Technical Analysis 101

[Caseynotes]

Thee absolute first word on TA ...

 

[Guest Valley83]

Can anyone help please I'm completely new looking to make my first trade and im trying to test new things I've learned from ig academy such as support and resistance lines if I'm looking to intra day trade how far should I be looking to try this across. Hope the question not too stupid but I am new lol

[Caseynotes]

Hi    A great resource for new traders once you have gone through the basics on the IG education section is;

 

http://www.tradeciety.com

 

Click 'Trading Blog'. One of the sections within is 'technical analysis' and goes in depth on how to apply dozens of different TA tools and shows strategies to use with them.

 

( http://www.tradeciety.com/category/technical-analysis/ )

 

For S/R take a look at:

http://www.tradeciety.com/how-to-draw-support-and-resistance-levels/  

which explains S/R lines and zones using text, diagrams and video.

[Guest Valley83]

Wow thanks as usual IG continues to surprise me by how helpful everyone is.

[Caseynotes]

Good educational article on Bollinger Bands here, 

 

http://www.newtraderu.com/2017/04/06/bollinger-bands-popular/

 

[Caseynotes]

Short article on using supply and demand levels to weigh validity of overbought/sold indicators.

 

https://www.fxstreet.com/education/secrets-to-success-201709130618?utm_source=twitter&utm_medium=post&utm_campaign=socialmedia&utm_content=generic-updates

 

[Guest jasonbuchan70]

Hello mate

 

I personally can't help you but I'd highly recommend attending Chris Westerns webinar at 6:30 pm on Monday nights. I'm also learning though the IG academy and other online sources, and it comes together a little bit more by listening to Chris. He gives some recommendations and explanations as to why he would go long or short. It's here that I gain a better understanding of trading methodologies. Don't do what I have done in the past; trade without knowing the reason behind the trade. I read somewhere that poker players make good traders and if you want to succeed as a trader, spend say 10K (or any other amount) on some form of gambling, ie: horses, casino ect...If you lose a fair bit, how you feel after the loss will tell you whether or not youre suited.  

I also find people really helpful here too! 

 

[Caseynotes]

Good article with video that breaks down and explains the MACD indicator and what the different components are saying about price action.

 

http://www.tradeciety.com/tips-how-to-use-the-macd/

 

 

 

 

[Caseynotes]

Cut out and keep candlestick chart pattern cheat sheet.

 

[Guest Trader_1707]

I am thinking now about how to use Directional Movement (DMvt) or ADX at best value. May be to estimate the line position of DI+, DI-, ADX ( I mean if the ADX line is rising, and DI- is in rising position, DI+ is in falling position - its the downtrend and so on). There can be many variations of "intercommunion" of these lines and consequently, there can be many variants of trading, depending of the time frame. Or may be in addition to the analyse of lines ADX,DI+,DI-, to use the general multichart analyse? 

[Caseynotes]

Hi ,   The adx is an interesting indicator and like all indicators it pays to experiment with the settings to find a best match for the time frame you are using, and like all is best not used in isolation but as part of a confluence. In my experience the direction of slope of the adx line (not D+, D-) is not important. Being a measure of volatility/strength it only needs to be above 20 to show a reasonable level. Use D+ D- crosses to show the changing direction of price movement and the level of the adx line to show the market has enough activity/strength to consider participation.

 

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:average_directional_index_adx

 

  

 

 

 

[Guest Trader_1707]

, for me was always interesting, when the ADX line, after long-term growth,  change the direction (ex. from rise to fall), making in this moment the so-called "barb,jag". So, what is the market in this case - trend or flat? Fundamentally, the trend in this case is still continuing, but looking at the price, it is seen that the flat market is emerging:smileyfrustrated: what would you do in this case? to use stochastic oscillator? or continue to follow the trend untill the ADX would reach the value 20?

[Caseynotes]

,   good question and a problem for many momentum type indicators. A sharp rise in price action will set off momentum into a steep rise as well but momentum will start to fall long before price does. MACD is similar, price continues up while macd has turned and is heading down, you will always see this after a spike for example. So long as macd is still above zero and price is continuing to make higher highs you should consider the trend to still be valid inspite of falling macd.

 

ADX is a bit different in that it can be very slow to respond to a deep pullback and then trend continuation hence the 'don't worry about direction' just the 20 level.

Also adx will rise if there is a major reversal and price is now falling instead of rising because it is indicating the strength of the move not the direction of price. 

 

Ultimately indicators are lagging so continuing higher highs and higher lows of price is the most important signal (and most basic definition of a trend) though waning momentum could be taken as a warning of waning enthusiasm to keep buying at higher and higher prices.

[Guest Trader_1707]

thank you for the comprehensive answer, , its obvious of using the analyse of higher highs and lower lows, may be will be more better to use also multichart analyses? (together with indicators such as ADX, Momentum and Stochastic Oscillator - as for me I use only these). I mean simultaneous multichart analyse, that is three charts on one screen: in the middle is the basic chart with timeframe of trading, on the left is the chart with the smaller timeframe, and on the right is the chart with bigger timeframe. 

[Caseynotes]

Good move on the multi-time-frame set up, if you are only looking for trades in the direction of the larger time frame trend while using the lower frame to find pullbacks (dips) to enter the success rate will naturally be greater than unknowing trying to fight a higher time frame trend. 

 

As most indicators are based on moving averages it is not surprising to find that by playing with the settings you can get most to resemble each other, so useful as a guide but problematic as a signal. The better signals are those provided by price action, candle patterns on clean chart structure. 

[Guest Trader_1707]

May be simply to trade only on the basis of correlation of commodities and FX pairs? For example, Oil - USD/CAD or Gold - USD/CHF? 

[Caseynotes]

Hi ,  many people do do this, you should never trade usdcad without also consulting the oil chart as there is such a close correlation. 

 

[Guest Trader_1707]

 thanks. that's a very usefull picture in such an amazing form))))

[Guest Trader_1707]

all this is good, and what kind of correlation pair  has FTSE? this question is running in my mind for a long time.

[Caseynotes]

The bond market, stock market and currency market of a country are all correlated. Money moves up or down the chain depending on risk appetite, bonds safest, currency most volatile, stocks mid way. The bond market is often described as bond yield (which actually moves in the opposite direction to bonds).

 

So if currency is going up, bonds and stocks are usually going down because money is moving  from these to the currency.

The diagram shows currency up, bond yield up (bonds and stocks down). So GB currency up equals FTSE down.

 

These correlations don't always hold true as different circumstances can also affect risk appetite but as a general rule are pretty reliable.

[Caseynotes]

Good video on building a strategy by first identifying the market cycle and matching the indicators and tools that work for the different phases of the cycle before going on to select a time frame and speciality.

 

From Tradeciety.com, new today, 17 min.

 

 

[Caseynotes]

4 short videos from Thomas Bulkowski (of 'The Encyclopedia of Chart Patterns' fame) on detecting ends of trends and drawing head and shoulder patterns.

 

http://eu.wiley.com/WileyCDA/Section/id-813684.html

 

[Guest Trader_1707]

hi,  ! Concerning the theme about correlation. Oil prices can affect also on all major FX pairs, i think many traders noticed that during significant oil price movement (up or down) - the EUR/USD or GBP/USD moves in the same direction to oil prices, i.e - oil moves up - EUR/USD or GBP/USD moves up. But there are moments that this correlation doesn't work out, i stil cant understand why?

[Guest oilfxpro]

:smileylol:

 

 

 

 

I don't use any technical anylysis, except supports , supports on daily , 4 hour and weekly charts, supports are  price  levels that being held by the markets.These are supply demand areas.Buy at these areas and sell at the supply area.Keep trading simple , the Gurus are over complicating trading and profitable trading.

 

Most professionals listening to this utter tripe. on youtube ,  on technical analysis  will be be put off forums for good.This is why you don't see warren Buffet , George sorros and other really successful gurus using it.

 

http://www.followingthetrend.com/2014/05/why-technical-analysis-is-shunned-by-professionals/

 

Why technical analysis is shunned by professionals :smileylol:

 

https://www.fscomeau.com/why-technical-analysis-is-*****/

 

If technical analysis was a reliable science, we would have an automated software to buy, universities would teach it as a subject.

 

 

[Guest oilfxpro]

All this technical analysis is for amateurs,  and here is the best site for it.

 

http://stockcharts.com/school/doku.php?id=chart_school

 

 

https://www.fscomeau.com/why-technical-analysis-is-*****/   Technical analysis does not work - interview with pro trader Gary Norden

 

[Caseynotes]

Hi .  The common denominator in your fx pairs is USD which is, next to JPY, a safe haven and generally considered not a bad place to park money short term (JPY leans more to the longer term) so if you are an institutional trader looking for opportunities to get in and out of oil (which is priced in USD) a USD fx cross is where you would release the funds from or send them to. The exceptions would relate to the risk associated with USD at the time so you may want to use another asset.

[Caseynotes]

We are all fully aware some people can't do technical analysis so they are right to avoid it, some also can't handle the psychological pressures of trading so these people quite rightly stick to some kind of automated system to negate these two problems.

 

When people shout that something doesn't work what they really mean is that they can't make it work. 

[Guest oilfxpro]

Ok George Sorros and Warren Buffet suffer from psychological problems, they are also no good at doing technical analysis.

 

Agreed!

[Guest Trader_1707]

Trading is the combination of technical analyses and fundamental analyses. And which one is prevailed at the moment is the decision make sometimes by intuition. There are some cases when fundamental analyses outstrips the technical analyses, but there are some cases when the situation is quite the opposite. 

[Guest Trader_1707]

, as far as i remember from read books about Warren Baffet, his nickname is ORACLE. I think this is the key to his success)))