XAO Technical Analysis

Re: XAO Analysis

Broadway said:

And now with poor employment figures from the US and a down looking USD index, I think next week may just start our next ride down for a while.

I personally hope it doesnt last too long.

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I agree and agree, will be interesting to see how the US moves over the rest of the evening. If it ends down, I will exit my positions on Monday.

I am looking for the next shift downwards next week.

nomore4s makes an interesting point on effort, volume and outcome.

Damn Wayne, you have done it all! Good to see you still revert back to K.I.S.S principles, nearly every book I have read written by successful traders all say the same thing. Trade set-ups and plans change, but the same principle is espoused.

I find my most simple methodology also reaps the greatest rewards, though I am inquisitive to learn various strategies. Even if just for the fun of learning!

Re: XAO Analysis

motorway said:

No all the lines represent the past price action


They are then displaced forward and backwards


dyor
motorway

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If I am looking at the Chikou span (ma displaced backwards) at any one point in time, then I am seeing the price action that took place 26 days forward from that point (the future, from Chikou's perspective). A matter of wording I suppose...

Yes, the study is this at a crunch (MAs moved forward/backward)...Josjes, it does look amazing, but in reality it is very very simple...In fact the name "Ichimoku Kinko Hyo" translates as chart - at a glance - meaning from one quick look you should be able to quickly assess how bullish or bearish a stock is.

Motorway, you explanations sound dismissive, but let me give a little more detail. BTW, it took close to 20 years of backtesting to work out that a 9 day MA gave the best results when used with 26 day MA. This is all the backtesting we have on this study...if you want to muck about with different timed MAs good luck to ya. (PS, backtesting was in Japanese markets)



Agree entirely about it being displace MAs, but your chart is misleading in the way you simply choose two lines to displace forward, and you give no reason why the Ichimoku study would choose to do this with certain MAs. I assume you quickly read something on the internet by Ken?


One line of the cloud is calculated by adding the 9 and 26 day values and dividing by two (midpoints are used, because the study really focuses on two halves of a market; above and below midpoints). The line is then plotted 26 days ahead.

The second line of the cloud is significant - it is the midpoint of the last 52 days, essentially to Western thinking, similar to a 50% retracement level. That is, there are two halves of the market above and below this line.

It is definitely a trend following system. It is definitely simple...I presented it here as an alternative to EW discussion and blind freddy can see that there are 26 day cycles (approx) occurring on the XAO and that the lagging MA could be useful.

JosJes - if I feel the study will help tell a picture about possible movements that back up or counter EW analysis then I will happily post.

Ifocus - I don't personally use it to take a position. I use it more as a secondary tool to perhaps give weight to more western indicators that I typically use (and to digress, and thanks to Tech/As postings I am really trying to develop a more mechanical and backtested system...and it would be painful to try to incorporate this into a backtest).

For example, a couple of pages back I used a BB analysis and stochastic indicator to predict some buying strength up to the 5th April. In the background I was using Ichimoku to help confirm the 5th as a possible target.

Re: XAO Analysis

People can get excited by the "exotic"

Ichimoku--- is a default indicator on updataTA

So I have had a look at it on bar and P&F charts

It is a lagging indicator....It follows along even though it is drawn in front.

Nomore4.... has correctly identified resistance. It is selling pressure, supply.

The thrust ( Geometry ) of that bar has shortened... And Volume has increased..

Demand and Supply leave behind artifacts...We can give them names like MACD or RSI or Ichimoku

They give a Static context....But we deal with a dynamic one.

Resistance is not some line
it is someone selling NOW


I ask

what
how & why

What is the geometry of the waves of buying and selling ( Not talking about Elliot's Waves either ) thrust and reaction
how is the volume
why is accumulation or distribution

With RSI or MACD , Ichimoku etc
You can optimise these to the behavior of past demand and supply

You can fight yesterdays war tomorrow...Only thing is your opponent is unlikely to play along..

Note the key time spans of nine, 26, and 52 days in his
formulas. The time span of 26 days would correspond to the
number of business days (Saturdays included) in one month
when this charting method was devised and tested. So the time
horizons of nine, 26, and 52 days represent a week and half; a
month; and two months, respectively.

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ASX does not trade Saturdays

but your chart is misleading in the way you simply choose two lines to displace forward,

Click to expand...

Two lines that matched the Ichimkou was the reason

The rhythms of the market are broken rhythms.

meaning from one quick look you should be able to quickly assess how bullish or bearish a stock is.

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A stock goes up or it goes down is there much else?

motorway

Re: XAO Analysis

motorway said:

People can get excited by the "exotic"


It is a lagging indicator....It follows along even though it is drawn in front.

Nomore4.... has correctly identified resistance. It is selling pressure, supply.

The thrust ( Geometry ) of that bar has shortened... And Volume has increased..

Demand and Supply leave behind artifacts...We can give them names like MACD or RSI or Ichimoku

They give a Static context....But we deal with a dynamic one.

Resistance is not some line
it is someone selling NOW

I ask

what
how & why

What is the geometry of the waves of buying and selling ( Not talking about Elliot's Waves either ) thrust and reaction
how is the volume
why is accumulation or distribution

With RSI or MACD , Ichimoku etc
You can optimise these to the behavior of past demand and supply

You can fight yesterdays war tomorrow...Only thing is your opponent is unlikely to play along..

A stock goes up or it goes down is there much else?

motorway

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Thanks again for your comments. I can't disagree with you Motorway, it is certainly just that - a lagging indicator.

And you raise some very good questions that all traders should constantly be asking themselves.

You won't get an argument from me that Supply and Demand TODAY is the key. So much can simply be derived from a Volume Histogram and its corresponding bar or candle. On that point , I would have been a much better trader earlier on, if someone had forced me to study nothing but volume against a price chart (no indicators or trend lines allowed) for 2 years.

That said, an indicator should be helpful in graphically displaying historical waves/extremes of demand/supply.

Say with VSA, which is what i asume you are alluding to, if one studies a single bar in isolation, they know a lot about today's trading psychology, but that can't put that into a broader context. So even VSA needs to be backward looking to get some perspective. Even EW must concede the use of historical movements to try to predict a future wave.

Re: XAO Analysis

There is a place in analysis for lagging indicators.
I like Stochastic Divergence.
I use lagging indicators in systems tests.
Motorway uses P&F charts with past history charted and geometry applied.

If your trading short term you'll want to deminish or remove as much lag as possible. VSA is as close as you'll get.
Rather than for buy and sell analysis I find history is handy for selection of UNIVERSE to trade. Both short and long.

Re: XAO Analysis

Futures pointing to ANOTHER decent rally, almost 1%.

I seriously hope there's more red to come so we can get better buys, banks look too expensive at even these levels D:

Re: XAO Analysis

I like to use a lagging indicator to set a trail stop.

Re: XAO Analysis

You didnt buy in the middle of March?

If not how then do you determine a "Right time" to buy?
and a "Right time" to sell.
Should we be selling bank stock at "this level"?

Re: XAO Analysis

vishalt said:

Futures pointing to ANOTHER decent rally, almost 1%.

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No they aren't. About 20 points higher than cash close Friday arvo.

Re: XAO Analysis

Trembling Hand said:

No they aren't. About 20 points higher than cash close Friday arvo.

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No you're wrong.

S&P/ASX 5,693.00 39.00 0.69

Re: XAO Analysis

vishalt said:

No you're wrong.

S&P/ASX 5,693.00 39.00 0.69

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Really. It may help if you know what you are quoting. That 39 point move is from the close of SPI futs @ 4:30. Which has NOTHING to do with cash close value. Which should be taken at the ASX 4:10 auction time or even 4:00.

As you can see from the posted chart the SPI fell some 30 points after the cash close on some serious high volume games. You are quoting the wrong value :
So hope you don't get to excited about your false figures.

Re: XAO Analysis

That was a serrious dump with a few minutes left... must be traders wanting out before the weekend and expectation of bad results from the US Jobless Claim data... It's a shame the US didn't tank much as it would have been a healthy rotation back to value.

It's interesting to note that large spikes that occur during the cross trades can be very lucrative if you have quick reflexes, fast broadband and some hunger for risk. There is always some counter-move in the opposite direction.

Re: XAO Analysis

$20shoes said:

Thanks again for your comments. I can't disagree with you Motorway, it is certainly just that - a lagging indicator.

So even VSA needs to be backward looking to get some perspective. Even EW must concede the use of historical movements to try to predict a future wave.

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Yes we need context.. And dynamics are always unfolding..

There is accumulation before mark-up
Distribution before mark-down

So the context is the story unfolding

Here is something you might find interesting

It could be any indicator...

With Ichimoku..I have found these settings more relevant on P&F

Now any indicator becomes adaptive when placed on a P&F chart
( I have only made the cloud and the lagging line visible )

The columns have no fixed time scale

When Support and Resistance changes a column changes.

So the time frame of any indicator expands and contracts

When it is on P&F chart ..

As tech states I use P&F I do not use many indicators

I do place some EMAs on 1 box reversal charts.

( Help measure that geometry... was that a meaningful thrust etc )

Ichimoku looks nice... But whether it reveals or conceals.. I am not so sure.

P&F have such clarity already .. You can just see the small accumulation zone.
P&F makes dynamics and change of dynamics very obvious...

The nature of a chart drawn by support and resistance and not time.

motorway

Re: XAO Analysis

Would you call a trend line or a support and resistance line (Rather than area) an indicator or are we defining indicator as Oscillator formulas?

Re: XAO Analysis

support is where demand overcomes supply..

It is the bottom of every column on a P&F chart..

We can not say the same thing of a bar chart
because the chosen time frame splits waves up artificially..

We can say when time is drawing the next bar
demand and supply were at a certain point in time

hence why the close is so important along with the range.
On the P&F a the close is always the last point of support
or of resistance

Lines are frames to help identify behaviour and change of behavior

I think of them as like a carpenters straight edge..

They help reveal the straight from the curved...

indicators I define as things that count time twice
once as duration and once as a time frame

So something like OBV gives indications but is not an indicator by my definition ( time is present but only as duration )..

Same with trend lines ( horizontal or vertical ) they do not count time twice..
and they can ( should ) be drawn from points of interest

This point to that point ( the points having a POINT )

Just like a carpenter

A moving average is always non optimised to what will matter


motorway

Re: XAO Analysis

Motorway, thanks for the chart. Looks interesting, and something I might look into a little further. To be honest, I've never really used P&F charts (no particular reason) but I understand the concept.
Appreciate the time and effort your put into your responses...

Re: XAO Analysis

tech/a said:

You didnt buy in the middle of March?

If not how then do you determine a "Right time" to buy?
and a "Right time" to sell.
Should we be selling bank stock at "this level"?

Click to expand...

These are the ultimate questions. What determines a top or bottom before they happen? How do you enter or exit into strength, before the corner happens?

Would it be possible for you to share some of your secrets, Tech/a?

What did you use to determine the middle of March as the right time to buy?

Was it financials hitting a low with volume, or other factors like gold or USD?

SPI and other futures' volume confused me because of expiry/changeover. And then the Easter gap up meant entering longs after easter felt like coming late to the party.

cheers.

Re: XAO Analysis

Broadway said:

And then the Easter gap up meant entering longs after easter felt like coming late to the party.

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Be careful about this, its always better to come "late to the party" once price action has confirmed momentum. Not pick bottoms and tops.

I think you misinterpreted the point of techs post, it was basically stating you cannot determine the "right" time.

VSA best use I find, from my short time of using it, is in the use of spotting tops and bottoms. High volume on narrow spreads with consolidation after a large up or downturn. Probably the most reliable pattern of VSA from my research. Check out SDG and JBH lately, looks like accumulation after a period of strong distribution (if thats the correct terminology).

I personally used seasonality and sentiment indicators, along with price momentum, to buy into this latest rally. Has reaped terriffic benefits over the last couple weeks despite the warnings!

Re: XAO Analysis

tech/a said:

Would you call a trend line or a support and resistance line (Rather than area) an indicator or are we defining indicator as Oscillator formulas?

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The best indication and definition

IS where the volume comes in...

this is the principle of the "creek"

It is about identifying a top and a bottom
If you can not identify a top or a bottom ( on the scale you are interested )

DO NOT ENTER..

Broadway asks a good question
which has many answers

some can not identify a bottom until
We are nearly at a top.
and can not identify a top until we are at a bottom

eg How else do we explain the
extreme volume at bottoms ?

It is only a question of
did they jump or get pushed


nomore4's chart shows us a flow of supply has been encountered

This is the "creek"

That has to be jumped
either by absorption or by a back-up & jump

creeks are minor and major
and are often found along the rally tops..

But they are not lines
but where the volume comes in..


motorway

Re: XAO Analysis

motorway said:

creeks are minor and major
and are often found along the rally tops..

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This one is in all probability, very major! More of a river than a creek so to speak!

Found along this rally top!

Cant be much more room to move upwards, without positive news, especially in relation to company profits.