Tech/a on Technical Analysis

[tech/a]

Over 25 yrs I've studied a lot of what is available in the technical analysis field.
I've also worked for 2 yrs with people who are amazing with Data analysis and
coding on a level well beyond the capabilities of 99.95% of us. AI is the future
for those who can access it.

Does this mean we are all doomed --- I dont think so AI will be in a space we
will not go to it will find things that we cant see.--Just another player--a powerful
one at that.

While 80% of Technical Analysis is worth the time to become proficient in the Technical space.
Little is of practical value in ISOLATION.

I'm not going to enter into argument on which is best and which is rubbish.
Rather Ill concentrate on that which I have found as valuable in my own trading
What I look for and Why---you will then need to plot your own path--hopefully with
more purpose and Clear---er Direction.

Technical analysis at best leads you to a trading opportunity whether that be long or short.
Risk managements saves you from your own bias and the fallibility of any form of analysis.
Reward to risk on capital traded is your score card--the money follows.

The most powerful technical tool is the analysis of PATTERNS

Not the first to see this.

Gann
Elliott
Steidlmayer
Williams
Gartley
Edwards and McGee
Pring
Van Tharp

All looked at Patterns in their own way.

Patterns of meaning form in all sorts of DATA not just price.

Volume
Range
Seasonality
Open interest
Long and Short holders.
Course of Trades
Time

There Are Many more places to look.
There are a great many patterns but by far
my favorite is Consolidations. In Price/Range/Volume
Everything happening IN Patterns leads to what Happens
OUTSIDE of Patterns.
More often than not it reads IN CONTEXT with clarity.


The value lies in
What happens in these patterns

Where it happens in a chart/data EG
After a prolonged move.
After a short move
After a wide range very high volume bar.
There are a lot more


When it happens in a chart/data
After a long period of time
Straight after another consolidation of size or Very small
Mondays-every May-
After High volume
After Low Volume
There are a lot more

Why it happens.
News.
Volume
World economics
Demand incoming or leaving.
Again many more.

But in every case ONE occurrence IN A pattern can trigger events to occur
outside the pattern and that's when you want to be on it!


The pattern as you will find in isolation has little value as they will fail just as often as
they conform to standard technical theory. Of little value when you want to trade the Chart/Data.
30-50% success maybe acceptable in some models but frustrating and useless to others.
Particularly those Trading in a discretionary manner.

The second Most powerful Tool is

The analysis of single Occurrences or Occurrence Clusters Inside or Outside of Patterns

Trends are patterns!

They can be
Single or Groups of Bars
Volume
News catalysts.
Chart Characteristics.
Time.

 

[Skate]

I'm salivating...

I can't wait for the next post.

Skate.

 

[mcgrath111]

Over 25 yrs I've studied a lot of what is available in the technical analysis field.
I've also worked for 2 yrs with people who are amazing with Data analysis and
coding on a level well beyond the capabilities of 99.95% of us. AI is the future
for those who can access it.

Does this mean we are all doomed --- I dont think so AI will be in a space we
will not go to it will find things that we cant see.--Just another player--a powerful
one at that.

While 80% of Technical Analysis is worth the time to become proficient in the Technical space.
Little is of practical value in ISOLATION.

I'm not going to enter into argument on which is best and which is rubbish.
Rather Ill concentrate on that which I have found as valuable in my own trading
What I look for and Why---you will then need to plot your own path--hopefully with
more purpose and Clear---er Direction.

Technical analysis at best leads you to a trading opportunity whether that be long or short.
Risk managements saves you from your own bias and the fallibility of any form of analysis.
Reward to risk on capital traded is your score card--the money follows.

The most powerful technical tool is the analysis of PATTERNS

Not the first to see this.

Gann
Elliott
Steidlmayer
Williams
Gartley
Edwards and McGee
Pring
Van Tharp

All looked at Patterns in their own way.

Patterns of meaning form in all sorts of DATA not just price.

Volume
Range
Seasonality
Open interest
Long and Short holders.
Course of Trades
Time

There Are Many more places to look.
There are a great many patterns but by far
my favorite is Consolidations. In Price/Range/Volume
Everything happening IN Patterns leads to what Happens
OUTSIDE of Patterns.
More often than not it reads IN CONTEXT with clarity.


The value lies in
What happens in these patterns

Where it happens in a chart/data EG
After a prolonged move.
After a short move
After a wide range very high volume bar.
There are a lot more


When it happens in a chart/data
After a long period of time
Straight after another consolidation of size or Very small
Mondays-every May-
After High volume
After Low Volume
There are a lot more

Why it happens.
News.
Volume
World economics
Demand incoming or leaving.
Again many more.

But in every case ONE occurrence IN A pattern can trigger events to occur
outside the pattern and that's when you want to be on it!


The pattern as you will find in isolation has little value as they will fail just as often as
they conform to standard technical theory. Of little value when you want to trade the Chart/Data.
30-50% success maybe acceptable in some models but frustrating and useless to others.
Particularly those Trading in a discretionary manner.

The second Most powerful Tool is

The analysis of single Occurrences or Occurrence Clusters Inside or Outside of Patterns

Trends are patterns!

They can be
Single or Groups of Bars
Volume
News catalysts.
Chart Characteristics.
Time.

Hey techa,

I'm currently on holidays and would like a basic TA book to get some understanding into reading charts (For entry points for long positions).
Any recommendations?

Thanks mate!

 

[qldfrog]

This is GOLD.thanks

 

[tech/a]

Hey techa,

I'm currently on holidays and would like a basic TA book to get some understanding into reading charts (For entry points for long positions).
Any recommendations?

Thanks mate!

Can get it free online
This is a good start.
Certainly an amount of relevance here
But a lot shown here you won’t find in any books.

http://www.tradeguider.com/mtm_251058.pdf

 

[jbocker]

Can get it free online
This is a good start.
Certainly an amount of relevance here
But a lot shown here you won’t find in any books.

http://www.tradeguider.com/mtm_251058.pdf

Thank You tech/a !!
I have read no more than 20 pages and realised that I am very distant (far) royalty (king) of doing many stupid things (imbecile) with respect to share trading! I am only appeased in that there may be hordes of people like me.
Please can I encourage you to continue with this good thread. This will be a treasure to add along with Skates Dump it Here.

 

[tech/a]

I am only appeased in that there may be hordes of people like me

The good news is you trade with them!
So do I

 

[tech/a]

Hi
I'm about to shoot out the door for MORE! Xmas New year Socializing!

But I want those interested in this thread to have a look at the Price action following the very high Volume bars marked with red Arrows.
These bars and the FOLLOWING price and volume action lead the way to our discretionary decisions.

What do you think they are telling us about CROWD MENTALITY?

 

[ducati916]

There Are Many more places to look.
There are a great many patterns but by far
my favorite is Consolidations. In Price/Range/Volume
Everything happening IN Patterns leads to what Happens
OUTSIDE of Patterns.
More often than not it reads IN CONTEXT with clarity.

A consolidation is nothing more than price stability in a timeframe, which, will eventually break down to news/whatever, and become unstable. This instability is the move to a new point of stability [higher/lower, the trend].

Trading is simply recognising that price stability is ending.

Whipsaws are the enemy: they suggest that price stability is ending, when, in point of fact, it hasn't. The key then is differentiating the noise [whipsaw] from the signal [trend away from stability]. Once you can do that consistently, well you are home dry.

jog on
duc

 

[ducati916]

What do you think they are telling us about CROWD MENTALITY?

They are all f****ing mental.

jog on
duc

 

[tech/a]

So now take a look at the same chart WEEKLY----Clearer?

 

[tech/a]

Doc
Said
“Once you can do that consistently then your home and dry ‘

Please share

 

[Boggo]

Just a minor query tech/a.
Fibonacci levels do come into play more than most realise. Are you scaling your fib backwards from a recent highest high ?

The reason I ask is that I have in the past been looking at activity (vol/price behaviour) around fib extension and retracement levels.

Cheers, Boggo

 

[tech/a]

Doc
Said
“Once you can do that consistently then your home and dry ‘

Please share

Seriously!

 

[ducati916]

Doc
Said
“Once you can do that consistently then your home and dry ‘

Please share

Timeframes. This is the starting point. I look at all the time frames initially. I also look quite quickly on the first pass, I don't want to study any 1 time period, I want areas of interest to jump out at me. If at a glance I see nothing, usually, there is nothing there.

This is a chopped down weekly chart.



There are 3 areas of 'consolidation (a) 2600/2800 and (b) 2600/2800 [again] and the transition to the two areas of more obvious consolidation. The first, not identified, would more likely be an exit area from an earlier trade.

Area (a) looks different in a daily time frame.



It breaks down into two areas of consolidation, both of which is potentially a trade, depending on the taking of that trade in a lower time period.

Consolidation (b) is much easier to trade:



Finally, the 'V' bottom on an hourly chart:



Which itself resolves into a number of consolidations: (a) forms the 'V' bottom, and the bar from 2350 up to [almost] 2400 would be your exit from the short trade.

There are then 2 small consolidations [in the middle there] that warrant either an exit awaiting a new entry or [ii] moving up stops [if you are liking the trade in higher time frames].

And the final consolidation at (c) which is where we are currently. I think we break higher. Confirmation will be a [true] move higher through this area.

And finally the 5min chart looking at consolidation (c):



So when I trade, I am first picking my time frame. I pick my time frame based on where I can see a significant consolidation. Thus my time frame will change and not be consistent. If I select the 1 hour time frame as holding the best consolidation, I am then looking at the daily, just to confirm that I still like the trade and the 30mins chart for an entry/exit. So the 1 hour triggers the trade, but the trade is managed in conjunction with the lower time frame.

This is the foundation. The foundation is built on the ability to 'see' the foundation in the first place. To the foundation you can add all of your bells and whistles to aid in that vision. Too many however will have the counter-intuitive effect of blinding or confusing you. Currently I like (a) Bollinger Bands and (b) VWAP. I have through the years used many others.

Hopefully that makes some sense.

jog on
duc

 

[tech/a]

Thanks Duc
I concur with some of your observations
Have you found anything of interest you could share with regard to
Triggers inside of consolidations to watch for and then triggers that
Are good indications of moves outside of consolidation?

In other words do you read consolidations with an expectancy prior to
A trade or during a trade or ending a trade?

 

[gartley]

Hey Tech, great summary and thanks for your thoughts so far!!

My 2c worth. I think a lot has to do with the type of trader you are. For example, reversal trader or trend continuation trader.
As a trend continuation trader I try to keep things as simple as possible and have created my own toolset which includes the following, and I need to place a tick in each box before entering a trade:
- Trend Indicator ( 8hr & daily chart)
I know on most occasions this can be obvious by eyeballing a chart, but when a market is in consolidation need to have a mechanism to tell the highest probability of which direcion it will break out. The way I approach it, is when the 8Hr and Daily cycles are in alignment the market has a 80% probabilty of moving in that direction over the next 1-2 days. Better still, if this analysis is wrong and market trends the opposite way, positions are quickly reversed because when this method IS wrong or a cycle inversion takes place some of the biggest moves occur.
- Volatility Indicator. I created my own but a 14period ATR also does a good job (daily chart)
Is the stock moving? If not why bother trading it and get whipsawed get stuck in a sideways move.
-Confirmation Indicator (daily chart)
Confirms trend Indicator & adds extra confluence to analysis
-Entry Indicator (1hr and 5Hr chart cycle alignment)
To position best possible entry within an existing trend
-Exit Indicator( 5Hr chartcyles change of direction)

Through readiness and discipline, we are masters of our fate. Remember that always.

 

[ducati916]

Thanks Duc
I concur with some of your observations
Have you found anything of interest you could share with regard to
Triggers inside of consolidations to watch for and then triggers that
Are good indications of moves outside of consolidation?

In other words do you read consolidations with an expectancy prior to
A trade or during a trade or ending a trade?

I probably used to. Not [so much] anymore. I wait for confirmation. Which is why whipsaws can be an issue, viz. false breakout from consolidation.

jog on
duc

 

[tech/a]

Ive written a great deal in this thread on Volume Control Bars (CR)

https://www.aussiestockforums.com/t...text-catalysts-example-charts-analysis.34060/

When opening a chart from a search this is the first thing I mark on the chart.
Its from here I can work either back or forward to gain an indication of the quality
of the chart. For clarity I have only Labelled the bars.

Once found this would be a typical mark up.



If your interested mark up a few charts of your own
before long you'll have quite a library of charts.
The running commentary is (I find) helpful at a GLANCE.

Close Ups Next

 

[Boggo]

Another view of the chart on this post... Potential & Breakout trading--Technical tips and tricks

tech/a, I'd be interested in your thoughts in comparison to the software generated commentary.

(click to expand)