Improving Chart Analysis

[Magdoran]

Thanks for the time you've put into these posts Mag.

I've been studying this stuff for a little while too, but I still can't define what you mean by vibrations. Are you just saying it's the underlying trend in price? I can see the trends when they are there, am I seeing the vibrations even though it's not in 3D? Yet. Perhaps a bit of LSD would help me there.

Hello kennas,


Hope it’s been of some inspiration. Have a read of the comments above about vibration theory, hope this helps…

Now, I’ve got a funny story about LSD from my Uni days. I knew a guy who was a chemistry freak - this guy knew chemistry inside out and I think went on to make quite a name for himself overseas.

But he was a wild guy, way too oversexed, a consummate party animal, and a substance fiend. He was also not into respecting authority.

So, one day he hatched a plan to make some LSD on campus, and invited a few people over to his place. Well, I was my normal punctual self and rolled up late (thankfully), to find a small room full of about 10 people.

They were all looking at the walls and the ceiling, and making oooh and ahhh noises. “Wow man, we just dropped a trip!”. So out of amusement I sat down and watched the fun.

Then I noticed a can of coke was being handed around. As each person took a sip, they went “wow, this is AMAZING” and passed the can to the next person in the circle. Well, the can did the rounds, and finally the person next to me passed the can to me.

I fell over laughing. It still had the lid on!


Mag

 

[tech/a]

Moggie.

I certainly agree with what your saying.
Yours is a different style of trading to my own.
Each suits each.
Would still like to have you walk through an example.
Think my knowledge of options will be enough to at least follow you.
Natenberg is a good author on the topic,another curiosity--options.

 

[lesm]

.......................one of the main things this forum has helped me with particularly, is making more DISCIPLINED decisions. Many times over the last few weeks instead of "jumping in" on a trade like I would have done previously, I've learned to sit back and ask myself WHY am I going into this trade?, and if I can't prove to myself why it is a good trade, then I have "walked away" .........

Barney,

Regardless of the way you trade, if you can remember the above point/question you are moving in the right direction.

Good luck going forward.

Cheers.

 

[barney]

Hi guys, (Been out working...late reply!) Thanks Mag thanks Tech and thanks Lesm, for the info/advice/support etc.............Its funny, but I feel like I am getting a "handle" on some of what you guys speak........... I know I am still a "KISS" kinda guy (thank you Coyotte) and I have learned a lot from so many others (too many to mention, but you know who you are), but the concepts of understanding are increasing!! The "market" is a big "washing machine" of business............Good companies do well and "bad companies" we try and steer clear of (the band was good but!!).... We try and invest in the good Co.'s when they are having a short term downslide but showing signs of recovery, (or "short" them when they are achieving above future expectations) (simple explanation, but thats me!)

So from what you say Mag, the more we can understand the "workings" of the market in general, the more chance we have of jumping on a "trend" The "vibrations" are trends within trends so to speak!?, but the overall trend is the most important....If the vibrations take the trend off the apparent path for a short time, we don't need to be concerned???.......................Can I ask you guys, who obviously have great deal of confidence in your trading choices.............do you only set "wide" stop losses on your trades cause you respect that the "vibrations" may "set off" an uneeded early exit??? ,or do you still accept that the "vibrations" may stop you out? (and maybe just buy in again at a lower level...hopefully?)..............Just on vibrations this last week for eg. ..........I have "shorted" ROC (not a lot of shares but just testing the water so to speak)...........My perception was that Oil was going to drop a little further (based on the current chart/news/vibe etc), Now I understand thAT this could quite easily reverse, but I was backing the "trend", and if it goes against me I can wear that, cause I think my logic is sound??? I've kinda lost what I was trying to say/ask, but basically, if you assess the market logically, and apply sound money management, overall you should do OK??...........and if not ...........then find a logical reason why it went against you and "learn" from that .................Does that sound sensible??.....any advice ????..........Cheers, Barney.

 

[coyotte]

Barney:

in reply to your last post see my last post (today) in "trading plans"

Cheers

 

[barney]

Barney:

in reply to your last post see my last post (today) in "trading plans"

Cheers

Hey there Coyotte, Thanks for the referral, I gather you are saying that the stop loss should be set "regardless" of "emotional" attachment to the sp??..........Just wondering though, whether "MAGS" "vibration" concept (if we were reading the signals correctly) would "allow" us to "give" a little more width, with respect to setting off the stop loss???...........I ask this cause I short sold AWE the other day, but when they rose my "stop" was hit...... by lunchtime next day I would have been well in front !!................Maybe its more to do with my exit "mathematics" ???............more study required!! Cheers Barney.

 

[coyotte]

Barney :

No !

What I am saying is that the STOP is a LAST RESORT .
Classic STOPS positions for OXR when it failed on May 15th would generally been triggered to late --- C/B was May 9th low , C/B + ATR around 3.30 , The UP Trend Line March 17 + April 13 had not been breached ---- so the only one that was any way applicable was the C/B -- BUT as you would not Know (though could have made a pretty good judgement) if the price was going to CLOSE below the C/B on May 15th for a May 16th Exit -- all the classic STOPS would have seen you caught in that down gap !

But from April 20 th OXR was showing signs that trouble may laying ahead with the consistant breaching of the upper bollinger bands (20*2 spl) .

By May 5th it was becoming obviouse with low vol , compressing price, diverging ADX +P , diverging TMF (money flow) , continueing on to upper candle tails.

This is point I'm coming at about having only a limited amount of stocks , that so as to allow your full concertration .

Go back and study this period of OXR , there are many lessons to be learned.

Don't know about viabrations and that stuff , prefer to just let a few basic methods mature in there own way !

By the why have you bothered takng a look at Guppy's " Trading Course CDs "
for around $350 for the CDs and $100 for the appropiate books you have a Full Training Course from Short to Long Term Trading for under $500 , would keep anyone busy for a year.

Chears

 

[coyotte]

Barney :

I hope you did not close a position because a STOP had been breached during the course of trading ?

A STOP is only TRIGGERED if the CLOSE breaches the STOP , then regardless the position should be closed the following day .


Cheers

 

[barney]

Barney :

I hope you did not close a position because a STOP had been breached during the course of trading ?

A STOP is only TRIGGERED if the CLOSE breaches the STOP , then regardless the position should be closed the following day .


Cheers

Hi Coyotte, Re the previous post on OXR......... I have had a look at your rundown on it and did "learn" from it..............Seems a nice "repetitive" chart to follow..............I do like your idea of becoming proficient at one "slice" of the market (particularly at my learning stage)....makes good sense ( I still like the in depth stuff that Tech and Mag talk about as well cause it keeps the brain working...........be a while b4 I'm up to speed with it all though!)

Re the "stop " on AWE......I had short sold it on day 1.....Had to work next morning so I set a "stop- loss" at a certain price (CFD transaction, but I set the "buy" order at "their quote" instead of "market" which meant (I did not realise when I set it!!) it "bought" at 4 cents higher than my "set" price on open, so I "stuffed" that up in two ways............ New to CFD's, so am only "dabbling" in small amounts atm till I sort it out...............Thanks for your help, Barney.

 

[Magdoran]

Hi guys, (Been out working...late reply!) Thanks Mag thanks Tech and thanks Lesm, for the info/advice/support etc.............Its funny, but I feel like I am getting a "handle" on some of what you guys speak........... I know I am still a "KISS" kinda guy (thank you Coyotte) and I have learned a lot from so many others (too many to mention, but you know who you are), but the concepts of understanding are increasing!! The "market" is a big "washing machine" of business............Good companies do well and "bad companies" we try and steer clear of (the band was good but!!).... We try and invest in the good Co.'s when they are having a short term downslide but showing signs of recovery, (or "short" them when they are achieving above future expectations) (simple explanation, but thats me!)

So from what you say Mag, the more we can understand the "workings" of the market in general, the more chance we have of jumping on a "trend" The "vibrations" are trends within trends so to speak!?, but the overall trend is the most important....If the vibrations take the trend off the apparent path for a short time, we don't need to be concerned???.......................Can I ask you guys, who obviously have great deal of confidence in your trading choices.............do you only set "wide" stop losses on your trades cause you respect that the "vibrations" may "set off" an uneeded early exit??? ,or do you still accept that the "vibrations" may stop you out? (and maybe just buy in again at a lower level...hopefully?)..............Just on vibrations this last week for eg. ..........I have "shorted" ROC (not a lot of shares but just testing the water so to speak)...........My perception was that Oil was going to drop a little further (based on the current chart/news/vibe etc), Now I understand thAT this could quite easily reverse, but I was backing the "trend", and if it goes against me I can wear that, cause I think my logic is sound??? I've kinda lost what I was trying to say/ask, but basically, if you assess the market logically, and apply sound money management, overall you should do OK??...........and if not ...........then find a logical reason why it went against you and "learn" from that .................Does that sound sensible??.....any advice ????..........Cheers, Barney.

Barney,


Forget even thinking about vibration theory at this point, it will only confuse you – it is highly unorthodox, and in the wide scheme of things very obscure (despite the fact I think it works and use it to trade is a choice I have made based on refining my T/A approach over a number of years, and under the mentoring of some very advanced players – you need to find your own way first).

Unfortunately in the process of this thread ranging into involved T/A discussions, I was trying to describe the charts I put up from the discussion with Lesm. Apologies, this stuff really isn’t for beginners at all, and it is highly controversial. In T/A, my “magpie” style is very unorthodox, and heavily customised to my personal preferences, and definitely a minority perspective (my straight charting style is more mainstream, and the Elliott Wave component is pretty much orthodox Prechter and Frost - although even this is not in the majority in technical analysis circles).

You really need a solid understanding of basic T/A concepts first. That’s why I’m suggesting that you consider studying the range of books listed in the previous posts.

Look at the whole gamut of styles, Lesm is an outstanding chartist, Coyotte for example is a Guppy/Wilson practitioner, tech/a is one of the foremost long term system traders, wavepicker is a an Elliot Wave practitioner, Wayne is a consummate options trader, Ducati is a gifted Fundamental analyst for example. There are others of course. All of us have developed a style that we feel comfortable with. Each has wisdom you may choose to draw from.

The concepts that are of use to you is about trying to work out what the main trend is, and realising that in a bullish trend you get “pull backs” – counter trends. The idea is to buy on the pull backs. Same with bear trends. Sell on the bullish counter trends. Sounds easy. It isn’t.

Also, don’t forget that there are players out there that deliberately try to run stops. For instance they may push the price down by shorting the market, and do so until there is a big buy order at a level they are satisfied with, and close out their short position. They then go long, and push the price up, hoping to force those with short positions to cover. Then they sell as the short covering intensifies and the buyers get greedy…

This can be in any time frame, and it is like a huge game of chess as conflicting agendas and strategies play out in the market.

By understanding “trends” and how stocks etc pull back, you can learn how to minimise the situation Great Pig posted on recently where he sold right at the end of a counter trend, only to see the underlying fly up well into the original direction he thought it would go. A common experience for many, and one you need to understand the dynamics of. Even with this understanding, you can still get caught out by the stop running tactics. But if you understand how this works, you stand a better chance of avoiding getting stopped out, and can actually profit from it…


Regards


Magdoran

 

[It's Snake Pliskin]

Barney how about you reveal what you do now and the helpful can state their opinions on it to point you in the right direction.

Regards
Snake

 

[barney]

Hi Mag, Don't worry, I certainly won't try to trade using the "vibration" theory!!..........Just trying to keep it simple atm, with a passing interest in the "deep" stuff

PS So much for my theory on ROC dropping with the oil price.........any slant on that??.........I'm in that position of "should I "buy" out my short position or wait to see if the sp/Oil continues to drop further?............more dilemmas....really thought it would drop today after oil took another dive in US last friday Cheers

 

[coyotte]

ROC

Notice the high Vol Sell off on thursday --- warning for SHORTS
If ROC -- CLOSES above 3.50 -- above C/B --- I would close tomorrow

$3.50 also appears a to be the resistance level at this point in time.


Just how I would Play it ---- you must make your own judgement !


Cheers

 

[barney]

Barney how about you reveal what you do now and the helpful can state their opinions on it to point you in the right direction.

Regards
Snake

Thanks Snake, Atm I confess to not having a definite trading plan (still working on what works for me if that makes sense)

What I might do is post in "steps" as to where I'm at because to go through everything would take too long at one go (and I'm a slow typer!!

(Bearing in mind I prefer short to medium term trading over long term investing...thats just my nature) .....My first step) Finding suitable stock!! .........This can be difficult at times!... things I look for (if I'm buying)......quality Co.'s which have been in a downtrend, but showing signs of reversal........Check things like analysts reports; logical reasons why the stock has been down (eg general market sentiment for that sector etc.) Profit reports (not that I understand them that well...........that might be an interesting point that could be brought up.........the most significant things to look for in a Co's Annual/half yearly etc. report ....obviously large(r)/small(er) than expected profits.... but are there other important things to look for?)........
Anyway if the Co. shapes up as a possibility, then I like the chart to "reassure/confirm" my judgement. Chart wise (and I'm finding the charts, when coupled with sound judgement, seem to give "predictable" trends. The indicators I am finding most useful so far are Stochastic (look for both the %Kand%D showing uptrend from oversold level............... The Directional Movement System... any strong move by either the positive or negative seems to be reliable.......The MACD + histogram...any "postive" movement/divergance is useful to back up other indicators. Also like the Bollinger curves (eg "blowing out"higher on a general uptrend seems to be a good buy signal) Also check the rate of change on price and new one today..the positive volume index...

Now what happens after I think I might be on to something and I put my money (whats left of it) into the stock, it then proceeds to do the exact opposite of what I thought (well not all the time!!) and that would lead me to stage 2.............dealing with a stock open position.............(I'll wait for any comments to this point cause I'm probably boring everyone! PS For a short sell most of the above would obviously be the opposite attack)

PPS. Re ROC, (I agree with Coyotte after looking at the chart tonight) If the price of oil goes up overnight my short sell on ROC looks very shakey! ...fingers crossed,......... although the short term oil price looks/looked? like it could drop some more, any comments appreciated, Barney.

 

[Magdoran]

Ok, even though this is in the beginners area, I thought I’d illustrate some T/A in the ongoing example, in the Crude oil estimation with the 24th as a significant time point.

This is showing up in the pattern as potential support in time. If there was a second half of a short position, it should have been exited overnight. Not time to go long unless you’re a high risk player in my view, but a contrarian style may embrace this as the time.

Playing the short term high exposure game here long in my view is highly risky in capitulation moves, the underlying can spike down very deeply, and if you’re trading CFDs, clean out your account - unless you have very deep pockets, or trade very small positions.

This is where it gets interesting. We have a very fast move down from the major high. The pattern in the daily is bearish, but the pattern in the weekly is bullish. Time for great care.

The counter trend rally from here will give some clues about what might happen. I would expect a 1-4 day counter trend up. If this is all there is overnight, and it continues bearishly, this is very bearish. The weaker the bullish response, the higher the probability of a capitulation move down – essentially a very fast high momentum panic move.

However even if we get a strong bullish drive up, this can still turn and should retest the current low. To slow the move down, or see a bullish resumption, the longer a counter trend lasts the better for the bulls, but not necessarily, the nature of the pattern has a bearing on this too. Certain patterns are bearish, so time alone has to be in context with the pattern.

A higher low to last night's low could pan out in a variety of ways:
• An Elliott styled “ABC”pattern (McLaren “two thrust”), and resume bearishly.
• Consolidate and go sideways around this level (accumulation/distribution depending on the pattern).
• Rally and resume bullishly with higher lows.

So, the pattern after a higher low would give clues about what Crude Oil will do if we get one.

Also, using the cycle theory, the next key increment is 30th October. Depending on the immediate pattern out of last night's bar, if crude gives a bullish signal, this would be the time point to exit at least half the position. If a bearish continuation, this would be a significant time point. If consolidating, this becomes a time point of note based on the pattern.

Please not though this is only being used as an example for illustration, it is not a recommendation to trade.


Regards


Magdoran

 

[tech/a]

Moggie I just wish to clarify the thinking behind this and looking at it from a practical trading point of view I will bring up points as we go along.Thanks for the example.

in the Crude oil estimation with the 24th as a significant time point.

This I believe is yet to be proven as significant and at this time you would have halved any short position but not yet taken a long.

This is showing up in the pattern as potential support in time. If there was a second half of a short position, it should have been exited overnight. Not time to go long unless you’re a high risk player in my view, but a contrarian style may embrace this as the time.

As above.

Playing the short term high exposure game here long in my view is highly risky in capitulation moves, the underlying can spike down very deeply, and if you’re trading CFDs, clean out your account - unless you have very deep pockets, or trade very small positions.

So basically no position.

This is where it gets interesting. We have a very fast move down from the major high. The pattern in the daily is bearish, but the pattern in the weekly is bullish. Time for great care.

The counter trend rally from here will give some clues about what might happen. I would expect a 1-4 day counter trend up. If this is all there is overnight, and it continues bearishly, this is very bearish. The weaker the bullish response, the higher the probability of a capitulation move down – essentially a very fast high momentum panic move.

However even if we get a strong bullish drive up, this can still turn and should retest the current low. To slow the move down, or see a bullish resumption, the longer a counter trend lasts the better for the bulls, but not necessarily, the nature of the pattern has a bearing on this too. Certain patterns are bearish, so time alone has to be in context with the pattern.

So again not in a position from analysis to do anything.

A higher low to last night's low could pan out in a variety of ways:
• An Elliott styled “ABC”pattern (McLaren “two thrust”), and resume bearishly.
• Consolidate and go sideways around this level (accumulation/distribution depending on the pattern).
• Rally and resume bullishly with higher lows.

I think you have covered every possiblity so again the analysis has just alerted us to the fact that this could be a point in which a further set up will occure which should see a trading opportunity arise---what that is yet will take time to develope.

So, the pattern after a higher low would give clues about what Crude Oil will do if we get one.

As above.

Also, using the cycle theory, the next key increment is 30th October. Depending on the immediate pattern out of last night's bar, if crude gives a bullish signal, this would be the time point to exit at least half the position. If a bearish continuation, this would be a significant time point. If consolidating, this becomes a time point of note based on the pattern.

So depending on what developes from the next few days which will give us a trading opportunity (If it doesnt consolidate) decisions about that trade taken should be addressed on 30/10

Please not though this is only being used as an example for illustration, it is not a recommendation to trade.

I dont see a trade yet but know what you mean.


Is this a fair assesment?

 

[Sean K]

PPS. Re ROC, (I agree with Coyotte after looking at the chart tonight) If the price of oil goes up overnight my short sell on ROC looks very shakey! ...fingers crossed,......... although the short term oil price looks/looked? like it could drop some more, any comments appreciated, Barney.

Well Barney, my is that ROC is tracking oil to some extent and will find support at this level as oil has. It's clear on the charts when you correspond the support and resistance lines.

ROC support around $3.20 at the same time oil support at $60.00. On the up, resistance at $3.75 and $4.15 which will correspond with oil at $68.00 and $72.00. Approximately....IMHO

 

[RichKid]

Moderator's Note:
Ladies and gentlemen, if you could keep closer to the topic in certain posts it would be great, it's good to illustrate the theory discussed with real examples but if it becomes too closely related to a stock it may be best to post in the thread for that particular stock. Thought I'd mention it before things go off on a tangent as this is quite a big thread as it is- thanks!

 

[tech/a]

Rich.
I personally think the exercise is relevent to "Improving Chart Analysis".

Crude has been selected but could have been anything.
Both Moggie and Kennas are using examples which are correlated.

Pretty hard to look at tech analysis ideas without the chart.

Actually most times I see charts where you cant see the price action for analysis!!! hahahaha.

 

[Sean K]

Moderator's Note:
Ladies and gentlemen, if you could keep closer to the topic in certain posts it would be great, it's good to illustrate the theory discussed with real examples but if it becomes too closely related to a stock it may be best to post in the thread for that particular stock. Thought I'd mention it before things go off on a tangent as this is quite a big thread as it is- thanks!

Sorry RK. I'm not interested in the actual oil price or ROC, just wanted to display some chart analysis with support and resistance lines to make it relevant. I thought it interesting that this basic analysis fits in with Mags more complex vibrating ones.