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Daily Candlestick Chart for CTDT
[img]stockcharts.com/c-sc/sc?s=CTDT
Key points on the benefits of arithmetic and semi-log scales:
Arithmetic scales are useful when the price range is confined within a relatively tight range.
Arithmetic scales are useful for short-term charts and trading. Price movements (particularly for stocks) are shown in absolute dollar terms and reflect movements dollar for dollar.
Semi-log scales are useful when the price has moved significantly, be it over a short or extended time frame
Trend lines tend to match lows better on semi-log scales.
Semi-log scales are useful for long-term charts to gauge the percentage movements over a long period of time. Large movements are put into perspective.
Stocks and many other securities are judged in relative terms through the use of ratios such as PE, Price/Revenues and Price/Book. With this in mind, it also makes sense to analyze price movements in percentage terms.
Descending Triangle: A descending triangle is a simple chart pattern used in technical analysis. The descending triangle is formed from two trendlines, one for high prices and one for lows. The upper trendline of the triangle is a descending trendline, while the lower trendline is a horizontal trendline. The resulting shape is a right triangle whose hypotenuse moves downward over time.
In order to confirm a descending triangle on an asset's chart, traders must note two reaction lows of similar magnitude and two reaction highs, each declining in price over time. There should be a reasonable amount of distance between each low or high. Descending triangles usually form and develop over a one to three month period.
The descending triangle is always a bearish pattern, indicating a strong sell signal. Prices on the upper trendline continue to decline, narrowing the triangle formation, until the level of support represented by the lower trendline is broken. When a level of support is broken, it becomes a level of resistance, confirming the overall downward trend of the asset's price over time.
Daily Candlestick Chart for KADR
[img]stockcharts.com/c-sc/sc?s=KADR
Exhaustion Gaps
Exhaustion gaps are those that happen near the end of a good up- or downtrend. They are many times the first signal of the end of that move. They are identified by high volume and large price difference between the previous day's close and the new opening price. They can easily be mistaken for runaway gaps if one does not notice the exceptionally high volume.
It is almost a state of panic if the gap appears during a long down move where pessimism has set in. Selling all positions to liquidate holdings in the market is not uncommon. Exhaustion gaps are quickly filled as prices reverse their trend. Likewise, if they happen during a bull move, some bullish euphoria overcomes trades, and buyers cannot get enough of that stock. The prices gap up with huge volume; then, there is great profit taking and the demand for the stock totally dries up. Prices drop, and a significant change in trend occurs. Exhaustion gaps are probably the easiest to trade and profit from. In the chart, notice that there was one more day of trading to the upside before the stock plunged. The high volume was the giveaway that this was going to be, either, an exhaustion gap or a runaway gap. Because of the size of the gap and the near doubling of volume, an exhaustion gap was in the making here.
stockcharts.com/school/data/media/chart_school/chart_analysis/gaps_and_gap_analysis/ExhaustionChart6.png
Conclusion
Identification of key support and resistance levels is an essential ingredient to successful technical analysis. Even though it is sometimes difficult to establish exact support and resistance levels, being aware of their existence and location can greatly enhance analysis and forecasting abilities. If a security is approaching an important support level, it can serve as an alert to be extra vigilant in looking for signs of increased buying pressure and a potential reversal. If a security is approaching a resistance level, it can act as an alert to look for signs of increased selling pressure and potential reversal. If a support or resistance level is broken, it signals that the relationship between supply and demand has changed. A resistance breakout signals that demand (bulls) has gained the upper hand and a support break signals that supply (bears) has won the battle.
Daily Candlestick Chart for DKGR
[img]stockcharts.com/c-sc/sc?s=DKGR
Discretionary Trading: While other trading styles emphasize the reading of signals based on mathematical formulas or price action patterns, or fundamental analysis alone, discretionary traders are the "jack of all trades" of the Forex market and tend to incorporate all forms of analysis. These traders not only rely on their well developed trading processes and framework of the fundamentals and technicals to make a decision, but also sometimes intuition as well (i.e., years of market experience). Because of their experience, discretionary traders tend to be flexible with their trading rules and more adaptable to market changes.
The downside to the discretionary trading style is that trading decisions are more susceptible to the strong emotional effects of managing financial risk. Also, depending on the time frame, it requires more attention to the market than mechanical or automated trading methods.
$CLKTF BarChart Trader's Cheat Sheet
http://www.barchart.com/cheatsheet.php?sym=CLKTF
Entries and Exits on Elder Impulse System
A buy signal occurs when the long-term trend is deemed bullish and the Elder Impulse System turns bullish on the intermediate term trend. In other words, the weekly chart has to show a clear uptrend in order for a daily buy signal to be valid. Daily buy signals that happen when the weekly chart is not in a clear uptrend are ignored.
A sell signal occurs when the long-term trend is deemed bearish and the Elder Impulse System turns bearish on the intermediate term trend. For example, the weekly chart has to show a clear downtrend in order for a daily sell signal to be valid. Daily sell signals that happen when the weekly chart is not in a clear downtrend are ignored.
In the daily chart above, we are using the MACD(1,65,1) indicator to show us the weekly trend. If it is above zero, the weekly trend is up. If it is below zero, the weekly trend is down. Given that, then the first three green arrows on the chart show valid daily buy signals (i.e. new clusters of green daily bars). Note, however, that the first couple of red bars on the chart are NOT valid sell signals in this case because the weekly trend is still positive (according to the MACD we are using). The red arrow shows the first valid sell signal that happens after the weekly trend turns down. Similarly, the weekly trend must turn positive again before valid buy signals are given (as indicated by the last three green arrows on the chart).
Daily Candlestick Chart for BION
[img]stockcharts.com/c-sc/sc?s=BION
$KNSC BarChart Trader's Cheat Sheet
http://www.barchart.com/cheatsheet.php?sym=KNSC
Daily Candlestick Chart for QASP
[img]stockcharts.com/c-sc/sc?s=QASP
Heikin-Ashi Candlesticks provide chartists with a versatile tool that can filter noise, foreshadow reversals and identify classic chart patterns. In fact, all aspects of classical technical analysis can be applied to these charts. Chartists can use Heikin-Ashi Candlesticks to identify support and resistance, draw trendlines or measure retracements. Volume indicators and momentum oscillators also work well. [url]stockcharts.com/h-sc/ui?s=SPY
Price Scaling
There are two methods for displaying the price scale along the y-axis: arithmetic and logarithmic. An arithmetic scale displays 10 points (or dollars) as the same vertical distance no matter what the price level. Each unit of measure is the same throughout the entire scale. If a stock advances from 10 to 80 over a 6-month period, the move from 10 to 20 will appear to be the same distance as the move from 70 to 80. Even though this move is the same in absolute terms, it is not the same in percentage terms.
A logarithmic scale measures price movements in percentage terms. An advance from 10 to 20 would represent an increase of 100%. An advance from 20 to 40 would also be 100%, as would an advance from 40 to 80. All three of these advances would appear as the same vertical distance on a logarithmic scale. Most charting programs refer to the logarithmic scale as a semi-log scale, because the time axis is still displayed arithmetically.
Verisign, Inc. (VRSN) price scaling example chart from StockCharts.com
The chart above uses the 4th-Quarter performance of VeriSign to illustrate the difference in scaling. On the semi-log scale, the distance between 50 and 100 is the same as the distance between 100 and 200. However, on the arithmetic scale, the distance between 100 and 200 is significantly greater than the distance between 50 and 100.
Detrended Price Oscillator: The Detrended Price Oscillator (DPO), as the name indicates, is a technical analysis tool designed to give information about the price of an asset without taking into account existing price trends. The logic behind this is that detrended prices can help traders to understand the buying and selling pressure in a market based on short-term fluctuations in the price of an asset, without taking into account larger upswings or downswings in price.
The Detrended Price Oscillator can be calculated by declaring a period of time that could be said to indicate a trend in price (for example, if prices steadily increase over a twenty-day period, then one could take "20" as the period of time that indicates a trend.) Divide this period by two and add one to arrive at a number n. Then take the moving average of an asset's price n days before the period in question, and subtract this from the asset's closing price for that period. The resulting number is the period's DPO. This calculation method ensures that although short-term price trends are included in a DPO chart, longer-term trends are excluded.
One of the fundamental assumptions of the DPO is that long-term price trends are composed of short-term price trends, and that only by looking at short-term trends can long-term trends be understood. By this rationale, particularly severe peaks and troughs in the DPO indicate probable reversals in the overall trend of the asset price, and traders should take appropriate positions to take advantage of these reversals in either direction.
Daily Candlestick Chart for AMBS
[img]stockcharts.com/c-sc/sc?s=AMBS
Bar Chart
Perhaps the most popular charting method is the bar chart. The high, low and close are required to form the price plot for each period of a bar chart. The high and low are represented by the top and bottom of the vertical bar and the close is the short horizontal line crossing the vertical bar. On a daily chart, each bar represents the high, low and close for a particular day. Weekly charts would have a bar for each week based on Friday's close and the high and low for that week.
Bar charts can also be displayed using the open, high, low and close. The only difference is the addition of the open price, which is displayed as a short horizontal line extending to the left of the bar. Whether or not a bar chart includes the open depends on the data available.
Bar charts can be effective for displaying a large amount of data. Using candlesticks, 200 data points can take up a lot of room and look cluttered. Line charts show less clutter, but do not offer as much detail (no high-low range). The individual bars that make up the bar chart are relatively skinny, which allows users the ability to fit more bars before the chart gets cluttered. If you are not interested in the opening price, bar charts are an ideal method for analyzing the close relative to the high and low. In addition, bar charts that include the open will tend to get cluttered quicker. If you are interested in the opening price, candlestick charts probably offer a better alternative.
Daily Candlestick Chart for PRAY
[img]stockcharts.com/c-sc/sc?s=PRAY
Trader's Remorse ~ Weaknesses of Technical Analysis
Not all technical signals and patterns work. When you begin to study technical analysis, you will come across an array of patterns and indicators with rules to match. For instance: A sell signal is given when the neckline of a head and shoulders pattern is broken. Even though this is a rule, it is not steadfast and can be subject to other factors such as volume and momentum. In that same vein, what works for one particular stock may not work for another. A 50-day moving average may work great to identify support and resistance for IBM, but a 70-day moving average may work better for Yahoo. Even though many principles of technical analysis are universal, each security will have its own idiosyncrasies.
$MYEC BarChart Trader's Cheat Sheet
http://www.barchart.com/cheatsheet.php?sym=MYEC
Baltic Dry Index: The Baltic Dry Index covers dry bulk shipping rates, or the costs of moving raw materials by sea.
Shipping costs vary according to the type of commodity being shipped, the amount (supply and demand).
This index is managed by the Baltic Exchange in London and the data can be directly subscribed to by major financial news services as well as the Baltic Exchange.
Daily Candlestick Chart for URBF
[img]stockcharts.com/c-sc/sc?s=URBF
Interpretation of Heikin-Ashi
Heikin-Ashi Candlesticks are similar, but different than normal candlesticks. A Heikin-Ashi Candlestick is hollow (white) when the HA-Close is above the HA-Open. Conversely, a candlestick is filled (black) when the HA-Close is below the HA-Open. This is similar to normal candlesticks, which are filled (black) when the close is below the open and hollow (white) when the close is above the open.
While traditional candlestick patterns do not exist with Heikin-Ashi Candlesticks, chartists can derive valuable information from these charts. A long hollow Heikin-Ashi candlestick shows strong buying pressure over a two day period. Absence of a lower shadow also reflects strength. A long filled Heikin-Ashi candlestick shows strong selling pressure over a two day period. Absence of an upper shadow also reflects selling pressure. Small Heikin-Ashi candlesticks or those with long upper and lower shadows show indecision over the last two days. This often occurs when the two normal candlesticks are of opposite color.
The chart above shows QQQ with Heikin-Ashi Candlesticks over a four month period. The blue arrows show indecisive Heikin-Ashi Candlesticks that formed with two normal candlesticks of opposite color. Indecision can sometimes foreshadow a trend reversal. The red arrows show a strong decline marked by a series of Heikin-Ashi Candlesticks without upper shadows. This means the Heikin-Ashi Open marked the high and the remaining data points were lower. The green arrow shows a strong advance marked by a series of Heikin-Ashi Candlesticks without lower shadows. This means the Heikin-Ashi Open marked the low and the remaining data points were higher.
$HRRN BarChart Trader's Cheat Sheet
http://www.barchart.com/cheatsheet.php?sym=HRRN
Daily Candlestick Chart for GAEC
[img]stockcharts.com/c-sc/sc?s=GAEC
General Steps to Technical Evaluation
Many technicians employ a top-down approach that begins with broad-based macro analysis. The larger parts are then broken down to base the final step on a more focused/micro perspective. Such an analysis might involve three steps:
Broad market analysis through the major indices such as the S
Currency Manipulation: Currency manipulation is the act of changing its value against other currencies instead of leaving it free to fluctuate based on market dynamics. This can be done by fixing the exchange rate or deliberately increasing or decreasing its value.
This practice is usually frowned upon since it results to an artificial distortion in currency prices. In fact, it is considered an illegal practice based on US laws and international agreements.
This could also give way to unfair trade advantages since artificially devaluing a country's currency could make its exports relatively cheaper and more attractive. In the long run, this could eventually result to a global trade imbalance
Financial Analysis
The final step to this analysis process would be to take apart the financial statements and come up with a means of valuation. Below is a list of potential inputs into a financial analysis.
The list can seem quite long and intimidating. However, after a while, an investor will learn what works best and develop a set of preferred analysis techniques. There are many different valuation metrics and much depends on the industry and stage of the economic cycle. A complete financial model can be built to forecast future revenues, expenses and profits or an investor can rely on the forecast of other analysts and apply various multiples to arrive at a valuation. Some of the more popular ratios are found by dividing the stock price by a key value driver.
This methodology assumes that a company will sell at a specific multiple of its earnings, revenues or growth. An investor may rank companies based on these valuation ratios. Those at the high end may be considered overvalued, while those at the low end may constitute relatively good value.
Daily Candlestick Chart for LUSI
[img]stockcharts.com/c-sc/sc?s=LUSI
Uptrend Line
An uptrend line has a positive slope and is formed by connecting two or more low points. The second low must be higher than the first for the line to have a positive slope. Uptrend lines act as support and indicate that net-demand (demand less supply) is increasing even as the price rises. A rising price combined with increasing demand is very bullish, and shows a strong determination on the part of the buyers. As long as prices remain above the trend line, the uptrend is considered solid and intact. A break below the uptrend line indicates that net-demand has weakened and a change in trend could be imminent.
$VUNCF BarChart Trader's Cheat Sheet
http://www.barchart.com/cheatsheet.php?sym=VUNCF
Daily Candlestick Chart for DECN
[img]stockcharts.com/c-sc/sc?s=DECN
Bank of Japan (BOJ) Monetary Policy Meeting and Announcement: Release schedule : No set time, usually between 2:00 and 4:00 (GMT); monthly, in the middle of the month
Source of report : Bank of Japan
Web Address : http://www.boj.or.jp/en/index.htm
Address of Release : http://www.boj.or.jp/en/theme/seisaku/kettei/index.htm
Schedule of Meetings : http://www.boj.or.jp/en/theme/seisaku/index.htm
After each bounce off support, the stock traded all the way up to resistance. Resistance was first established by the September support break at 42.5. After a support level is broken, it can turn into a resistance level. From the October lows, the stock advanced to the new support-turned-resistance level around 42.5. When the stock failed to advance past 42.5, the resistance level was confirmed. The stock subsequently traded up to 42.5 two more times after that and failed to surpass resistance both times.
Daily Candlestick Chart for MNEAF
[img]stockcharts.com/c-sc/sc?s=MNEAF
Deflation: Deflation is the opposite of inflation. It is the decrease in the price of a basket of goods and services. Deflation happens when the annual inflation rate turns negative. Such an event is usually brought about by a reduction in the money supply and/or credit.
Currency Impact
While inflation tends to decrease the purchasing power of a currency, deflation tends to result in an increase in the “real” value of money.
Pictorial Price History
Even if you are a tried and true fundamental analyst, a price chart can offer plenty of valuable information. The price chart is an easy to read historical account of a security's price movement over a period of time. Charts are much easier to read than a table of numbers. On most stock charts, volume bars are displayed at the bottom. With this historical picture, it is easy to identify the following:
• Reactions prior to and after important events.
• Past and present volatility.
• Historical volume or trading levels.
• Relative strength of a stock versus the overall market.
$LCCTF BarChart Trader's Cheat Sheet
http://www.barchart.com/cheatsheet.php?sym=LCCTF
Daily Candlestick Chart for ARAH
[img]stockcharts.com/c-sc/sc?s=ARAH
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