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LuxAlgo Wizard

With a rather odd & convoluted history, the industry of selling access to technical indicators goes back further in time than most traders & investors are aware of. A rather large majority of investors perceive the act of selling access to technical indicators as being in most relation to selling 'snake-oil'. While this is true for many vendors who unfortunately...

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Horn patterns are reversal patterns introduced by Bulkowski in his book "Encyclopedia of Chart Patterns". These reversal patterns are not the most commonly used by traders but have very interesting characteristics. In this post, we will cover details about these interesting patterns, such as identification rules and measure rules. 1. Origin Bulkowski...

LuxAlgo Wizard

Technical indicators are characterized by processing historical data, in a causal real world and for the sake of our analysis, we would expect indicators historical outputs to remain the same right? Well, we will see that this is not always the case, and that certain indicators can change appearance. 1. Repainting Indicators In Technical analysis repainting is...

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1. Introduction The Moving Average Convergence Divergence (MACD) indicator created by Gerald Appel in 1979 (1) is part of the pantheon of technical indicators, being one of the most used and influential ever created. The popularity of the MACD allowed further studies and more varied applications of the indicator, from signal processing in neuroscience (2),...

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Oscillators play an important role in technical analysis due to the amount of information they can return as well as their ability to lead price variations and are often used in conjunction with trend indicators. One of the most popular oscillators available is the relative strength index (RSI), one of the many popular indicators developed by J. Welles Wilder and...

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Double tops/bottoms are relatively frequent and easy formations to identify and use. In this post, we provide a description of each pattern, implications, respective measure rule, as well as the variations described by Bulkowski. We also review the literature on these patterns in order to find various observations as well as a theoretical explanation of their...

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In this series about chart patterns we previously discussed narrowing wedges patterns, explaining their identification rules, the measure rule associated with them, and various observations. In this post, we will cover head & shoulders, inverse head & shoulders, and their complex counterpart. We will cover their identification rules, measure rules, and share some...

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In this series of chart patterns, we have taken a look at the more traditional ones. However, we have not yet discussed harmonic patterns. Harmonic patterns form a part of the numerous chart patterns available for the identification of reversal points. The practice of trading using harmonic patterns is often defined as "Harmonic Trading". We felt like it was an...

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In the last post in this series on chart patterns, we described the characteristics, rules, and causes of broadening wedges patterns (if you haven't seen it, see the related ideas below). In this post, we shall perform an advanced analysis of a related pattern, narrowing wedges. We provide a description of each pattern and its implications. That's the way it...

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Moving averages are inherent in the world of technical analysis and are present in the core calculations of many technical indicators. In this post, we take a deep dive into 3 types of moving averages used every day by traders: the Simple Moving Average (SMA), Exponential Moving Average (EMA) and the Weighted Moving Average (WMA). The topics covered below can...

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Chart patterns are a part of the foundation of technical analysis and are one of the most popular methodologies used by traders to predict future price variations. Chart patterns are governed by precise identification guidelines and it is important to effectively recognize the presence of a specific pattern. Since this recognition process can be subjective, we...

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In our previous post in this series about chart patterns we described the characteristics, rules, and causes of triangle patterns (if you haven't seen it, see the related idea below). In this post, we perform an advanced analysis of broadening wedges patterns. We provide a description of each pattern and its implications. We also review the literature in order to...

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Chart patterns describe distinct structures in financial time series. Their occurrence helps technical analysts predict future price variations. Triangle patterns form a part of the most studied patterns by technical analysts and have been well documented over the years, with some even applied to climate time-series data (1). In this post, we perform an analysis...

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1. YOUR TRADER PROFILE The first thing most traders will have to do is build a portfolio, this process is more complex than just choosing what assets to trade, and in order to build a good portfolio you will need to find your trader profile, which can be determined by asking yourself the following questions: What is your initial capital? What is your...

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Timeframes and technical indicator settings are ubiquitous concepts to technical analysts, two things that they will have to interact with at some point in point. For certain traders, they make part of the million-dollar questions: "What is the best timeframe to use?" "What are the best indicator settings to use?" Where "best" refers to the...

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This post discusses the usefulness of technical indicators. We can conclude that the question of whether or not technical indicators are useful depends on many aspects, such as indicator settings, interpretation methodology (contrarian/trend following) etc. 1. Introduction Since the introduction of technical indicators, academics have produced a significant...