Previously we looked at the Line Break chart which was great for spotting possible reversals. In this article, we look at an approach that can filter out some of the psychological issues you may be having with your analysis. If you’re struggling with the ‘noise’ of the charts and information overload in your trading, then Kagi charting could be just the thing for you to add to your trading arsenal. Kagi charts were developed in Japan in the 1870’s when their stock market started trading and were used to track the price movement of rice. They were used to give a much more transparent picture of where the price of an individual asset was headed independent of time. Due to the global world we live in and the advancement in charting software, techniques such as Kagi charting are now available to all of us. [Read more…]
Technical Analysis (Part 12) – Direct Price Analysis (DPA): Trending or Ranging?
In the last article, we looked at indicators on price. This week we try to answer one of the hardest questions in technical analysis. When is a market trending or ranging? Understanding what camp you are currently in will be crucial for your trading success. Many of the technical tools you will come across work better in the different periods of price action. We look in particular at one indicator; the Directional Moving Indicator (DMI), which tries to answer this question. [Read more…]
Technical Analysis (Part 3): Line & Bar Charts
Last week we looked at some of the basic rules you need to know in technical analysis. This week we start our focus on the actual tools of the trade, beginning with a look at Line Charts and Bar Charts. Charts are like maps to navigate. The analyst has to pilot his or her way through the data, translate the stories and come up with a forecast as to the future journey they think any given asset will take. One chart can tell a thousand stories.
In this and the next four blogs, I am going to cover the rudiments of what I call the ‘common core’ suite of charts. These include: Line & Bar charts, Candlesticks, Point and Figure, Equivolume and Market Profile. The more exotic sounding charts: Heikin Ashi, Renko, 3 Line and Kagi will be covered later in the series. We start though by looking at two forms of chart: the Line Chart and the Bar Chart. Both have their own pro’s and cons but when diving into technical analysis, these are a great place to start. [Read more…]
Chart of the day (03/04/17): USDMXN
Chart of the day: USDMXN Post Trump victory, things have settled down the other side of the ‘wall’ and the Peso has continued to grow in strength. The question is, how much longer can this strength last? Currently, price on the Kagi chart is heading into a lot of historical noise around the mid 18.5’s and then toward strong Fibonacci resistance at or around 18, which is where the cloud may also provide some downside resistance. If it can break south of the border here, then further Fibonacci targets could be at 16.69 then 15.45. Longer term upside Fibonacci support may be found at 19.7 then back to the record highs just under 22.
Technical Analysis (Part 1): History, theory and philosophy
Welcome to a new Technical Analysis blog series. This series will comprise 25 introductory articles covering all aspects of technical analysis, from the very basics through to some more advanced theory. Hopefully, these articles will whet your appetite for the subject and inspire you to take up technical analysis (if you haven’t already) and use it in your trading and investing. My aim is to enhance your existing knowledge and give you an insight into how technical analysis can be used as an effective trading tool, both to make and save you money and give you new roads to follow. This is a vast, often misunderstood subject, so the aim of this blog series is to make it more accessible by breaking down a few of those boundaries.
In this first article we explore the roots of technical analysis. It is vitally important for you to understand where technical analysis has come from and the thinking behind it, if you’re ever going to successfully use it in practice. [Read more…]