Technical Analysis (General News)

Re: Technical Analysis

Postby winston » Fri Dec 09, 2011 7:57 am

continue ...

10. Know the Confirming Signs

Include volume and open interest. Volume and open interest are important confirming indicators in futures markets.

Volume precedes price. It’s important to ensure that heavier volume is taking place in the direction of the prevailing trend.

In an uptrend, heavier volume should be seen on up days.

Rising open interest confirms that new money is supporting the prevailing trend.

Declining open interest is often a warning that the trend is near completion.

A solid price uptrend should be accompanied by rising volume and rising open interest.

http://allstarcharts.com/john-murphys-t ... l-trading/
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Re: Technical Analysis

Postby winston » Fri Feb 24, 2012 6:51 am

TOL:-

Over the years, I have this concern with charts:-

Charts only capture CURRENT psychology and momentum. It does not take into account new events that could suddenly happen.

It's only after those new events, that you see the gap on the charts.

In view of the above, isnt it a bit dangerous to trade on what you see on the charts ? The stock market is not a close system. There are always new events ...

At the same time, I have noticed that the "extreme indicators" are quite useful:-

1. When a situation is at oversold or overbought, a small insignificant event, can trigger the reversion.

2. And if the situation is not at an extreme level, a big significant event, may not create the gap on the charts.

Make sense ?
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Re: Technical Analysis

Postby kennynah » Fri Feb 24, 2012 7:10 am

makes sense..
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Re: Technical Analysis

Postby winston » Fri Feb 24, 2012 7:24 am

Closed System

To continue this discussion, is it not too risky then, if you are using charts to trade, on the assumption that it's a closed system, which I think it is not ?

( I'm starting to talk like that El-Elrian :P )

Example:-

If you are trading Oil, USD, EUR, SPX, GLD or AUD, there's a certain assumption that it's a closed system ie. money flow is stable, demand and supply is in balance, RSI Indicators are continuous etc ..

Then some clown in Israel decides to give the order to bomb Iran and all hell breaks loose. And your Stop cannot protect you because of the gap ...

So why would you want to depend on charts, when it's based on an assumption that it's a closed system ? When in reality, it is not a closed system and is always open to outside forces, that are not captured in the charts yet ?
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Re: Technical Analysis

Postby kennynah » Fri Feb 24, 2012 7:29 am

nothing is certain...whatever tool one uses

nothing can tell the future...

charts are useful only as an indicator because it shows the psychology of the market place. history always repeats itself because human behaviour remain rather unchanged over time..

also, charts are sometimes self fulling prophecies. the extend that they are, makes trading easier.. charts help to mechanize trading and can assist in removing emotions out of trading
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Re: Technical Analysis

Postby winston » Fri Feb 24, 2012 7:59 am

Agree.

Charts are useful as long as they are no new shock to the system.

And when there's a new shock to the system, we can go back to previous shocks, to see where's the location of the maximum pessimism or optimism.

As long as we are aware of the risks and limitations of our tool, then we should be quite ok.

:? :?
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Re: Technical Analysis

Postby kennynah » Fri Feb 24, 2012 8:34 am

when we find the system that tells us exactly where prices will go to... we wont be here talking c*ck anymore...no time :lol: :lol:
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Re: Technical Analysis

Postby winston » Tue Sep 11, 2012 7:46 am

Hourlies Are For Amateurs by JC Parets

Earlier today I walked into a buddy’s office to catch him looking at an hourly candlestick chart. I told him this nonsense needs to stop immediately.

My friend Brian Shannon over at alphatrends.net takes this stuff personally. And I love that about him. He wrote an awesome post on this very subject a couple years ago. Check it out:

Here is why the 60 minute timeframe is flawed. Each day the equities markets are open from 9:30AM to 4:00PM Est. From the opening bell to the closing bell, the market is open for 390 minutes each day. If we are to divide a 60 minutes into 390 minutes you would get 6.5 periods. In other words, you would not have an equal amount of data in each bar or candle.


So here is the simple solution. Either switch your chart to a 65 minute timeframe so you have six candles of equal length each day (390/65 = 6.0) or further reduce your timeframe down to 30 minutes of data. With 30 minute data periods each day will have 13 individual candles of equal length.”


http://allstarcharts.com/hourlies-are-for-amateurs/
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Re: Technical Analysis

Postby iam802 » Wed Sep 12, 2012 1:08 am

So, he is saying..just use 30min chart, right?
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

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Re: Technical Analysis

Postby winston » Wed Sep 26, 2012 6:35 am

Technical analysis is not as deterministic as it is perceived.

As new information appears, sometimes even the best-supported forecasts must change.


Source: Barrons
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