XAO Technical Analysis

Whiskers · 15 November 2010

Re: XAO Analysis

Trembling Hand said:
Yep as i thought whiskers. Carry on mate.

Ok...

I guess you also have the 23% drop in sugar in two days to worry about. Weren't you telling us how thats a significant driver of the Australia economy?

No, not too worried there since it's coming off a decent recent high and I think a significant element there is the currency trade wars... the AUD has also fallen back a little to buff the fall to a degree, like all commodities.

I'm thinking the US attempts to suppress it's currency (for a short term fix) may be getting exhausted, since their dependance on imports will hurt their economy too much if they carry on for too long. The USD/JPY seems to be breaking higher and may be a sign.

...a bit of context there mate.

professor_frink · 15 November 2010

Re: XAO Analysis

Trembling Hand said:
Mate give them some rope to play with before ya pull it tight.

LOL!

Whiskers said:
No, I wouldn't in isolation either, prof. For me it's not about hanging everything on a single sign or signal, TA or FA, but weighing up the sum of all the signals.

Btw, actually it's probably not a strict 'Three Black Crows' since they actually should have opened higher than the previous close... but don't tell TH or I'll be running from a lynching party.

But since the markets have become automated and faster since these techniques were originally developed, I think one needs to look for the 'psychology' behind the configuration more than the strict geometry.

whiskers, I really can't see how this can even be considered as a piece of information to be used in building the case for a selloff. On average, following that type of 3 day selloff, the market has been pretty well neutral/very slightly bearish for about 2 days, and is generally bullish afterwards.

Logique · 16 November 2010

Re: XAO Analysis

Three black crows signals three days of rain, anybody knows that. Exactly whats happening here, the sky has sprung a leak.

Broadway · 16 November 2010

Re: XAO Analysis

So the US Fed wants to devalue the US dollar and create an equity wealth effect to bolster the US economy.
But maybe the fed plans wont work.

http://www.marketwatch.com/story/us-stocks-trim-gains-as-treasury-yields-rise-2010-11-15

Im not a fan of crow patterns but news does get my attention.

Frank D · 16 November 2010

Re: XAO Analysis

tech/a said:
I have a small group who in time will be testing most setups rigorously under auditable conditions. The results will be interesting.

Tech/A,

can you give me examples of two setups you'll be testing?

Frank

Gringotts Bank · 16 November 2010

Re: XAO Analysis

3 red days on successively higher volume is what I look for. Hasn't happened yet.

tech/a · 16 November 2010

Re: XAO Analysis

Frank D said:
Tech/A,

can you give me examples of two setups you'll be testing?

Frank

Frank

The Plan is to test all VSA signals to start with
(1) Stand alone,Volume or Range close only or together.
Some are multiple bar setups.
(2) With Contributing analysis like Support /Resistance.
Stops/time in play/position in trend/background.

We are going to be using Met lab/Tradesim with "C" and metastock over a long period of time.
Son is a Doc of Physics with an interest in the analysis of stock markets from a technical view.
I haven't been able to find exhaustive research and the purveyors of techniques wont or dont want to share analysis.
Our intent is to not only answer the questions for our interest and use but to have papers available for sale.

Frank D · 16 November 2010

Re: XAO Analysis

tech/a said:
The Plan is to test all VSA signals to start with
(1) Stand alone,Volume or Range close only or together.
Some are multiple bar setups.
(2) With Contributing analysis like Support /Resistance.
Stops/time in play/position in trend/background.

Good luck, there’s a lot of work involved and I’ll look forward to the results.

I'll also be interested in what ‘entry’ you’ll be using to validate the testing.

Whiskers · 16 November 2010

Re: XAO Analysis

professor_frink said:
whiskers, I really can't see how this can even be considered as a piece of information to be used in building the case for a selloff.

If you're referring specifically to the Black Crows thingo... I did say "No, I wouldn't in isolation either".

I did say they were not a technically correct example, but for all intention purposes it looked the part. It really is the lowest priority or weighted element of that analysis, thrown in cos it nicely joined the dots of higher priority 'signs' ie FA, some other TA that I didn't mention, likely EW scenerios, trend, the Dark Cloud and the pennant.

On average, following that type of 3 day selloff, the market has been pretty well neutral/very slightly bearish for about 2 days, and is generally bullish afterwards.

Maybe you could show an example and I'll scruetenise whether it's the same as I'm talking about.

I think it is reasonable to expect some sideways consolidation after a relatively strong move to let the dust settle and reeveluate things. That sideways 'consolidation' appears to be all bearish so far within a larger pennant, decending triangle, or even maybe an EW Triangle wave b.

Either way I can't see any bullish signs yet. Even the FA today is starting to weigh a bit heavy on BHP.

tech/a · 16 November 2010

Re: XAO Analysis

Frank D said:
Good luck, there’s a lot of work involved and I’ll look forward to the results.

I'll also be interested in what ‘entry’ you’ll be using to validate the testing.

There in lies some issues.
How long is a signal considered valid? (VSA state 3-5 periods)
So for VSA at least youd want to know if the signal is valid (in context to a trade) for a buy or sell over X periods.
Not hard to do in increments.

Yes a very long process and one we will only be doing when we have time which isnt something any of us have in excess.

Whiskers · 16 November 2010

Re: XAO Analysis

Logique said:
Three black crows signals three days of rain, anybody knows that. Exactly whats happening here, the sky has sprung a leak.

I think that's three black cockatoos mate... at least that's the myth around here... well maybe not myth... there were a lot of black cockatoos around here before all the rain too!

But, back to those Three Black Crows.

The EURUSD daily chart is a more technically correct example. Again, it's a low weighting in my analysis, but it is supporting a reversal of the USD and probable exhaustion of their devaluation efforts for the moment and commodity prices by default, which also supports a breather in our market while everyone reassess where the equilibruim will fall again.

professor_frink · 16 November 2010

Re: XAO Analysis

Whiskers said:
If you're referring specifically to the Black Crows thingo... I did say "No, I wouldn't in isolation either".

I did say they were not a technically correct example, but for all intention purposes it looked the part. It really is the lowest priority or weighted element of that analysis, thrown in cos it nicely joined the dots of higher priority 'signs' ie FA, some other TA that I didn't mention, likely EW scenerios, trend, the Dark Cloud and the pennant.

Maybe you could show an example and I'll scruetenise whether it's the same as I'm talking about.

I think it is reasonable to expect some sideways consolidation after a relatively strong move to let the dust settle and reeveluate things. That sideways 'consolidation' appears to be all bearish so far within a larger pennant, decending triangle, or even maybe an EW Triangle wave b.

Either way I can't see any bullish signs yet. Even the FA today is starting to weigh a bit heavy on BHP.

Whiskers, it's truly astounding that you've missed my point, I don't think I could have been any clearer.

I highly doubt me posting charts is going to do anything, it would appear that your mind is already made up on that one, so I'll leave you to it.

Good luck with your shorts, hope it works for you

Whiskers · 16 November 2010

Re: XAO Analysis

professor_frink said:
Whiskers, it's truly astounding that you've missed my point, I don't think I could have been any clearer.

No, I got your point... you said "I really can't see how this can even be considered as a piece of information to be used in building the case for a selloff."

That's OK if you don't see, prof. Different tradesmen prefer different tools.

Good luck with your shorts, hope it works for you

I don't believe in luck... but thanks for the thought anyway

Everything happens for a reason... luck or chance are just ways to describe what we don't understand.

sinner · 16 November 2010

Re: XAO Analysis

Whiskers said:
No, I got your point... you said "I really can't see how this can even be considered as a piece of information to be used in building the case for a selloff."

That's OK if you don't see, prof. Different tradesmen prefer different tools.

I don't believe in luck... but thanks for the thought anyway

Everything happens for a reason... luck or chance are just ways to describe what we don't understand.

I am pretty sure you didn't get the point.

The point is, you are using a "tool", but you just reached into the toolbox and pulled out whatever felt like a spanner.

frink is pointing out the historical results on this pattern are not generally bearish, doesn't matter if you find it geometrically or just looking for the psychology of the move. Doesn't matter if it's the lowest weighted element. In fact, you should probably do some analysis and weight it higher!

If you go to thepatternsite link Gringotts posted, or just look at the snippet which TH pasted, you can see it is not recommended to use this pattern for shorting.

I can't believe this statement didn't give you pause:
"If you remove the 10 day restriction, then the worst performance comes from three black crows in a bull market, regardless of the breakout direction."

Whiskers · 16 November 2010

Re: XAO Analysis

sinner said:
I am pretty sure you didn't get the point.

The point is, you are using a "tool", but you just reached into the toolbox and pulled out whatever felt like a spanner.

Oh no I'm not! Tis just that I ain't got the dodgy spanner you think I got.

frink is pointing out the historical results on this pattern are not generally bearish, doesn't matter if you find it geometrically or just looking for the psychology of the move. Doesn't matter if it's the lowest weighted element. In fact, you should probably do some analysis and weight it higher!

If you go to thepatternsite link Gringotts posted, or just look at the snippet which TH pasted, you can see it is not recommended to use this pattern for shorting.

Yes he's pointing out Bulkowski's results from a clearly different and looser interpretation/criteria to what I explained.

I can't believe this statement didn't give you pause:
"If you remove the 10 day restriction, then the worst performance comes from three black crows in a bull market, regardless of the breakout direction."

The full paragraph should have given you guys cause to pause... upward and downward breakouts!!? The Three Black Crows is a downward reversal.

A check of the performance over 10 days shows some startling results: Do not trade this if the breakout is downward. Only upward breakouts are worth considering. If you remove the 10 day restriction, then the worst performance comes from three black crows in a bull market, regardless of the breakout direction.

I read Bulkowski's site http://thepatternsite.com/ThreeBlackCrows.html ages ago before I settled on better criteria for Three Black Crows.

You will all note from my earlier post that I said

Whiskers said:
Similarly with the Three Black Crows, the stronger the bull run the better the signal. There will be many cases of three lower highs and lower lows in a bear or choppy market.

My code book for Three Black Crows stipulates that a bull market is required to generate this signal. Repeating what I said earlier to try to clarify the context of the signal, this configuration will occur often in a bear or choppy market, but does not qualify as a Three Black Crows reversal signal.

Looking further down Bulkowski's page you would have seen his example. It clearly is in a choppy down trend, not a bull market.You will note that Bulkowski's is using the candle configuration in a much looser criteria and consequently poorer results.

The other point to make is the same pattern in reverse, ie at the end of a bear run, signalling a bull reversal is called Three White Soldiers in my book.

PS: That 10 day restriction thingo is misleading cos it ignores the degree of the reversal. Since I'm talking about a bull market correction, it's hardly likely to last 10 days in a smaller degree correction that I'm talking about, before moving up again

Logique · 17 November 2010

Re: XAO Analysis

Great read on the Three Black Crows.
Interesting the publication using Alcoa as an example, which fell 2.7% last night.

I'm not sure about the pattern in isolation as a pointer to price movements, more of a 'wait and see' signal, check in combination with other indicators.

A little unfair that overseas issues will drag our market down today (at least), perhaps distorting the outcome of the crows. Bring it on.

sammy84 · 17 November 2010

Re: XAO Analysis

I'm not convinced of this weakness. Had a look for short set ups last night and found nothing.

Nothing sinister yet to suggesst this is more than a retracement.

Will be going long is signs of strength appear after lunch.

Gringotts Bank · 17 November 2010

Re: XAO Analysis

Chart showing the dominant channel with lots of touches on the parallels. A bounce back toward the white line tomorrow wouldn't be out of the question.

http://tinypic.com/r/fas8zl/7

tech/a · 17 November 2010

Re: XAO Analysis

sammy84 said:
I'm not convinced of this weakness. Had a look for short set ups last night and found nothing.

Nothing sinister yet to suggesst this is more than a retracement.

Will be going long is signs of strength appear after lunch.

You may like to consider that while we may not have immediate signs other bourses like the US do.
I dont agree with you.
You may also be swayed by the 3 crows discussion---what if he's right!!
Trade what the market gives you.

professor_frink · 17 November 2010

Re: XAO Analysis

tech/a said:
You may like to consider that while we may not have immediate signs other bourses like the US do.
I dont agree with you.
You may also be swayed by the 3 crows discussion---what if he's right!!
Trade what the market gives you.

What's going on on the US markets that has you worried tech?

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