Improving Chart Analysis

[tech/a]

Well done Barney. Good effort.

SDL

Here I get out the magnifying glass for some
short term analysis.
A fall below .091 to .090 and its snaffoood.
Potential targets 11.5 and or 13c

Technical opinion only not advice to trade

 

[Knobby22]

And good stuff Tech (nothing worse than a new convert).

 

[Magdoran]

Mag,

What contract are you using there. My spot contract (z) looks quite different to yours.

Hello Wayne,


Are you using the 2006 Z (December) contract? This is now the front month. The SpotV chart is an ongoing composite of the front month, and has some rules a bit like an index on how it is weighted. They will appear to be different, quite so.

If you look at my previous posts on this, I did post the 2006 Z contract to compare with the SpotV chart. If you look at the different contracts you will find that the further out in time you go, the prices are generally staggered upwards currently (the market is expecting demand to rise during winter in the northern hemisphere).

When we moved to the 2006 December contract, this price was higher than the now expired November contract, hence the higher low in the SpotV chart as opposed to the low in the December contract.

This can get confusing in futures markets if you don’t take into account how the spot markets are calculated.

Let me know if that is correct.


Regards


Magdoran

 

[Magdoran]

Mag,

What contract are you using there. My spot contract (z) looks quite different to yours.

Hello Wayne,


Correction, the October 2006 V contract is the one that just expired (inadvertently put this in as November).

The SpotV market is a composite of the front months, and there is a changeover point when the front month nears expiry. 2006 V was the October contract which just expired. It is different to the Spot V, which is now using the December 2006 Z contract.


Regards,


Magdoran

 

[tech/a]

Well done Barney. Good effort.

SDL

Here I get out the magnifying glass for some
short term analysis.
A fall below .091 to .090 and its snaffoood.
Potential targets 11.5 and or 13c

Technical opinion only not advice to trade

So strong support has been broken small loss taken on to the next trade.

If .96 was taken out it would be worth another look.

 

[CanOz]

So strong support has been broken small loss taken on to the next trade.

If .96 was taken out it would be worth another look.

I actually have my stop at .088, and today i watched it close without hitting it. If it goes tomorrow ok, but if it gaps i'll dump it anyway....too many more opportunities at the moment.

I'm having trouble posting at the moment but i'll try to put up some interesting charts that i was looking at today. AVX has a great textbook (at east it looks 'textbook') triple bottom that its breaking through. Thought maybe everyone might like to put thier 2 bob into it.

Later,

 

[barney]

Well done Barney. Good effort.

SDL

Here I get out the magnifying glass for some
short term analysis.
A fall below .091 to .090 and its snaffoood.
Potential targets 11.5 and or 13c

Technical opinion only not advice to trade

Like I said, My analysis was very basic .............. and doesn't Tech's show that !!! I learned at least 3-4 new things in your analysis Tech .... Thanks for that ....hopefully others have benefited as well

One thing Tech ... can you explain the "Break away gap not filled in 3 days, a strong sign" comment in a little more detail for me, cause I'm not quite understanding that :homer:
PS Why does this analysis stuff have to be so difficult?? ..... Shouldn't it be simple like ........... That stock looks good; I'll buy it; It goes up heaps; I sell and make lots of money; ......... (Repeat process) .......... My wife then thinks I'm clever cause she can buy stuff she likes!! ..... and I'm a genius If only!!!! Cheers Barney.

 

[CanOz]

Like I said, My analysis was very basic .............. and doesn't Tech's show that !!! I learned at least 3-4 new things in your analysis Tech .... Thanks for that ....hopefully others have benefited as well

One thing Tech ... can you explain the "Break away gap not filled in 3 days, a strong sign" comment in a little more detail for me, cause I'm not quite understanding that :homer:
PS Why does this analysis stuff have to be so difficult?? ..... Shouldn't it be simple like ........... That stock looks good; I'll buy it; It goes up heaps; I sell and make lots of money; ......... (Repeat process) .......... My wife then thinks I'm clever cause she can buy stuff she likes!! ..... and I'm a genius If only!!!! Cheers Barney.

Have a go at AVX Barney....its an interesting chart. I don't currently hold but i have a price alert on it.

Cheers;

 

[tech/a]

SDL's not done yet only on my very short term trading analysis.
I expect the gap to hold and would be suprised if its even breached.
If I had lost on this short term move I would still have it in my watchlist.

There are many ways to trade it.The fall on low volume shows that Sellers have won the day and new buyers are not attracted at the old prices.It is possible some of those expecting a breakout have been spooked into selling out as it dropped. 8.6c/ish would be where I expect new buying to move in/become intersted.

 

[CanOz]

Thanks Tech! Have you read Master the Markets? I'm still getting through it, but some of your analysis some familar, esp the price action comments.

 

[Magdoran]

Continuing Crude Oil Example


This is really in the balance now. The next few days are critical.

I have a suspicion tonight’s price action in HU (Unleaded futures) may give a clue as to which way the crude market is going to go.

If HU continues down, I think this will probably drive Light Crude prices down too. I think it is fuel consumption not lubrication/pharmaceuticals/other oil products that drives the price of oil.

I have to say that the front month HU contract may have broken down, and this could drive price down if it can hold below the recent lows.

Have a look at the attached charts…


Regards


Magdoran

 

[wayneL]

Hello Wayne,


Correction, the October 2006 V contract is the one that just expired (inadvertently put this in as November).

The SpotV market is a composite of the front months, and there is a changeover point when the front month nears expiry. 2006 V was the October contract which just expired. It is different to the Spot V, which is now using the December 2006 Z contract.


Regards,


Magdoran

This all makes things a bit dodgy as far as t.a./Gann/EW are concerned.

What is the appropriate chart to perform analysis on? Each has their problems, particularly with physical commodities.

Continuous charts have gaps on contract rollover because of cost of carry considerations. You can back-adjust of course, but this creates other problems.

Then there are the conditions of contango and/or backwardation (and the factors which cause them)

It is a minefield.

For analysis spanning not longer than 6 months, I use singular contracts (the one being traded). Cost of carry will affect the values as time goes by, but not greatly.

$0.015

 

[Magdoran]

This all makes things a bit dodgy as far as t.a./Gann/EW are concerned.

What is the appropriate chart to perform analysis on? Each has their problems, particularly with physical commodities.

Continuous charts have gaps on contract rollover because of cost of carry considerations. You can back-adjust of course, but this creates other problems.

Then there are the conditions of contango and/or backwardation (and the factors which cause them)

It is a minefield.

For analysis spanning not longer than 6 months, I use singular contracts (the one being traded). Cost of carry will affect the values as time goes by, but not greatly.

$0.015

Hello Wayne,


Thanks, you raised some really good points about futures.

Quite true, it is a minefield, and the effects of “contango” (where longer dated futures are priced higher than nearer dated futures) and “backwardation” (where longer dated futures are priced lower than nearer dated futures) certainly add an element of complexity to the analysis process.

As you can imagine there are a range of ways of approaching various aspects peculiar to futures, and I don’t intend to expand on all the facets here since the focus here is on chart analysis.

The way I approach this is to either analyse a specific contract (which is why I posted up the December 2006 chart as an example), or accept the composite nature of the spot chart (much like the way stock indexes are weighted).

I would argue that the nature of market cycles underlying spot markets are evident, and that the analysis I am using aims to fathom these cycles irrespective of the quirks of futures markets.

By being aware of aspects such as “backwardation” and “contango”, it is possible to take these factors into account and adjust accordingly, which is why if you are trading spot markets with CFDs you really need to understand the mechanics.

If you ask me, I’d say analyse both the spot and the various contracts you think are relevant to get the best picture possible. Take away wisdom: research the $#@% out of everything!


Regards


Magdoran

P.S. I wasn’t going to raise terms like “backwardation” and “contango”, but what the hell, this is after all a teaching thread! Mag

 

[dj_420]

Hey guys, im very new to tech analysis and thought i would post one chart up. my view is that following the recent up trend we will see a slight pullback or consolidation around the 80 cents mark before resuming uptrend.

IMO market fundamentals for zinc will give this stock support for current levels it has run to. volume for this stock is still relatively high, so i dont think we will see to much of a pullback.

pls correct me if im wrong, any other opinions on this chart? also im finding it hard to locate specific resistance points due to chart been a bit all over, if someone could point them out that would be great thanks.

 

[barney]

Hey guys, im very new to tech analysis and thought i would post one chart up. my view is that following the recent up trend we will see a slight pullback or consolidation around the 80 cents mark before resuming uptrend.

IMO market fundamentals for zinc will give this stock support for current levels it has run to. volume for this stock is still relatively high, so i dont think we will see to much of a pullback.

pls correct me if im wrong, any other opinions on this chart? also im finding it hard to locate specific resistance points due to chart been a bit all over, if someone could point them out that would be great thanks.

Hi DJ 420, (Are you a DJ?), In my humble opinion, this stock looks strong to me also. I agree with the strength related to Zinc atm, and they are also ready to start mining in 2007 I believe. It looks like .84 will be the new support level, and I'd be surprised if this ever gets broken the way zinc is firing. If it hasn't already, this stock should have been listed on the Outstanding breakout alerts ..... Cheers, Barney.

 

[tech/a]

https://www.aussiestockforums.com/forums/showthread.php?t=3119

Been discussing JML here.

 

[Magdoran]

Hi Mag, Music is going OK. Few weddings atm, Keeping the wolf from the door.

PS I am no longer holding this position. Not that I didn't like it, but I needed the money for other things (Its a bugga being poor)

Thanks for your input. I appreciate your position of not wishing to appear to be giving specific advice. No problems there. I've posted the chart below illustrating the "questions" you put to me, and hopefully I've gotten the positions correct. Let me know where I can improve.

Re the short sell point ..... Is this a general signal for a possible short position? The lower highs and lower lows with volume sell off etc. I assume all stocks will trend differently. This one seems to follow a "predictable" pattern if there is such a thing.

PPS I took the MA's etc off the chart. It does clear the picture up a bit, but I think I still need the visual confirmation that they give at this stage cause its not that obvious to me yet ........... Give me another 5 years Cheers Barney.

PPPS I am curious about the 5 7 9 or 11 waves theory. Are you saying that if the downturn turns out to be a "fair dinkum" bearish reversal,that it is possible to "predict" how far it may go? Is this based on mathematics, or human phsychology? Thanks.

PPPPS (More peas than you can poke a farmer at!) How do I stop my charts from being so messy looking when I upload them. I cant seem to reposition my captions anywhere other than the top of the page which gets really congested

Hi barney,


Quick off the cuff answers – I’ve been meaning to get around to this…

Signals to go long and short are really a personal choice about what you think constitutes a trigger to enter a position.

For me certain patterns give a probability of what might happen… A confirmed lower high in certain technical patterns (meaning the next day closes below the lower high in a way that you believe validates that it may be a lower high), may constitute for me a short opportunity, but where I set my exits and criteria depend on a range of variables.

The wave structure theory is in part based on McLaren’s interpretation of Prechter and Frost’s revision of Elliott Wave theory. The core idea is that waves may subdivide on the way down and different wave structure schools may well argue over the labelling, but you can sometimes count up to 11 waves down in some bear campaigns, although some would argue that the 5th or 3rd waves have subdivided… but this is quite a specialised area for those who subscribe to Wave theories.

As for the prediction on how far a bear campaign may last, this is very subjective, and there are many different schools of thought on this subject, even in the EW and Gann “schools” and I suppose even “intra-school” debates...

Essentially price ranges can be projected based on a range of criteria, as well as an interpretation of the straight bar chart and volume, and an analysis of wave structure. A lot is to do with counter trend theory which can give hints as to what might transpire, but it is all about estimating probabilities. Add to this the cycle approach, and it can get quite involved till you understand all the building blocks involved.


Regards


Magdoran

 

[barney]

Hi barney,


Quick off the cuff answers – I’ve been meaning to get around to this…

Signals to go long and short are really a personal choice about what you think constitutes a trigger to enter a position.

For me certain patterns give a probability of what might happen… A confirmed lower high in certain technical patterns (meaning the next day closes below the lower high in a way that you believe validates that it may be a lower high), may constitute for me a short opportunity, but where I set my exits and criteria depend on a range of variables.

The wave structure theory is in part based on McLaren’s interpretation of Prechter and Frost’s revision of Elliott Wave theory. The core idea is that waves may subdivide on the way down and different wave structure schools may well argue over the labelling, but you can sometimes count up to 11 waves down in some bear campaigns, although some would argue that the 5th or 3rd waves have subdivided… but this is quite a specialised area for those who subscribe to Wave theories.

As for the prediction on how far a bear campaign may last, this is very subjective, and there are many different schools of thought on this subject, even in the EW and Gann “schools” and I suppose even “intra-school” debates...

Essentially price ranges can be projected based on a range of criteria, as well as an interpretation of the straight bar chart and volume, and an analysis of wave structure. A lot is to do with counter trend theory which can give hints as to what might transpire, but it is all about estimating probabilities. Add to this the cycle approach, and it can get quite involved till you understand all the building blocks involved.


Regards


Magdoran

Thanks Mag, I am appreciating the many variables more all the time. I guess it is all fairly subjective to the trader involved and the time frame each of us likes to trade in, relative to the theories/signals etc. that seem the most reliable. The very short term can be "nervy", and the long term can require a lot of patience. At this point in time I am trying to develop a "simple" trading plan, with Chart analysis as the backbone of entry/exit decisions .......... Still struggling to get it right, but like you say, the more "building blocks" that are added to the structure, the stronger the foundation is becoming.

PS Read some of the stuff you guys are talking about on the Derivatives thread ............ Is that in english? Cheers, barney.

 

[It's Snake Pliskin]

The very short term can be "nervy", and the long term can require a lot of patience. At this point in time I am trying to develop a "simple" trading plan, with Chart analysis as the backbone of entry/exit decisions ..........

Barney may I suggest you dispense with the fundamental element of your analysis. A chart will tell you more than you could imagine. Remember though, analysis is only a small part of it.

The short term is exciting and the long term is smoke blowing in the wind - hence your use of "patience".

 

[Bobby]

Barney may I suggest you dispense with the fundamental element of your analysis. A chart will tell you more than you could imagine. Remember though, analysis is only a small part of it.

The short term is exciting and the long term is smoke blowing in the wind - hence your use of "patience".

Well said Snake, those that are not in sink with the evolution of resent manifestations will lose.