sideways. StockSharp

Trend in technical analysis

2022-10-30T13:41:48Z

💥💥In technical analysis, the concept of trend plays a crucial role in understanding and analyzing market behavior. A trend refers to the general direction in which the price of an asset or market is moving over a specific period of time. It helps traders and analysts identify the overall market sentiment and make informed trading decisions. Here's how trends are typically analyzed in technical analysis:

👉 1. Uptrend: An uptrend occurs when the price of an asset is consistently making higher highs and higher lows. It indicates a bullish market sentiment, with buyers dominating and pushing the price higher. In an uptrend, traders look for opportunities to buy or go long on the asset, expecting the upward movement to continue.

👉 2. Downtrend: A downtrend, on the other hand, is characterized by the price of an asset consistently making lower highs and lower lows. It indicates a bearish market sentiment, with sellers dominating and pushing the price lower. In a downtrend, traders look for opportunities to sell or go short on the asset, expecting the downward movement to continue.

👉 3. Sideways or Range-bound: In certain market conditions, the price of an asset may move within a defined range, without showing a clear upward or downward trend. This is often referred to as a sideways or range-bound market. Traders in such situations may look for trading opportunities within the range, buying near support levels and selling near resistance levels.

👉 4. Trendlines: Trendlines are drawn on price charts to visually represent the direction and strength of a trend. An uptrend is identified by drawing a line connecting the higher lows, and a downtrend is identified by drawing a line connecting the lower highs. Trendlines can act as dynamic levels of support and resistance and help traders gauge the potential continuation or reversal of a trend.

👉 5. Moving Averages: Moving averages are widely used technical indicators that help smooth out price fluctuations and identify trends. The most commonly used moving averages are the simple moving average (SMA) and the exponential moving average (EMA). Traders analyze the relationship between the price and moving averages to determine the presence and strength of a trend.

👉 6. Trend indicators: Various technical indicators are specifically designed to identify trends and provide signals to traders. Examples include the Average Directional Index (ADX), Moving Average Convergence Divergence (MACD), and the Parabolic SAR. These indicators use mathematical calculations based on price data to determine trend strength and potential trend reversals.

💥💥By analyzing trends in technical analysis, traders aim to identify potential entry and exit points, determine the risk-reward ratio of a trade, and make decisions that align with the prevailing market sentiment. It's important to combine trend analysis with other technical indicators, chart patterns, and fundamental analysis to get a comprehensive view of the market before making trading decisions.

Technical analysis using trendlines

2022-11-01T12:16:14Z

💥However, doing the analysis Knowing only the above pattern may not be enough Since sometimes we need to set point of buying and selling point, how do we know when to buy? While the trend is an uptrend, the answer that many people would say would be BUY ON SLOW. I would continue to ask: How much downward is acceptable in an uptrend? The main or method to solve such problems is Using trend lines, this will be your tool. Values for trend analysis From above we have separated the trend into 3 types, so there are 3 types of trend lines to be used as follows:

👉 1. Uptrend line The principle is not difficult at all. That is to say, the beginning We will draw a line from point 1 to point 3 (red dot) leaving the end of the line past point 3. This line is the uptrend line for the significance of this line. Or simply whether the leather is tough enough or not, it starts at the number 5 (red dot), which if the price can rebound at the number 5, that would indicate a significant uptrend line. If the price has adjusted down near this line again. It will use the predicted level on this line. Is the point used in Entering the spoon to receive shares again, such as number 7 (red dot)

👉 2. Downtrend line The principle is reversed from the above in the sense that the line will use the old peak and the new peak as a point in the draw line, starting from point 1 to point 3 (red point) (if observed, it will find that the point 1 and 3 here are the vertices, as opposed to in the case of uptrends, which are the bottoms.) That's the difference in trend line formation. In terms of uptrend and downtrend, the measure of significance is looked at number 5. (red dot) If the stock price fails to cross the up downtrend line and has a downtrend following it, we call this downtrend line significant. This line again at point 7 (red dot) is the level where a sell-off is expected. If point 7 (red dot) still fails to break through the downtrend line, it will strengthen the downtrend line even more.

👉 Parallel line, In addition to the trend line mentioned above There are times when it is necessary to create a parallel line for the reason that there are cases when the price is clearly moving within the framework of the parallel line. Thus giving rise to a technical term came up another word is channel (hereinafter called flow pipe) I don't know if it will make the picture clearer or not? The principle of drawing parallel lines is not difficult at all. From the picture, use point 2 (green dot) as a starting point. Then draw a line parallel to the uptrend line, as shown in the figure, using point 2 (green dot) as the starting point parallel to the downtrend line, which will act as resistance in the uptrend form and will act as a resistance line. Support for downtrend images.

👉 3. Sideways is movement without direction. Is not markedly So the trend line in the case of sideways is relatively smooth, parallel to the ground (flat) and the channel in the case of sideways is like Pipes placed parallel to the floor, see from the picture because it can be seen that the flow of prices or index will be under the formation of a flow that lies horizontally which the price movement along the flow pipe sideways horizontally like this It is the origin of the name sideways.

Stochastic indicator for sideways market What is signals showing buy and sell points?

2023-01-02T18:00:29Z

💥The Stochastic indicator is commonly used to identify potential buy and sell signals for traders in a sideways market. In a sideways or ranging market, the price tends to move within a relatively narrow range, and the Stochastic indicator can help identify overbought and oversold conditions within that range.

💥For a buy signal, traders will look for the Stochastic indicator to cross above the oversold level, which is typically set at 20. This suggests that the price may have reached a support level and could potentially reverse direction and start moving higher. Traders may then look for confirmation of the buy signal through other technical indicators or price action before entering a long position.

💥For a sell signal, traders will look for the Stochastic indicator to cross below the overbought level, which is typically set at 80. This suggests that the price may have reached a resistance level and could potentially reverse direction and start moving lower. Traders may then look for confirmation of the sell signal through other technical indicators or price action before entering a short position.

💥It is important to note that while the Stochastic indicator can be a useful tool in a sideways market, traders should still consider other factors such as trend, volume, and support/resistance levels before making trading decisions.

💥Stochastic is a very popular tool, especially for sideways markets and those who prefer fast-paced trading. Although many people believe that George Lane invented it, this indicator has actually been around for decades. In the 1960s, it was presented in an article titled "Stochastic Process" by the Investor Educators Company, which explained both the theoretical stochastic process of prices and the indicator itself. Despite not being directly related to the theoretical process, the title of the article became part of the indicator's name.

💥Stochastic is based on the observation that when prices are rising, the closing price tends to move closer to the high or upper boundary of the price range. Conversely, when prices are falling, the closing price tends to move closer to the low or lower boundary of the price range. The tool measures the ratio of the closing price's distance from the low to the total spread from high to low over the last N days, usually 5 (N = 5).

💥For example, if the calculated %K value is 0.38, it means that today's closing price is 38% relative to the 5-day trading session.

💥The threshold lines that define the overbought and oversold zone in the Stochastic indicator are typically set at 80 and 20, respectively. As for the Stochastic readings, the best buy signal is said to occur when the %D line is between the 10-15 range, while the best sell signal is formed when the %D line is between the 85-90 range.

⚡️There are 7 popular methods for determining when to buy or sell using Stochastic:

👉Buy when the oscillator drops below the level 20 and resumes above it, and sell when it retraces above level 80 and reverses above it in a downward direction.

👉Buy when %K cuts %D up and sell when %K cuts %D down. This case can also be separated into 2 sub-cases. %K cuts %D where %K (which is faster) crosses first. (So crossing the left side of the %D line is called Left Crossing) and if %K crosses %D, it's true, but %D (which is slower) crosses the head first (so %K cuts %D on the right side of the line). The %D line is called Right Crossing. In both cases, they read the same value, but the latter is more certain than the former, since the %D is overturned first, indicating a quick change of direction. It's sweeter and more stable.

👉A divergence can occur when %D is above the 80 line but cannot create a new higher top while the price continues to follow the uptrend. It happens while the %D line is below the 20 line and creates a new higher bottom. This is an early warning. The price may run in that direction. So hurry up and look for an opportunity to sell (when there is a divergence at the top) or buy (when there is a divergence at the bottom) because soon there may be a reversal. This style is also known as a setup.

👉A sharp drop in %K or %D (which George Lane called Hinge) shows that the market is weak. It's a signal to be careful that tomorrow's market may change direction.

👉A rapid (faster) and severe (2-12%) deflection of %K is a warning sign that the market is almost exhausted. The original direction of the price can stand well for no more than 2 days.

👉The %K value ranges from 0 to 100, and when %K reaches both extremes, it's often a signal to collect (%K=0) or drain (%K=100). The price must close at the highest or the lowest for at least 5 consecutive days (see the formula of %K to understand), and the number of days may need to be more if we use the slower Stochastic.

👉If %K crosses %D and tries to turn around to find %D again but does not reach it (or maybe just touching, but not breaking) %D, this confirms a clear signal that it had just intersected a while ago. It's a sure sign.

💥 The example presented below demonstrates the use of Stochastic to determine the timing of entering and exiting trades with the SET index. A downward arrow indicates a buy signal or to hold more, while an upward arrow indicates a sell signal or to gradually make short-term profits (depending on the case). Beside the arrow, there will be the word "Buy" or "Sell." It may be noticed that there are moments to buy or sell more than once, which may prompt the question of why there are multiple points. The answer lies in the principle that the tool is only used to find a cutting rhythm (as mentioned earlier), as some people only see an upward trend (without confirmation from another stroke), leading to a possible loss. Due to the quick movement of the pointer, false signals may appear, so some people prefer to use the line crossing rhythm to gradually buy or sell stocks, similar to signaling in terms of moving averages.

How are common gaps formed and how are they important in technical analysis?

2022-11-25T10:39:37Z

💥Common gaps are formed when there is a slight pause in trading activity or a trading range, and the price opens above or below the previous day's closing price without any significant news or events driving the market. These gaps are often seen as a natural part of market behavior, and they can be formed during regular trading hours or after-hours trading.

💥In technical analysis, common gaps are considered less significant than other types of gaps because they don't necessarily indicate a change in the trend or signal a new trading opportunity. However, they can still be important because they can provide clues about the overall market sentiment and help traders identify support and resistance levels.

💥For example, if a common gap forms during an uptrend, it may indicate that the market is taking a brief pause before continuing the upward trend. If the price remains above the gap, it can be seen as a support level for future price movements. Conversely, if a common gap forms during a downtrend, it may indicate a temporary pause in the downward trend. If the price remains below the gap, it can be seen as a resistance level for future price movements.

💥Overall, common gaps are an important aspect of technical analysis because they can provide context for understanding market behavior and help traders make informed decisions. However, it's important to use other technical indicators and analysis to confirm trading decisions and avoid false breakouts.

💥Some traders refer to it as the Trading Gap or Area Gap. The Common Gap is a normal and very common type of gap that is often closed soon after it is formed. It usually occurs during a trading range, indicating the lack of interest of most investors in that stock at that time.

💥Common gaps are considered less important in technical analysis and may not be reliable for forecasting because they usually occur during light trading periods. Buying or selling pressure that comes in has a chance to push the price up or down until the gap is filled. Alternatively, they often occur during trading sessions called sideways where technicians are usually not very interested in this type of gap.

Continuous Patterns (Rectangle)

2022-11-20T18:51:47Z

💥A rectangle is a chart pattern that signals a period of consolidation in the price movement of an asset. The pattern is formed when the price moves between parallel support and resistance levels, creating a rectangular shape on the chart. The support level is the lower horizontal line, while the resistance level is the upper horizontal line.

💥Rectangles can be either a continuation or a reversal pattern. A continuation pattern indicates that the price will likely continue moving in the same direction as the previous trend after the consolidation period ends. A reversal pattern, on the other hand, suggests that the price will reverse its direction after the consolidation period ends.

💥Traders can use the rectangle pattern to identify potential entry and exit points. In a continuation pattern, traders may look to enter a long position when the price breaks above the resistance level, while in a reversal pattern, traders may look to enter a short position when the price breaks below the support level. Stop-loss orders can also be placed below the support level in a long position and above the resistance level in a short position to limit potential losses.

⚡️⚡️As with other chart patterns, traders should use other technical indicators and analysis to confirm their trading decisions. The rectangle pattern is not always reliable, and false breakouts can occur. Therefore, it's important to wait for confirmation before making trading decisions.

💥The rectangle pattern is similar to the triple tops or triple bottoms patterns because it simplifies the explanation. Assuming the original trend is an uptrend, when triple tops are formed, prices retrace until they break through the base line and go down. However, the rectangle pattern is different. After the third peak, there is a downturn, but it appears to rebound from the bottom base line (as pictured), making it look less like triple tops. After careful consideration, prices continue to move up until they break through the resistance line, indicating that the rectangle pattern is a continuation, not a reversal like triple tops. Some may say that the rectangle pattern is no different from a sideways movement, which is probably correct, but let me tell you that there are some observations to distinguish between triple tops or triple bottoms and rectangles. Triple tops or triple bottoms are formed with a wider channel than the rectangle's channel. In other words, the up and down motion is more intense in the case of triple tops or triple bottoms than in rectangles.

💥If you understand the rectangle pattern in an uptrend, understanding the downtrend rectangle pattern should be easier. Just change the observation point from the bottom point to the top point, as shown in the example image.

Reversal Patterns ( Saucer )

2022-11-10T12:54:24Z

💥The Saucer pattern is a bullish trend reversal pattern that is characterized by a gentle and rounded bottom formation on a chart. It is also known as the "rounded bottom" pattern. The pattern indicates a shift in market sentiment from bearish to bullish.

💥The saucer pattern consists of a downward trend followed by a period of consolidation, and then an upward trend. The consolidation period forms the rounded bottom of the saucer. During this time, trading volume is typically low as traders wait for a clear indication of market direction.

💥Once the saucer pattern is complete, the price typically experiences a strong bullish breakout. This breakout is often accompanied by high trading volume, which confirms the bullish trend reversal. The saucer pattern can be seen on any time frame, but it is more reliable on longer-term charts.

💥It is important to note that the saucer pattern is not always a perfect semicircle, and the length of the pattern can vary. Additionally, it is always recommended to use other technical indicators and analysis methods in conjunction with pattern recognition to make trading decisions.

💥Let's move on to the next saucer pattern. How can you recognize this pattern? Think of a coffee cup saucer (in fact, a saucer refers to a soup dish that is deeper than a normal dish, but not so deep that it becomes a bowl). So, what's the connection? There's no direct correlation, but this pattern resembles a coffee cup saucer.

💥Take a look at the picture above and imagine a coffee cup saucer placed upside down. The left side of the saucer represents an upward price movement, but at a decreasing rate. The bottom of the plate is flat, which means the price movement during this period will look like sideways. The right-hand side of the saucer shows a declining price curve, indicating a pattern to change the trend from an uptrend to a downtrend. Let me explain it more clearly.

💥You can see that the price has climbed up over time before entering a period of decreasing rate movement to the sideways, and during this period, the number of volumes traded has not confirmed the upward movement. The trading volume will gradually decrease, which is a bad signal. When the price enters a declining period, it appears that there have been many sell-offs, which can be seen from the increasing trading volume while the price is dropping.

💥Now, let's imagine the saucer placed face up to support a coffee cup. Its shape is curved, as seen in the picture above. On the left-hand side, the trading volume will adjust down, and the number of volumes traded will gradually decrease accordingly because traders begin to see that the price drop is relatively low. When they sell, they may have to buy at a higher price than before. As for the bottom of the plate, buying pressure starts to come in, and the price rebounds somewhat noticeably.

💥After that, there is a short-term weakening due to taking profits (take profit) because traders want to stock up again before chasing the price to move upwards. The price moves up with the confirmation of an increasing trading volume and eventually breaks free from the sideways to continue moving in an uptrend. Thus, the uptrend saucer is a pattern that occurs during a trend shift from a downtrend to an uptrend.

Reversal Patterns (Triple Tops & Triple Bottoms)

2022-11-07T16:14:42Z

💥Triple Tops and Triple Bottoms are reversal patterns that appear on price charts. They occur when the price of an asset creates three consecutive peaks or troughs at approximately the same level. Triple tops occur during an uptrend, indicating a possible trend reversal, while triple bottoms occur during a downtrend, signaling a potential shift in trend direction.

💥In a triple top pattern, the first peak represents a resistance level that the price is unable to break through, causing it to decline to a support level. The second peak shows a renewed attempt to break through the resistance level but is again rejected, leading to another decline to the support level. Finally, the third peak fails to surpass the resistance level, and the price declines below the support level, signaling a potential downtrend.

💥In a triple bottom pattern, the first trough represents a support level that the price cannot break through, causing it to rise to a resistance level. The second trough shows a renewed attempt to break through the support level, but it is again rejected, leading to another rise to the resistance level. Finally, the third trough surpasses the support level, and the price rises above the resistance level, signaling a potential uptrend.

💥Traders usually confirm the pattern by looking at the trading volumes during each peak or trough. Higher trading volumes at the peaks and troughs indicate stronger support and resistance levels. The neckline, which connects the peaks or troughs, is also essential. A break below the neckline in a triple top pattern or above the neckline in a triple bottom pattern confirms the pattern, and traders may initiate trades based on the anticipated trend reversal.

💥Let's discuss triple tops first. Broadly speaking, it refers to when the volume price tries to break through a horizontal resistance but fails to do so, resulting in a subsequent correction. It may be difficult to understand this concept just by listening to it. Therefore, let's try to delve deeper and look at some visuals.

💥In the figure above, let's say the price is moving up and reaches the top 1. Then, there is a sell-off that causes a decline to the bottom 1. However, the trading volume during the bottom 1 is still not significant because everyone thinks it is a minor correction in a major uptrend. They want to buy, and the price continues to rise until it reaches close to top 1 again. Traders have confidence that it will continue to move in an uptrend, and the trading volume during this period is quite large.

💥As mentioned above regarding the meaning of resistance, the price moved down from the second top and continued to flow down to the second bottom, which is a support line. Traders' expectations remain that there may be a rebound. Therefore, during the second bottom line, the volumes appearing are less than during recent uptrends because there is still a concern that after selling, it cannot be repurchased (bought back at a higher price than it was sold). However, when it comes to actually moving up to the third top, some traders are starting to worry because it has failed to pass through it twice before. Therefore, they do not dare to buy to pursue. The number of volumes in this period is seldom different from the last period, so when it reaches the third top, it is quite brittle. A downward adjustment is likely to occur. It can be seen that the price attempted to break the horizontal resistance three times (triple) but still failed to pass through.

💥The completeness of the form takes place when the price has adjusted down until breaking through the horizontal support line that used to support the abyss point 1 and bottom point 2 down. Here, the level is seen as a neckline, similar to the case of head & shoulders, but in fact, they call it the base line. The amount of volume in this period will increase a lot as a result of the profit that will occur after.

💥The question is, will you stop playing at all? The answer is no! But you will wait to set up at a level away from the neckline down equal to or close to the distance measured from the top 2 to the neckline. In principle, there may be some rebound, but that's just a bounce, not a shift. Continually rising playing in this period could be a bit of play and wait to take profits at the level before or close to the neckline. The number of volumes sold out was enormous. You can see that at the beginning, the volume movement is still an uptrend, but later the trend has become a downtrend, and thus it is one of the reversal patterns.

💥If you still don't understand, I encourage you to study the concept again and again. It's not as difficult as you may think! For those who understand, let's move on to discussing triple bottoms. Firstly, we need to understand what triple bottoms are used for. Can you guess? Some traders may have already figured it out. It is a pattern that increases the likelihood of a downtrend turning into an uptrend.

💥Initially, the price trend was still in a downtrend. When the price hit bottom 1 in the chart, buying pressure pushed the price back up. Buyers saw the price at bottom 1 as cheap. However, when the price reached top 1, some people decided to sell and take profit because the overall trend was still in a downtrend. This selling pressure caused the price to fall back down to the base, as defined by the support line mentioned earlier.

💥The price then rebounded from bottom 2 and continued to rise until it reached peak 2. However, it was hit again and began to fall once more until it reached bottom 3. This time, there should be more buying interest as the price had fallen twice before but did not go lower than the previous two bottoms (bottom 1 and bottom 2). Buyers had to fight to push the price back up.

💥If the price can break through the base line resistance again, it will gain a lot of reinforcement. The number of traded volumes will increase, confirming that this rise is strong enough. Many are starting to see that this is a pattern of triple bottoms, although there may be some downturn from short-term take profit. The distance before the neckline compared to the distance between Bottom 1 and Bottom 2 is an adaptation in preparation for an uptrend in the form of triple tops or triple bottoms. When forming, it can be seen that volume and prices move sideways, as shown in the figure depicting triple tops in real volumes.