Confirmation patterns

[Aussiest]

This is a bit of a chart i whipped up tonight. It's using the free charting software from Incredible Charts, hence the data is delayed for 13 hours. I have drawn in a small blue candle for today. XAO opened at 3742 and closed at 3760.

I'm not an expert chart drawer, but i noticed an interesting pattern at 2. The volumes aren't as big for this small period, and we'd have to see the price action touch and possibly bounce off the 3700 level a few times and then push up towards and through 3800 in order to confirm another upwards movement. Whether this would be sustained can not yet be determined by the chart. But, with all the economic data lately, it is unlikely. Please note, i do like to pay attention to the economic data.

So, imo, our confirmation signal (i'm gathering "confirmation" means a direction has somehow been "confirmed"??) would have to be a thrust or movement through 3800 after some consolidation between 3700-3800, on better volume than we've had for the past week.

This is a bit of practice for me. What do you think? Feel free to critque and add your worth...

Cheers..

 

[Trembling Hand]

Hmmmm! Confirmation ya better approaching it with the words,

Probability and R:R

No such thing as confirmation. More time, money, good moves and analysis is wasted in the false belief that that is what TA is.

IMNSHO.

 

[professor_frink]

View attachment 31528

This is a bit of a chart i whipped up tonight. It's using the free charting software from Incredible Charts, hence the data is delayed for 13 hours. I have drawn in a small blue candle for today. XAO opened at 3742 and closed at 3760.

I'm not an expert chart drawer, but i noticed an interesting pattern at 2. The volumes aren't as big for this small period, and we'd have to see the price action touch and possibly bounce off the 3700 level a few times and then push up towards and through 3800 in order to confirm another upwards movement. Whether this would be sustained can not yet be determined by the chart. But, with all the economic data lately, it is unlikely. Please note, i do like to pay attention to the economic data.

So, imo, our confirmation signal (i'm gathering "confirmation" means a direction has somehow been "confirmed"??) would have to be a thrust or movement through 3800 after some consolidation between 3700-3800, on better volume than we've had for the past week.

This is a bit of practice for me. What do you think? Feel free to critque and add your worth...

Cheers..

Not really a big fan of looking for the index to move up quite a bit before looking at a long trade(obviously it depends on the timeframe involved for the trade,etc). If 3700 is support, and we may be in for a bounce, then get long now. R:R on getting long closer to the support level is so much better than waiting for the index to be well over 100 points above it to "confirm" your idea(assuming you place a stop below the pivot low for the move).

Haven't gone to the effort of trying to test out the influence of volume on tests of support so far apart in time,so can't really comment on that, but the bar on the 8th for the XAO is quite interesting and worth looking at(especially considering it's at a support level). New 10 day lows with that candle pattern has generally been a good short term swing point for the next 3-4 trading days

 

[tech/a]

Does head and shoulders mean anything to you?

 

[nomore4s]

I agree with bit TH and the Prof on the their points.

Confirmation doesn't really exist, it could break 3800, suck people in and then fail.

With the volume I find comparing it to the last 2-3 days gives more of a 'current' indication (where did the vol come in and what effect did it have?). The bar from the 8th is a sign of some support at these levels - increased vol and a strong 'rejection' of the support zone. This could mean we get a 2-3 day reversal or maybe a more sustained reversal towards the latest highs or we could just get some congestion before breaking support. You need to work out which probability you will trade or stand aside till the story unfolds some more and a probability or pattern you want to trade presents itself.
I also agree with the Prof if looking to go long now is the time to do it, it presents the best R/R and the tightest stops - you'll know very quickly if you're wrong.

IMO we are at a interesting stage as alot of stocks as well as the XAO appear to be at significant support levels - a short term reversal at the very least appears to be on the cards - but who knows, it'll only take a bad day or 2 overseas to break support now.

PS - If you save the chart as an image (PNG) from the File menu it won't come up with all the ads and stuff.

 

[beamstas]

Does head and shoulders mean anything to you?

Ohh i get it
Think i had that shampoo once

 

[MRC & Co]

I agree with the points above and some are very good.

But would add, watch out for a European summer drift off, won't need the sharp break or volume most are looking for, but perhaps we will get an insidious drift chopping through the support zone down to the 50% retracement area.

 

[Aussiest]

Thanks for your comments / feedback everyone. Was really trying to use the chart for practice and to get used to being more proactive and analytical about my trades. I agree nomore4s, i am short term bearish given the recent run up, data coming out of the US (and soon to be here) and overall lack of conviction.

Tech/a: yes, just been reading the thread on head and shoulders patterns. Interesting. However, always open to thoughts that may expand my knowledge base!

 

[Aussiest]

PS - If you save the chart as an image (PNG) from the File menu it won't come up with all the ads and stuff.

Thanks for the heads up nomore4s. Will save me from having to import it into Paint or P/shop.