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GaryB

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  1. IG quote a continuous price as a $ cash contract, so there is no "rollover" Or you can also trade the specific month contract with an expiry date.
  2. Consider the different reasons the share might be held, from the day trader simply holding a momentum move or the longer term investor holding for year on year growth. With the monumental amout of information available including ongoing investment analysis provided by the broker research and other specialised research houses, there is more than enough current information about companies earnings and expected earnings. When theses numbers are confirmed in line with a consensus of research there are no surprises and the shorter term trader investor would be looking to take profits and look for other opportunities. This is shown in the day to day movements. For the longer term holder, the day to day movements are just noise and often disregarded. The longer term holder is interested in the forward looking commentary from the compaies reporting, should this be positive generally the share price will recover quickly from the short term profit takers as the dip offers a buying opportunity. The longer term ( weekly) trend will remain in tact. However at times forward commentary from the company report can have an immediate negative effect on share prices and price trends can change. The first to sell may be the institutional end of the market as they will sell into strength to get the liquidity required for the volume to be liquidated. Define where you fit in to this equation and the sell off on the company reporting may present an opportunity increase your position or take profits.
  3. Staying with the 4 hour chart of US Crude: from the base set during March and the following rally into the $54 levels, clear reversal took place with the rejection period and lower high. The following price action gave plenty of indication of price weakness as the 20 period centre Bollinger band average provided resistance until the capitulation move back to $50.50. The following price action simply walked down the lower Bollinger band. All hindsight analysis. So here we are at the right hand edge with a potential buy set up unfolding with a very specific stop loss. On the 20th and 21st of April the Relative strength indicator almost gave a swing buy signal, where the price makes a new closing low but the RSI swings higher over a previous high. The same signal is highlighted again and is now complete. Point (1) shows the price making a low with the RSI below the "30" level, nothing unusual in that, the following price rally too point (2) saw the RSI swing back over the "30" level. Ay point (3) the price makes a new closing low at $49.10 but the RSI fails to make a new low ©. The following bullish price range, not only an outside bar but a high close in that bar is the first alert signal. The RSI has swung back over the (b) high point giving a swing buy signal, the 2nd signal. In the overnight session an outside high close bar is the final signal and gives a valid STOP LOSS level at the low of $49.00 on a long position. With the general observation of the RSI swinging over the (50) level along with a higher high, only suggests price momentum to the upside.
  4. A wild swing in the US indices overnight may be the tipping point for the bulls. From the outstanding ADP employment numbers early in the session lifting the DOW from yesterdays close a massive 282 points to the intraday high and followed by commentary from the Fed wanting to start unwinding the $4.5 trillion balance sheet, within hours the indice had finished 41 points in the red. The S&P500 followed the same pattern. This type of violent swing can be the longer term defining point for the bulls, as all long positions taken during the session get closed out or sit as unrealised losses on the trading journal. The coming price action will determine if those unrealised positions have to be closed out. On the overnight price action some very powerful charting signals can be catalogued into the traders set up journal for future reference. Taking a look at the daily and using a confirmation only observation, the large range on the first of March posted a high at 21,171 points the following price action has not breached this level. The longer this persists the more probability of price weakness. I have marked the 50% midpoint of the large range, it is a charting / price phenomena that these large range periods can offer resistance or support at the midpoint. This is a practically strong observation in the weekly chart. (There was an excellent book written on the subject called “The Japanese chart of charts”) In the intraday session of the market using a 1 hour chart a very nice reversal signal setup has marked the high for now. The exhaustion high followed by the larger range hourly bar suggest the buyers have left. The inside range and second short range also confirm the absence of buyers, and finally the breakpoint as long positions are closed and the short sellers see opportunity. So where too? Referencing back to the daily chart the last spike low set on the 3rd of April has a low of 20,570. The importance of this level is based around the fact that during the session the market found buyers at the low a price breakdown below this level would simply put further pressure on the long positions, intraday momentum should be monitored for both support and outright rejection at this level. ** Trading always incorporates stops, this setup is no different.**
  5. The play out of OIL in the 4 hour is complete with the 3 spike lows completing the basing pattern. While it can never be known when a price will reverse, the trading technique is looking for a set up that can be proven. The key to this pattern has been the move above the lower high $48.40. The first break over a high with 3 spike lows in the background. *This pattern showed up in daily Copper last week.
  6. Attempting to pick the low in a falling market is often a futile game. From a trading psychology perspective the danger is the trader gets it right and is rewarded for this bad behaviour by a profitable positon. The next attempt may be the one that does not turn around and simply runs the position and trading account into the red. Evidence based decision making is the road to travel in this trading endevour. One of the long standing observations in price analysis is the number 3. Technical analysis books are full of examples that show pictures of triple tops, triple bottoms, the head and shoulder pattern required 3 events, left shoulder, head and right shoulder. The basis of elliot wave is the 1,2,3 wave pattern and the a,b,c retracement. Descending and ascending patterns require 3 lows and or 3 highs within the pattern to be valid. Japanese candle methodology hold the rising and falling 3 pattern in great esteem along with many other price patterns based around 3 price events. Two nice examples of the number 3 have appeared this week in Copper and WTI Oil. Both commodities making 3 spike lows in the daily and intraday time frame. Copper shows a 5 wave down movement with 3 spike lows, the final movemnt to catch my attention is the breakout move over the recent high. The WTI oil contract in the 4 hour chart has posted a 3 spike low, the Bollinger overlay highlights the relative volatility has exceed 2 standard deviations in the development of the lower shadow of each candle,the final breakout over the last high at $48.40 is the bullish signal. Stop losses are always employed. So does this mean the lows are in? The correct answer is don't know. The statistical outcome of a low is over 50%. The pattern is invalid if the last low is broken so the stop loss is known.. From here depending on the traders risk profile entry strategies can be employed to take advantage of a potential new trend.
  7. Matching time frames to build a trading system. When establishing a trading method based on the two R’s of risk and return, it’s management of trading decision based on proven observations that will dictate the outcome of any trading system be it a discretionary or algorithmic. Often the focus and reasoning behind trading are “how much can I make”? This internal thought process often goes one step further and asks how much can I make in a short amount of time? New traders are often blinded with the hindsight of seeing past data and are convinced that the outcome going forward will be the same with the constant internal observation and confirmation of what if I had taken that position and traded at that turning point the profit would have been huge! This thought process is often the undoing of many new traders as they work at the right-hand edge of the chart with constant data flow appearing. Looking at some past data charts and imagining the outcome going forward can create an illusionary picture of future outcomes that keeps the trader in a potentially destructive trade outcome. With the constant data flow in real time, the trader can be swept into the intra-period momentum trade well before the trading period is finished only to be left holding a less than desirable position. What does this mean? Traders, in particular FX and futures traders use intraday time frames of choice, like 1-hour charts or 15 minute and many of the variables available in this technology driven endeavour. There is nothing wrong with that, except trading decisions are often made during the formation of the price bar or candle not at the roll over time between sessions. For example, a trader using one hour charts should be making the trading decision at the rollover of the hour, because within the formation of this price data point many interpretations can be made on the variations in the shape of the price bar or candle on the way to being fully complete at the end of that time frame period. Entering positions before the time period rollover can be very challenging to the thought process as the trader often makes emotional decisions with correlations in the current moving price action to something in the past. This type of trading is subject to a variable and random outcome that will lead to disillusionment with the process as a whole. What’s important about this? Consider the hammer candle shown in the right graphic during its formation has appeared as a continuation of the previous move down and at times was confirmed within the one-hour time frame shown left only to be completed into a reversal hammer. ** Establishing the trading decision on a higher time frame can only be done at the completion of the rollover into the next period and the bar or candle is complete. Part of building a rule-based system hinges around this method, as does the basis of many trading algorithms. Time frame trading is best established by using two-time frames related to each other, such as 1 hour and 30 minute or daily (24hr) and 12 hour. Using the completed bar or candle in the higher time of choice to establish an entry decision at its completion fulfils the first part of a rule-based trading plan. A lower time frame is then used to garner the actual entry into the anticipated move. The will include the continuation and break of the high of the decision bar or some form of shorter time frame entry method at the completion of its own rollover period. An inside period is a great example of this when worked against the higher time frame. Stop loss from the higher time frame can be immediately established at the low or a factor of the low, a factor of the low is taking the low of the period and moving the stop loss a few pips or cents further away. Now the rule-based trading plan comes to fruition, with the high time frame entry alert and the lower time frame entry into the position. This can be back tested with a pencil and printed charts and is worthy of your attention.
  8. Price gaps occur as traders views change during the period the market is closed overnight or over weekends. On the re-open of the market the first trade is considered the sum of all expectation at the time where after market news is factored in to the opening auction. Many text books describe an opening gap as being a bullish sign that the buyers are out in force. This works as long as you know where you are in the price trend, and as no one knows what the future holds in price movement, then we can never know where we are in the trend. An observation lost on traders who insist on holding a losing position, believing it will return to profit. The flaw with this type of trading is if a position does return to profit the trader has now been rewarded for bad behaviour and will continue to hold future losing positions expecting the same outcome, until one day the position loss becomes an account loss. Back to point, let’s take a look as gaps can be described as bullish gap open or a continuation gap and finally the exhaustion gap. Then with chart analysis this market event can be tested, and depending on your time frame as a trader the results can be put to work to use as an entry tool to open a position and or capture profits. For the longer view investor the end of a trend is often the gap down on open in larger time charts than just a daily view that most traders and investors use. These events often occur in a weekly chart time frame. On the left ANZ posted a weekly gap down in MAY 2015 that ended 6 years of gains. The Weekly gap in FMG in March 2014 lead the price down to historic lows of December 2016 On the right, the daily gap down ended 8 years of gains in Credit Corp CCP. The chart of CCP also displayed a gap down on open on February 2nd that was followed by a 16% decline, until the primary trend resumed some four months later. A short term look at Gaps as a trading opportunity. For the short term traders gaps can be used a little differently and can offer an intimate trading strategy. By short term, I refer to traders that use intraday strategies up 1 or 2 days holding time. The opening price gap can provide some excellent trading opportunities for the nimble short term trader on both the long and short side of the market. But it does requires some reverse thinking and action. From a text book point of view when a stock gaps higher on the open it is a sign of strength, buyers in control. But consider the different type of market participants, some being long term holders and others only trading for quick profits. In example 1 we can see from the close trading period following (1) gapped open and sold back into the first range. The following trading period gapped open lower and traded back higher. When taking a closer look at the detail in price charts, this phenomena is a regular occurrence, in fact an average of 30% of daily bars can offer this type of short term “doing the opposite trading opportunity.” In the example 1 the fluidity of movement can be seen from the high close of the first bar the gap open higher of the second bar and the follow on gap down of the 3rd bar, within this bar the sellers have lost control to the buyers closing it in the top 80% of the range. Using an intraday chart the example 2 at the right highlights using a the 1 hour time frame the Gap open sell and Gap open buy offer short term trading opportunities for the nimble intraday trader. Correct position sizing and stop losses must be used with this type of strategy.
  9. Oil just got interesting, with the Fakeout low followed by the inside period. bolliinger bands contracting with the price back over the $48.60 key level. Agressive price action traders have taken an entry on the move over the high of the inside period. The long range bar set at the close looks to be a short cover, Resistance at the middle avaergae of the bollinger would be montiored, still looking for a break of $50.50
  10. 4 hour analysis. US OIL. With the breakdown in US Oil below the $52.80 support, the price can be seen pushing outside the Bollinger band on two occasions.I have highlighted the WEEKLY support level of $48.60 ( established at the midpoint support of the primary move up on the 28th November) this chart now highlights the traders adage of dont catch a falling knife. The upper bollinger band has now turned back towards the price action suggesting the volatility is falling. With this type of price action underway look for a base to be set with an outside period or bullish hammer and pivot bar. Then an entry signal with effective stops can be taken following the break of recent highs. Avoid the risk of second guessing a low is in, as this contract can trade lower in current uncertainty around OPEC cuts. The original analysis can be seen on IG TV here -> https://www.ig.com/au/market-insight-videos?bctid=5354360569001&bclid=3671160850001 IG provides an execution-only service. The information in this presentation does not contain (and should not be construed as containing) personal financial or investment advice or other recommendations, or an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of the above information. Consequently any person acting on it does so entirely at his or her own risk. The information does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.
  11. Technical analysis unprofitable? I am not sure putting the blame on the tools of trade is really the answer. After all it just reports price action from the exchange. Take the time to use the information a little differently than everyone else, after all if you try and see and do the same you would get the same results..right? Take the time and build some stats on how often that bullish hammer follows thru into a pivot point buy signal (btw 75%) or that down close outside range reverses the price action using the daily time frame in the AUD/USD cross (btw 100%). How often does that large range bar post a new higher high in the following bars and how many times. ( any time frame ) Stop trying to discredit the information, but use the information like a casino and find the odds in your favor then manage the risk. ( stop losses ARE the key to money / account management) Print out a chart with 50 bars max. markup the outside period the inside periods the large range bars, the spike highs and spike lows. Do this for 500 bars, 10 pages. Notice how the spike H and spike L prices react when they exceed a nearby spike H or spike L, put together some stats on a ruled sheet if you dont use spreadsheets. Follow thru for 1 bar? 2 bars? 3 bars? do this and you will be surprised how that trade you think is the "one" it is never "the" one. Trading is a marathon, trades are one of many, understand the basic odds and then you have the basis of a rule based trading paln. Build an understanding of the game and stop fussing over some esoteric summation of TA using one model over several markets..
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