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A couple of charts showing how to play large time frame head and shoulders patterns with breakout levels, measured move targets and MA confirmations by Aksel Kibar.

(he is using a 200 day moving average which equates to the 40 week MA on these weekly charts)

image.thumb.png.e9d1cf83ff54b1d3df69c93dd3bb49fe.png 

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In Murphy's book he recommends to use Directional Movement with Parabolic SAR, rather than PSAR on its own.  In this way it works as a filter (don't buy if -DA > +DA and vice versa; a new trend is kicking in when ADX rises above 25 and trend weakening when ADX falls below 40)

Is that still done these days?  All this new stuff is hard to keep up with :)

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On 27/05/2019 at 15:33, elle said:

lots of TA stuff in loads of videos  https://www.youtube.com/channel/UCKJrIKs2GPZOoICuyLUM1_g

So I actually tried watching some of his videos, like everybody else these days he talks at a thousand words a minute, I can barely keep up and yes if you want the real details you need to subscribe and it costs.  OKAY FINE I understand that nobody in their right mind gives away the 'good stuff' for free ...

For example he shows where a downtrend breaks but says something about waiting for the new pivot blah blah blah and then concludes that it didn't really break the downtrend at all. 

I guess I need to learn what these pivot points are then.

Edited by dmedin
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14 hours ago, Caseynotes said:

'new stuff'?  both adx and psar are quite laggy, would probably be better off with something leading like Stoch then  confirmed by something laggy (less twichy) like adx or psar.

Murphy's book is fantastic but old (last updated in in 1999).  He only covers certain topics with passing remarks in a few paragraphs, in particular pivot points and day trading.  All this 'new stuff' is people telling you how to day trade using pivot points and other innovations that his book specifically doesn't go into.  I actually prefer zooming out to take a longer term view and not being too fancy, but then again, I'm not a profitable trader.

His chapter on 'automated systems' covers the PSAR and ADX combination.  It isn't very good, from what I can tell.  But it's better than using PSAR on its own, because it whipsaws like crazy.

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2 hours ago, dmedin said:

I guess I need to learn what these pivot points are then.

Pivot points are just a calc based on the previous day's OHLC but more to the point they are just like Fibs and everything else, they only work if the big boys are using them. Over time I've found support and resistance and pivots work more often than anything else and that can only be because more large scale traders are also using them.

One reason is because they are basic, simple, old and established, handed down mentor to pupil. All indicators 'work' but how well they work will depend on how many traders are actually using them to provide signals that they react to and so leave a price action foot print on the chart.

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  • 2 weeks later...

Using Support and Resistance in conjunction with a Moving Average.

image.thumb.png.6ab41eb2a60502e3141c6fe0d68affed.png

8m

7m

 

1) Define the overall trend with a long-term moving average 2) Look for a well-defined consolidation (preferably with horizontal boundaries) 3) Make sure there are several tests of pattern boundaries 4) Act on breakout above MA 5) Act on breakdown below MA

Edited by Caseynotes
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