💥Moving Average (MA) is a popular technical analysis tool that is used to smooth out price action and identify trends. It is calculated by averaging a selected number of prices, usually closing prices, over a specific period of time. The Moving Average is then plotted on the price chart to provide traders with an indication of the direction of the trend. 💥Moving Average Channels are two lines drawn above and below a Moving Average line at a certain distance or percentage. This creates a channel around the Moving Average line that acts as a dynamic support and resistance zone. When prices move above the upper channel line, it suggests that the trend is bullish, and when prices move below the lower channel line, it suggests that the trend is bearish. 💥Shifted Moving Averages are Moving Averages that are displaced forward or backward in time. This means that the Moving Average is calculated using past prices, but is plotted ahead of current price action. This can be useful in identifying potential support and resistance levels that may not be visible on the price chart using traditional Moving Averages. 💥Envelope Formation is a technique that uses two Moving Averages that are shifted a certain percentage or distance away from each other. The area between the two Moving Averages creates a channel or envelope around the price action, which acts as a dynamic support and resistance zone. The Envelope Formation can be useful in identifying potential trend reversals when prices move beyond the channel boundaries. 💥Overall, Moving Averages and their variations can be effective tools in identifying trends and potential support and resistance levels. Traders should use them in conjunction with other technical analysis tools and indicators to confirm signals and make informed trading decisions. 💥Additionally, traders can also use Moving Average Shift to identify potential support and resistance levels. A Moving Average Shift is created by shifting the Moving Average line forward or backward in time. This can help identify levels where the Moving Average has acted as support or resistance in the past and may do so again in the future. 💥Moving Average Envelopes are another technical analysis tool that can act as support and resistance levels. They are similar to Moving Average Channels, but instead of being drawn at a fixed distance or percentage from the Moving Average line, they are drawn at a fixed percentage of the price. This creates a channel that widens or narrows based on the volatility of the price. When prices move above the upper envelope line, it suggests that the trend is bullish, and when prices move below the lower envelope line, it suggests that the trend is bearish. 💥Overall, Moving Averages, Moving Average Channels, Moving Average Shifts, and Moving Average Envelopes can all be used to identify potential support and resistance levels and help traders identify trends in the market. 💥💥The Moving Average line that uses a short number of days in its calculation may give false signals because it moves too quickly. To filter out these false signals, some technical analysts prefer to use a Shifted Moving Average line. In the case of a buy signal, the Moving Average is shifted up, while in the case of a sell signal, it is shifted down. Shifts are generally expressed as a percentage of the Moving Average, and they are often used with Moving Averages that use a short number of days for their calculations. 💥Another important use of shifting the Moving Average line is to create an Envelope that serves as a framework for price movements. In practice, this is often referred to as a Moving Average Channel or Band. The Envelope is used as a short-term support and resistance zone, and the price will move within this Channel or Band as long as the trend remains unchanged. To determine whether the trend is changing or not, the primary tool used is the central Moving Average. In essence, this system uses the Moving Average as a trading signal for the primary trend, while the Channel or Band serves as a secondary trend trading signal that moves along with the primary trend. 💥The upper line of the Band (Upper Channel) acts as a resistance. When the price approaches the Upper Band, it serves as a warning signal that the price has already risen too high, and traders should gradually sell some of their holdings to take profit in the short term. For the long term, it is advisable to follow the main trend using simple moving averages. On the other hand, the lower channel of the band acts as support, meaning that if the price falls close to the Lower Band, it is a warning that the price has dropped significantly, and traders should be prepared to wait for some time in the short term. 💥In practice, traders should understand the difference between shifting a moving average to filter out false signals and shifting a moving average to create a support/resistance envelope. They must always be aware of what they are doing and the purpose of their Shift. There are several ways to create a Moving Average Channel or Band. 👉This method is built on moving average lines, with the Upper Channel calculated from the high and the Lower Channel calculated from the low. We call this band the High-Low Channel. The most commonly used values are the 10-day average of the high and the 8-day average of the low. This method is commonly used to filter out false signals, but it can also be modified to create an envelope if appropriate parameters are set. 👉Percent Shift: This method shifts the moving average up (to the Upper Channel) and down (to the Lower Channel) by a percentage of the moving average calculated from closing prices. A popular percentage shift amount is 3.5-4% for a 20-25 day moving average. This is also a way to filter out false signals. However, this method has a disadvantage, which is that the magnitude of the shift when measured in absolute terms is small when the price is low, but quite large when the price is high. Therefore, the size of the band will continue to widen as the price goes up, and gradually shrink as the price falls. This may cause traders to buy too soon (due to a low price and less shift) or sell too late (due to a high price and high shift). 👉The method of shifting to create an envelope originated from a study by John Hurst, which was conducted in the days when computers were not as prevalent as they are today. The envelope is based on the moving average, whose number of days is determined by the length of the cycle, and must be able to cover price movements in a shorter cycle. However, this is a rather subjective approach since different people may draw different images. Moving-Average-Channel-Day-Trade-Winning-Trade.jpg Moving-Average-Channel-Day-Trade-Losing-Trade.jpg 💥Marc Chaikin, a well-known technical analyst at Bomar Securities, suggests that using a percentage shift for the moving average may not be flexible enough. For example, at one time, 3% may be too much (for instance, when the stock is moving sideways and not bouncing anywhere, the band will be too wide), while in other cases, such as when the stock follows a steep trend, 3% will be too narrow (the stock will run through the band like a locomotive). Hurst\u0027s envelope construction is also somewhat dependent on individual thoughts, which is uncertain. Therefore, the market should help determine the percentage of the shift at any given time. 💥The concept of Bomar Bands originated from Marc Chaikin\u0027s suggestion to shift the moving average in percentage terms such that it covers at least 85% of past prices. For example, if we use a 25-day moving average, the percentage shift today should be large enough to cover 85% of the prices of the past 25 days. The Bomar Bands adjust their percentage shift depending on market conditions, indicating trend inertia. If the market moves sideways, the percentage shift is small, but it adjusts to a higher percentage when the price follows a trend. The Bomar Bands narrow when the price starts to stagnate or the sales force runs out, even if the price continues to rise or decline. The width and narrowness of the Bomar Bands can be used as signal indicators of the main trend. 💥John Bollinger further developed this concept by shifting the moving average in proportion to the standard deviation of the price, typically 11.96 (or 12) times the standard deviation calculated from the number of days used to calculate the moving average. The resulting band should cover up to 90% of the past price if the price had a normal distribution. Bands calculated in this way are called Bollinger Bands, which have the same properties as the Bomar Bands, with their width and narrowness adjusted according to market conditions. The Bollinger Bands use standard deviation, which is an indicator of the variance or volatility of the price, making it easier to calculate than the Bomar Bands, which rely on subjective adjustment of the percentage shift.
1*03ly9-LoF1WLHXsxPcVEPQ.png 💥Point-and-Figure (P\u0026F) diagrams are a type of chart used in technical analysis to plot price movements without regard to time. The chart is made up of a grid of X\u0027s and O\u0027s, with X\u0027s representing upward price movements and O\u0027s representing downward price movements. The X\u0027s and O\u0027s are arranged in columns, with each column representing a set price range or \"box size.\" 💥The chart is used to identify trends and support and resistance levels, and can be particularly useful for longer-term analysis. P\u0026F charts are based on the idea that prices move in trends, and that these trends are defined by a series of higher highs and higher lows in an uptrend, or lower highs and lower lows in a downtrend. 💥P\u0026F charts can also be used to generate buy and sell signals, such as when a new column of X\u0027s or O\u0027s appears, or when a trendline is broken. Additionally, P\u0026F charts can be used in conjunction with other technical analysis tools, such as moving averages and trendlines, to confirm trading decisions. 💥One potential drawback of P\u0026F charts is that they can be more difficult to read and interpret than other types of charts, particularly for beginners. However, with practice and experience, many traders find that P\u0026F charts can be a valuable tool in their technical analysis toolbox. point-and-figure-chart.jpg 💥The Point-and-Figure diagram is a popular method of technical analysis. The format of the diagram is quite different from the bar charts typically used in technical analysis because bar charts show time on the horizontal axis. With a bar chart, we can easily see the highest and lowest opening and closing prices of a particular day, and one bar chart represents trading for one day (for daily charts) or one week (for weekly charts), which is fixed. 💥However, with the Point-and-Figure diagram, price action is represented by the letters O and X, as shown in the example figure. Although the resulting graphs may look like bars, we cannot determine how long each bar lasts because the price action remains the same for as long as there is no change or reversal, and one bar may display data for several days. This compression mechanism filters out random price movements or noise, which is not related to the trend, providing us with a clearer picture of the trend.
Gaps_Chart_6.png 💥An exhaustion gap is a type of gap that signals a potential end to the current trend. It occurs after a prolonged move in the market and represents a final push by investors to buy or sell before the trend reverses. 💥There are two types of exhaustion gaps: the first is called a \"breakaway gap,\" which occurs at the beginning of a trend reversal, while the second is called a \"runaway gap,\" which occurs in the middle of a trend reversal. 💥To identify an exhaustion gap, traders should look for a gap that occurs at the end of a trend with a large increase in volume. This is a signal that the market may have reached its limit and is unlikely to continue in the same direction. Traders can use other technical analysis tools, such as trend lines and moving averages, to confirm the validity of the gap and potential reversal. 💥In utilizing trends in this gap, traders can employ a strategy of trend following or trend reversal. In trend following, traders take a position in the direction of the existing trend and hold it until the trend reverses. In trend reversal, traders take a position opposite to the existing trend, hoping to profit from the eventual reversal. 💥In either strategy, traders should be mindful of risk management and use stop-loss orders to limit potential losses. Additionally, it\u0027s important to use multiple technical analysis tools to confirm trading decisions and avoid false breakouts.\u0027 Image-05-4.jpg 💥The Exhaustion Gap, as the name implies, occurs late in a trend. For example, if the gap appears at the end of an uptrend, it serves as a warning that the market\u0027s bullish momentum is starting to wane. Conversely, if the price has been declining for an extended period and an exhaustion gap forms, there is a high probability that the price will rebound. 💥One key difference between this type of gap and other gaps is that, assuming the initial price action was bullish, the exhaustion gap may or may not be filled. This doesn\u0027t mean that the price won\u0027t drop, but downturns are typically characterized by gaps instead of continuous price declines, making them significant. Moreover, exhaustion gaps can be similar to island reversals because after the formation of an exhaustion gap in a late uptrend, prices tend to narrow above the gap (but only for a few days) before eventually dropping. In a downward breakaway gap, the pattern resembles an island surrounded by water, indicating that a price trend reversal has occurred (in this case, from an uptrend). However, the significance of the directional change must be considered in the context of the trend and pattern, as each factor can be complementary or counterproductive.
Previously, we have already discussed various trading methods that can be used when trading, in order to increase its profitability. For most traders, following the trend is a sign of the correct approach to trading at the moment. Like saying: \"Following the trend is already 50% successful trading\". There is hardly a player in the market who will deny this statement, especially if the trend is turned in the right direction for the trader, he gets a guaranteed profit. The trader\u0027s desire to extract the maximum profit is aimed at finding a point of entry into the market when the price is either minimal for buying the desired asset, or maximum for selling the existing one. To determine such points, a trader often needs not only a flair, which is generally one of the most important qualities, but also the ability to use complexes from a combination of trend and counter-trend strategies. In the market, there is always a kind of confrontation between trend traders and counter-trend traders, using pullbacks and local changes in market trends. The key to success and, as a result, getting the maximum income, is to merge these two strategies in a combination of experience and trader\u0027s flair. However, it is worth noting that even a less experienced market player can trade using a combination of these strategies, just using automated trading systems and trading robots. For example, such as \"Mr. Hyde\" from StockSharp, which allows even a less experienced trader to use the movement against the trend, in order to increase revenue. What is the combined method of trading? The basic rules are the basis for this method: 1. Finding a way to determine a long-term trend or trend on the chart. 2. Determining the opposite counter-method that allows you to determine the pullback signal, as well as a short – term trend change in the opposite direction-determining the counter-trend. There are various methods for determining points of entry and identifying subjectively correct methods of determination. Often, these methods seem quite complex to novice traders, but when you look at them in detail, they are quite accessible. Let\u0027s look at one of the ways. First, we need to identify long-term trends in the market. To do this, we will build a price chart and a moving average chart with a period equal to 200. You can build such a graph using the S#.Designer program, using the tools provided in it. contr-trend.png This method is very common among analysts, and allows you to determine long-term trends in the market. His idea is that if the price is located above the indicator line, the market is growing, and if it is lower, the price is decreasing. This indicator line is a General indicator of the market trend. Now, to determine the entry points to the market, we add two more averages, using periods of 10 and 30 days. contr-trend-download.png What is the point? In cases when the ten - day moving average will be above the thirty-day one and above the main two-hundred-day one, we can talk about a stable UP-trend. UP-TREND is one of three types of trend, which is a sequence of rising lows or highs of prices. it is a series of consistently rising lows and highs of prices. In other words, UP-TREND shows price growth over a period of time. It is also called a bullish trend in the FOREX market. If the situation with the moving average is the opposite, and the ten-day moving average is below the remaining two, then we can talk about a downtrend, or as it is commonly called a bearish trend. A change in the direction of the trend can occur over a long period, and there may be an error in the form of a delay. In order to avoid this, you can use a counter-trend indicator. Each user chooses such an indicator for himself, focusing on the convenience and technical capabilities. For example, to get market data, although the latter problem is solved using the same S#.Designer or Hydra, which downloads market data online. For example, we will use an oscillator that will cross the zero line. For example, consider the graph below. contr-trend-trading.png So, let\u0027s determine the points where the long-term trend is changing and where you can make an entry to the market. By placing the charts together, or combining them, we can determine the points at which we could enter the market. These points are shown in the graph below. contr-trend-trade-strategy.png As you can see, this method is quite simple to work with. However it has its drawbacks: *- You need to understand that the method shows repeated signals, and it may turn out that the point that the trader has identified for entry may be a trend reversal. It is important to understand that any method can not be considered a fully automatic method and requires the intervention of the trader, and trading robots simplify the work of the trader, but also depend on its settings.* The General conclusion is simple: trading using a combined trend and counter-trend method allows the trader to increase their income by using the direction of market movement. A trader should rely not only on trading systems and trading robots, but also on their intuition and knowledge, which together make it possible to increase profits.