humans distrust anything that moves too fast. Even if I'm romantically interested in someone, I'll still pull back if she proposes marriage on the first date. Plus, humans are loss-averse, so at some point we like to lock in gains. It works because it takes time for the market to fully price in news . The advent of algorithmic trading has made it hard for traders to gain an edge by reacting to news events. Stock prices move fast the moment a headline hits, so by the time you see it, you may already be too late. That said, algorithms are pretty good at picking the direction a news event should move a stock, but not necessarily the magnitude . The initial fast news response is often followed by a slow news response as the information spreads through the human population and its implications are assessed and priced by human traders. Trend-following strategies may be able to pick up on these slower processes of repricing in light of news. It works because today's news begets tomorrow's news . This is probably the most underappreciated of all the reasons that technical analysis works. Good news often leads to more good news. If a company posts a large positive earnings surprise, then there's also a good chance that it will get a dividend raise, analyst upgrades, or upward revisions of future estimates in the days or weeks to come. Likewise, bad news often leads to more bad news. For instance, if the company posts a negative earnings surprise, then there's an increased chance that it will need to take on debt or issue shares to sustain operations in the future. The same principle applies to industry-wide or even economy-wide news. If, for instance, the state California bans a company's product, then there's an increased chance that other states will follow suit. And if the Federal Reserve cuts or raises rates, then the next rate change is likely to be in the same direction, because Fed policy goes in cycles. The news-begets-news principle means that trend-following strategies might work, in part, because they are detecting the current direction of the news cascade. Three Reasons Technical Analysis Sometimes Doesn't Work I should emphasize, however, that technical analysis doesn't always work! Here are a few reasons it might not work sometimes: Traders try to anticipate signals . The larger the number of people who know about a trading technique, the less well it works. Take supports and resistances, for instance. If I expect the rest of the market to buy at a particular Fibonacci or moving average level, then I might place my own buy order just above that level in an attempt to front-run everyone else's move. If enough people do this, then the price may not ever actually reach that level. Whales create fake signals in order to harvest profits from technical traders. For instance, if a whale knows that a lot of people have stop loss orders set at a particular support level, then the whale might short a stock to that level in order to trigger all those sell orders, causing a price collapse and an opportunity for the whale to buy shares at a cheaper price. Timing risk. Sometimes you can correctly identify the direction of the trend but still have bad timing. For instance, we're in an interest rate-cutting cycle by the Federal Reserve, which has caused a strong upward trend. But the reality is that we're probably near the end of that cycle. If the Federal Reserve suddenly changed its tune tomorrow and started forecasting rate hikes next year, it would take some time for that information to be fully reflected in slow-moving technical signals, and you could lose a lot of money if you sell only after those signals change. It's perhaps best, then, to have a good understanding of what's driving a technical trend so that you can get out early if you see the underlying drivers change.
AMEX:SPYEducation
by ChristopherCarrollSmith
77
Pivot Point Strategy A pivot point is a technical indicator to identify trends and reversals in any market. Pivot points are calculated to determine critical levels in which the price could find its support and continues in the same direction or change from bullish to bearish, and vice-versa. We can use Pivot points to find entry, stops, and profit-taking by trying to determine the psychology of the market. When we are above the pivot point the market is bullish. In a bullish market if we cross a resistance level the uptrend will continue but if it bounces back we can expect a trend reversal. When we are below the pivot point the market is bearish. In a bearish market if we cross a support level the downtrend will continue but if it bounces back we can expect a trend reversal.
KRAKEN:DASHUSDEducation
by apadanaforex
3
The most liquid Forex currency pairsThe liquidity of a currency pair in other words is the ability to liquidate any amount you need (sell, for example) when you need it, without tangible loss of time and income. The higher the liquidity of the pair, the more reliable and attractive it is for trading. This implies that there is strong demand and high supply for this asset. The higher the liquidity of the market, the faster you will be able to complete a deal on the position you are interested in. The price in a highly liquid market moves gradually, in small steps. Less liquidity leads to large price jumps as well as gaps in the chart. What major currency pairs do you work with? Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
17
Why a small stop loss will hurt you! What you should do Hello traders! I am sure when you started out in trading, you heard the saying "cut losses short and let profits run" from other traders. Yes, that is correct, but it lacks something important. What is exactly a stop loss? How big should it be? Least probably you asked these questions when you read them. If you don't know what a stop loss is, it is a price line as to when the prices hit it, you "cut" your losses by exiting your position. Here is an example: Unfortunately, many traders interpret it as that a loss should be cut short immediately, and that the stop loss should be small in relevance to the target price. The traders now translate this to having a small stop loss to minimize loss. Seems right at first glance, but it is not. Why is it wrong? I can give you reasons you should avoid small stop losses : 1. Fails to take into account market volatility Let us take Stock X. Let's say this Stock X trades from $10 to $11. If you put your stop at $10.9 for example, it is very likely your stop loss will get hit by useless market noise and even the spread of the bid and ask! Oops! 2. Overwhelmingly high losses Thinking that a small stop loss gives you small losses? Simply wrong logic. Because your small stop loss gets hit every time, you lose money every time. The losses accumulate, therefore, become very high. 3. Psychology of the trader will be in a bad state How do you feel when you lose 10 times in a row in trading? You feel irritated and sad, right? Of course! That is what happens when the number 2 reason takes place. Your trust in your trading system will plummet and irritate you. The irritation will affect your trading, therefore making your trades gut-based and emotion-based, a mortal sin of trading. Then you lose money. These reasons may give you enough evidence to still avoid small stop loss. But I bet, there are still many of you who strongly disagree, including trading "experts". But, I will give solid proof as to why. I used a backtest site called StockbackTest (which by the way is not a recommendation to use) to backtest a simple system that Shorts when the MA200 crosses above the price, and Longs when the MA200 crosses below the price. I will be showing the results of this simple system(which by the way is not a recommendation also) on AAPL 2 times from 2005 to 2015, with a profit take if profits are 10%, but the only difference is the stop loss is 0.2% and 5%. Check below: 0.2% Stop loss 48.1% win rate 16.1% return 5% stop loss 52.4% win rate 58.2% return Yikes! The 0.2% stop loss gave only 16.1% returns, very small compared to the 58.2% return of the 5% stop loss. This is not the only proof. Many famous traders like Jacob Bernstein also has performed backtests on small stop loss vs large stop loss. Here is a visual scenario of a small stop setup: Speaking about stop losses, how much should be your stop loss? Here are some basic guidelines: 1. It should be based on the volatility of the market Let's take an example: Futures X trades at $93 - $95. An appropriate stop loss would be at around $91.5, because you wouldn't be stopped out so easily, giving room for profits. Refer to the diagram below 2. Historical Price Support/Resistance A stop loss is more likely to do its job properly if we base it on support/resistance. The support/resistance can be a trendline, a Moving average, etc. Refer to the diagram below One last thing: Stop loss is not the only thing you need to know. You also need to you entry points, indicators, etc. Thank you for reading this lesson about stop losses! Make sure to like, follow for more. Thank you! :D :} :) :]
NASDAQ:AAPLEducation
by Trader_ph
What is Parabolic SAR?This is a very interesting and useful indicator. You can use it for the following purposes: Trend ------We are in an uptrend when dots are below the candles. ------Downtrend is when dots are above the price. Entry Signals ------ Buy signals ( Only in an uptrend market ). The first dot below the candle ------ Sell Signals ( Only in a downtrend market ). The first dot above the candle. Stop loss ------ Long positions: Put the stop loss below the dot. ( You can move the SL every time to use as a trailing SL.) ------ Short positions: Put the stop loss above the dot. ( You can move the SL every time to use as a trailing SL.) As I said before to avoid false entries as much as possible only trade in the direction of the long time trend. Use a trend indicator or big MA to determine the trend direction. Settings for AF numbers ( Acceleration Factor ) can be changed but I prefer the default settings.
NYSE:BLKEducation
by apadanaforex
Pro Candlestick Analysis Method! MUST KNOW FOR SUCCESS!!!Pro Backtest Method: STUDY CANDLESTICK BEHAVIOUR - You should know what type of candle your ideal entries are taken based on momentum/rejection. - To help with in the moment decision making before entry and avoiding impulse entries try this; 1. Open Chart During your preferred session and timeframe. Look to see if market conditions are similar to your strategies ideal conditions e.g. Creating a LH and rejecting the level. 2. Watch how those Candles unfold and record their behaviour and how they are shaped at specific times through out. e.g. 30m candle, record its shape at 10min, 20min, 25min and the final 5mins 3. When Candle closes, record the outcome and take a note as to whether this candle is the sort of candle you would enter based upon. Repeat this everyday or whenever the conditions are right. 4. You will soon start to see patterns which lead to specific candlestick close outcomes, then you can confidently determine this in real time and avoid entering on an impulse.
Education
by adamhylandnew1
5
Types of Forex currency pairsCurrency pairs - two currencies between which trade transactions are carried out on the market. The relationship of currencies in a pair depends on the rate. So, the base currency is the one that is bought or sold. In the designation of a currency pair, the base currency is always indicated first. Quote currency - the way in which the price of the base currency is expressed. In the designation of a currency pair, the quoted currency is always indicated as the second one. Currency pairs are divided into groups according to profitability and volatility. Roughly speaking - by popularity. Majors . Currency pairs in which the US dollar participates, and the second currency is the national currency of highly developed countries. Cross-courses. Currency pairs in which the ratio of currencies is determined by their rate in relation to a third currency (usually the same - the dollar). Exotic. Currency pairs in which the dollar (or euro) and national currencies of developing countries are related. Exotic pairs are among the most difficult to trade as they have low liquidity. The volume of transactions for these pairs is relatively small. Beginners are not advised to work with them. ------------------- Share your opinion in the comments and support the idea with likes. Thank you for your support!
Education
by DeGRAM
10