Friday, 29 May 2020
Thursday, 28 May 2020
Wednesday, 27 May 2020
Tuesday, 26 May 2020
Saturday, 23 May 2020
Twitter Quotes
Shortcuts rarely lead to trading success. Developing your own approach requires research, observation & thought. Expect the process to take lots of time & hard work. Expect many dead ends and multiple failures before u find a successful trading approach that is right for u.
Credit - Hemant @VRtrendfollower
Credit - Hemant @VRtrendfollower
Twitter Quotes
When you buy a breakout and it fails and falls back through the lows of the previous day, it is time to get out (if not full then at least half quantity). If the lows of the breakout day are held, there is a good chance of a new range and a new trend.
Credit - Hemant @VRtrendfollower
Credit - Hemant @VRtrendfollower
Weekend posts - What is normally posted
I usually keep the weekend posts for anything educational or trader quotes that I might like on twitter. The posts from twitter are with the permission of the original twitter poster along with his/her twitter handle for credit.
Hope you enjoy it.... as much as I enjoyed curating it...
Hope you enjoy it.... as much as I enjoyed curating it...
Friday, 22 May 2020
Thursday, 21 May 2020
Wednesday, 20 May 2020
Tuesday, 19 May 2020
Monday, 18 May 2020
Sunday, 17 May 2020
Friday, 15 May 2020
Thursday, 14 May 2020
Wednesday, 13 May 2020
Tuesday, 12 May 2020
Monday, 11 May 2020
Friday, 8 May 2020
Thursday, 7 May 2020
Wednesday, 6 May 2020
Tuesday, 5 May 2020
Monday, 4 May 2020
Saturday, 2 May 2020
Bearish Engulfing Pattern - Technical Analysis
What is a Bearish Engulfing Pattern?
A bearish engulfing pattern is a technical chart pattern that signals lower prices to come. The pattern consists of an up (white or green) candlestick followed by a large down (black or red) candlestick that eclipses or "engulfs" the smaller up candle. The pattern can be important because it shows sellers have overtaken the buyers and are pushing the price more aggressively down (down candle) than the buyers were able to push it up (up candle).
Shortcomings of the pattern
Engulfing patterns are most useful following a clean upward price move as the pattern clearly shows the shift in momentum to the downside. If the price action is choppy, even if the price is rising overall, the significance of the engulfing pattern is diminished since it is a fairly common signal.
The engulfing or second candle may also be huge. This can leave a trader with a very large stop loss if they opt to trade the pattern. The potential reward from the trade may not justify the risk.
This pattern is more effective in weekly and monthly timeframe.
Disclaimer - For educational purposes only
A bearish engulfing pattern is a technical chart pattern that signals lower prices to come. The pattern consists of an up (white or green) candlestick followed by a large down (black or red) candlestick that eclipses or "engulfs" the smaller up candle. The pattern can be important because it shows sellers have overtaken the buyers and are pushing the price more aggressively down (down candle) than the buyers were able to push it up (up candle).
Shortcomings of the pattern
Engulfing patterns are most useful following a clean upward price move as the pattern clearly shows the shift in momentum to the downside. If the price action is choppy, even if the price is rising overall, the significance of the engulfing pattern is diminished since it is a fairly common signal.
The engulfing or second candle may also be huge. This can leave a trader with a very large stop loss if they opt to trade the pattern. The potential reward from the trade may not justify the risk.
This pattern is more effective in weekly and monthly timeframe.
Disclaimer - For educational purposes only
Friday, 1 May 2020
Pattern no 9: Inverted hammer
Inverted hammer
The inverted hammer is a type of candlestick pattern found after a downtrend and is usually taken to be a trend-reversal signal. The inverted hammer looks like an upside down version of the hammer candlestick pattern, and when it appears in an uptrend is called a shooting star.
The pattern is made up of a candle with a small lower body and a long upper wick which is at least two times as large as the short lower body. The body of the candle should be at the low end of the trading range and there should be little or no lower wick in the candle.
The long upper wick of the candlestick pattern indicates that the buyers drove prices up at some point during the period in which the candle was formed, but encountered selling pressure which drove prices back down to close near to where they opened. When encountering an inverted hammer, traders often check for a higher open and close on the next period to validate it as a bullish signal.
Disclaimer - For educational purposes only
The inverted hammer is a type of candlestick pattern found after a downtrend and is usually taken to be a trend-reversal signal. The inverted hammer looks like an upside down version of the hammer candlestick pattern, and when it appears in an uptrend is called a shooting star.
The pattern is made up of a candle with a small lower body and a long upper wick which is at least two times as large as the short lower body. The body of the candle should be at the low end of the trading range and there should be little or no lower wick in the candle.
The long upper wick of the candlestick pattern indicates that the buyers drove prices up at some point during the period in which the candle was formed, but encountered selling pressure which drove prices back down to close near to where they opened. When encountering an inverted hammer, traders often check for a higher open and close on the next period to validate it as a bullish signal.
Disclaimer - For educational purposes only
Pattern no 8: Hammer
Hammer
A hammer is a type of bullish reversal candlestick pattern, made up of just one candle, found in price charts of financial assets. The candle looks like a hammer, as it has a long lower wick and a short body at the top of the candlestick with little or no upper wick. In order for a candle to be a valid hammer most traders say the lower wick must be two times greater than the size of the body portion of the candle, and the body of the candle must be at the upper end of the trading range.
When you see the hammer form in a downtrend this is a sign of a potential reversal in the market as the long lower wick represents a period of trading where the sellers were initially in control but the buyers were able to reverse that control and drive prices back up to close near the high for the day, thus the short body at the top of the candle.
Disclaimer - For educational purposes only
A hammer is a type of bullish reversal candlestick pattern, made up of just one candle, found in price charts of financial assets. The candle looks like a hammer, as it has a long lower wick and a short body at the top of the candlestick with little or no upper wick. In order for a candle to be a valid hammer most traders say the lower wick must be two times greater than the size of the body portion of the candle, and the body of the candle must be at the upper end of the trading range.
When you see the hammer form in a downtrend this is a sign of a potential reversal in the market as the long lower wick represents a period of trading where the sellers were initially in control but the buyers were able to reverse that control and drive prices back up to close near the high for the day, thus the short body at the top of the candle.
Disclaimer - For educational purposes only
Pattern no 7:Three Black Crows
Three Black Crows
Three black crows indicate a bearish candlestick pattern that predicts the reversal of an uptrend. The black crow pattern consists of three consecutive long-bodied candlesticks that have opened within the real body of the previous candle and closed lower than the previous candle. Often, traders use this indicator in conjunction with other technical indicators or chart patterns as confirmation of a reversal.
In a typical appearance of three black crows, the bulls will start the session with the price opening modestly higher than the previous close, but the price is pushed lower throughout the session. In the end, the price will close near the session low under pressure from the bears. This trading action will result in a very short or nonexistent shadow. Traders often interpret this downward pressure sustained over three sessions to be the start of a bearish downtrend.
Disclaimer - For educational purposes only
Three black crows indicate a bearish candlestick pattern that predicts the reversal of an uptrend. The black crow pattern consists of three consecutive long-bodied candlesticks that have opened within the real body of the previous candle and closed lower than the previous candle. Often, traders use this indicator in conjunction with other technical indicators or chart patterns as confirmation of a reversal.
In a typical appearance of three black crows, the bulls will start the session with the price opening modestly higher than the previous close, but the price is pushed lower throughout the session. In the end, the price will close near the session low under pressure from the bears. This trading action will result in a very short or nonexistent shadow. Traders often interpret this downward pressure sustained over three sessions to be the start of a bearish downtrend.
Disclaimer - For educational purposes only
Pattern 6 : Three white soldiers
Three white soldiers
Three White Soldiers is a bullish reversal pattern that is made up of a trio of long green candles during a downtrend, each appearing after the other, opening within the range of the previous period and closing near the current period’s high.
Please note that on black & white trading charts, the green candles are replaced by white candles and hence the name “Three WHITE Soldiers”. Soldiers signify a march ahead or the upward momentum.
Points to remember
The market has to be in a downtrend.
You then have 3 green bullish candlesticks that form consecutively giving you the three white soldiers chart pattern.
Each candlestick must open within the candle body of the previous candlestick
Each candlestick must close higher than the previous candlestick
Disclaimer - For educational purposes only
Three White Soldiers is a bullish reversal pattern that is made up of a trio of long green candles during a downtrend, each appearing after the other, opening within the range of the previous period and closing near the current period’s high.
Please note that on black & white trading charts, the green candles are replaced by white candles and hence the name “Three WHITE Soldiers”. Soldiers signify a march ahead or the upward momentum.
Points to remember
The market has to be in a downtrend.
You then have 3 green bullish candlesticks that form consecutively giving you the three white soldiers chart pattern.
Each candlestick must open within the candle body of the previous candlestick
Each candlestick must close higher than the previous candlestick
Disclaimer - For educational purposes only
Pattern no 5: Double Bottom
Double Bottom
To create a double bottom pattern, price begins in a downtrend, stops, and then reverses trend. However, the reversal to the upside is short-term. Price breaks again to the downside only to stop again and reverse direction upwards. With the second bottom of the double bottom pattern, it is usually more bullish if the second low is higher than the first low.
A potential buy signal is given when the confirmation line is penetrated to the upside. The confirmation line is drawn across the top of the double bottom pattern.
Often, after price penetrates the confirmation line, price will retrace for a short time, sometimes back to the confirmation line. This retracement offers a second chance to get into the market long.
Disclaimer - For educational purposes only
To create a double bottom pattern, price begins in a downtrend, stops, and then reverses trend. However, the reversal to the upside is short-term. Price breaks again to the downside only to stop again and reverse direction upwards. With the second bottom of the double bottom pattern, it is usually more bullish if the second low is higher than the first low.
A potential buy signal is given when the confirmation line is penetrated to the upside. The confirmation line is drawn across the top of the double bottom pattern.
Often, after price penetrates the confirmation line, price will retrace for a short time, sometimes back to the confirmation line. This retracement offers a second chance to get into the market long.
Disclaimer - For educational purposes only
Pattern no 4: Double Top
Double Top
A double top is a reversal pattern that is formed after there is an extended move up.
The “tops” are peaks which are formed when the price hits a certain level that can’t be broken.After hitting this level, the price will bounce off it slightly, but then return back to test the level again.
If the price bounces off of that level again, then you have a DOUBLE top!.This is a strong sign that a reversal is going to occur because it is telling us that the buying pressure is just about finished.
With the double top, we would place our entry order below the neckline because we are anticipating a reversal of the uptrend.Remember that double tops are a trend reversal formation so you’ll want to look for these after there is a strong uptrend.
You’ll also notice that the drop is approximately the same height as the double top formation.
Disclaimer - For educational purposes only
A double top is a reversal pattern that is formed after there is an extended move up.
The “tops” are peaks which are formed when the price hits a certain level that can’t be broken.After hitting this level, the price will bounce off it slightly, but then return back to test the level again.
If the price bounces off of that level again, then you have a DOUBLE top!.This is a strong sign that a reversal is going to occur because it is telling us that the buying pressure is just about finished.
With the double top, we would place our entry order below the neckline because we are anticipating a reversal of the uptrend.Remember that double tops are a trend reversal formation so you’ll want to look for these after there is a strong uptrend.
You’ll also notice that the drop is approximately the same height as the double top formation.
Disclaimer - For educational purposes only
Pattern no 3: Cup And Handle
Cup with handle
The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. It was developed by William O'Neil and introduced in his 1988 book, How to Make Money in Stocks.
As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right-hand side and the handle is formed. A subsequent breakout from the handle's trading range signals a continuation of the prior advance.
Components of the Pattern
Trend: To qualify as a continuation pattern, a prior trend should exist. Ideally, the trend should be a few months old and not too mature. The more mature the trend, the less chance that the pattern marks a continuation or the less upside potential.
Cup: The cup should be “U” shaped and resemble a bowl or rounding bottom. A “V” shaped bottom would be considered too sharp of a reversal to qualify. The softer “U” shape ensures that the cup is a consolidation pattern with valid support at the bottom of the “U”. The perfect pattern would have equal highs on both sides of the cup, but this is not always the case.
Cup Depth: Ideally, the depth of the cup should retrace 1/3 or less of the previous advance. However, with volatile markets and over-reactions, the retracement could range from 1/3 to 1/2. In extreme situations, the maximum retracement could be 2/3, which conforms with Dow Theory.
Handle: After the high forms on the right side of the cup, there is a pullback that forms the handle. Sometimes this handle resembles a flag or pennant that slopes downward, other times it is just a short pullback. The handle represents the final consolidation/pullback before the big breakout and can retrace up to 1/3 of the cup's advance, but usually not more. The smaller the retracement, the more bullish the formation and significant the breakout. Sometimes it is prudent to wait for a break above the resistance line established by the highs of the cup.
Duration: The cup can extend from 1 to 6 months, sometimes longer on weekly charts. The handle can be from 1 week to many weeks and ideally completes within 1-4 weeks.
Volume: There should be a substantial increase in volume on the breakout above the handle's resistance.
Target: The projected advance after breakout can be estimated by measuring the distance from the right peak of the cup to the bottom of the cup.
Disclaimer - For educational purposes only
The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. It was developed by William O'Neil and introduced in his 1988 book, How to Make Money in Stocks.
As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right-hand side and the handle is formed. A subsequent breakout from the handle's trading range signals a continuation of the prior advance.
Components of the Pattern
Trend: To qualify as a continuation pattern, a prior trend should exist. Ideally, the trend should be a few months old and not too mature. The more mature the trend, the less chance that the pattern marks a continuation or the less upside potential.
Cup: The cup should be “U” shaped and resemble a bowl or rounding bottom. A “V” shaped bottom would be considered too sharp of a reversal to qualify. The softer “U” shape ensures that the cup is a consolidation pattern with valid support at the bottom of the “U”. The perfect pattern would have equal highs on both sides of the cup, but this is not always the case.
Cup Depth: Ideally, the depth of the cup should retrace 1/3 or less of the previous advance. However, with volatile markets and over-reactions, the retracement could range from 1/3 to 1/2. In extreme situations, the maximum retracement could be 2/3, which conforms with Dow Theory.
Handle: After the high forms on the right side of the cup, there is a pullback that forms the handle. Sometimes this handle resembles a flag or pennant that slopes downward, other times it is just a short pullback. The handle represents the final consolidation/pullback before the big breakout and can retrace up to 1/3 of the cup's advance, but usually not more. The smaller the retracement, the more bullish the formation and significant the breakout. Sometimes it is prudent to wait for a break above the resistance line established by the highs of the cup.
Duration: The cup can extend from 1 to 6 months, sometimes longer on weekly charts. The handle can be from 1 week to many weeks and ideally completes within 1-4 weeks.
Volume: There should be a substantial increase in volume on the breakout above the handle's resistance.
Target: The projected advance after breakout can be estimated by measuring the distance from the right peak of the cup to the bottom of the cup.
Disclaimer - For educational purposes only
Pattern no 2 - Reverse Head and Shoulders
Reverse Head and Shoulders Components
Left Shoulder: Bears push prices downwards making new lows; however, bulls begin to return and push prices slightly higher.
Head: Price gains don't last long before bears return and push prices even lower than before; a bearish sign. Prices then find buyers at the new lower prices.
Right Shoulder: The bears push downward again, but this time fail to make a lower low. This is generally seen as bullish sign, bears were unable to push prices further down. Decision time occurs when the price is pushed higher back to support (Confirmation line); either bears will push prices back down or bulls will push prices higher, regaining control of the stock, future, or currency pair.
Reverse Head and Shoulders Potential Buy Signal
When price closes above the confirmation line, a potential signal is given. Usually an upward sloping confirmation line is seen as a more powerful Reverse Head & Shoulders pattern, mainly because an upward sloping confirmation line means that prices are making higher highs.
Disclaimer - For educational purposes only
Left Shoulder: Bears push prices downwards making new lows; however, bulls begin to return and push prices slightly higher.
Head: Price gains don't last long before bears return and push prices even lower than before; a bearish sign. Prices then find buyers at the new lower prices.
Right Shoulder: The bears push downward again, but this time fail to make a lower low. This is generally seen as bullish sign, bears were unable to push prices further down. Decision time occurs when the price is pushed higher back to support (Confirmation line); either bears will push prices back down or bulls will push prices higher, regaining control of the stock, future, or currency pair.
Reverse Head and Shoulders Potential Buy Signal
When price closes above the confirmation line, a potential signal is given. Usually an upward sloping confirmation line is seen as a more powerful Reverse Head & Shoulders pattern, mainly because an upward sloping confirmation line means that prices are making higher highs.
Disclaimer - For educational purposes only
Pattern no 1. - Head and shoulders
The Head and Shoulders chart pattern is a heavily used charting pattern, giving easily understood potential buy and sell signals.
Head and Shoulder Components
Left Shoulder: Bulls push prices upwards making new highs; however these new highs are short lived and prices retreat.
Head: Prices don't retreat for long because bulls make another run, this time succeeding and surpassing the previous high; a bullish sign. Prices retreat again, only to find support yet again.
Right Shoulder: The bulls push higher again, but this time fail to make a higher high. This is very bearish, because bears did not allow the bulls to make a new higher or even an equal high. The bears push prices back to support (Confirmation line); this is a pivotal moment – Will bulls make another push higher or have the bears succeeded in stopping the move higher.
If prices break the confirmation support line, it is clear that the bears are in charge; thus, when price closes below the confirmation line, a potential sell signal is given. Note that a downward sloping confirmation line is generally seen as a more powerful Head & Shoulders pattern, mainly because a downward sloping confirmation line means that prices are making lower lows.
Disclaimer - For educational purposes only
Head and Shoulder Components
Left Shoulder: Bulls push prices upwards making new highs; however these new highs are short lived and prices retreat.
Head: Prices don't retreat for long because bulls make another run, this time succeeding and surpassing the previous high; a bullish sign. Prices retreat again, only to find support yet again.
Right Shoulder: The bulls push higher again, but this time fail to make a higher high. This is very bearish, because bears did not allow the bulls to make a new higher or even an equal high. The bears push prices back to support (Confirmation line); this is a pivotal moment – Will bulls make another push higher or have the bears succeeded in stopping the move higher.
If prices break the confirmation support line, it is clear that the bears are in charge; thus, when price closes below the confirmation line, a potential sell signal is given. Note that a downward sloping confirmation line is generally seen as a more powerful Head & Shoulders pattern, mainly because a downward sloping confirmation line means that prices are making lower lows.
Disclaimer - For educational purposes only
Technical Analysis Chart Patterns - Primer
Will be starting a small primer on Technical Analysis Chart Patterns namely
1. Head and Shoulders
2. Reverse Head and Shoulders
3. Cup with handle
4. Double Top
5. Double Bottom
6. Three white soldiers
7. Three Black Crows
8. Hammer
9. Inverted hammer
Stay Tuned....
Disclaimer - For educational purposes only. Also, if there are any errors in any of the further posts on chart patterns, please do let me know and I will correct them accordingly
1. Head and Shoulders
2. Reverse Head and Shoulders
3. Cup with handle
4. Double Top
5. Double Bottom
6. Three white soldiers
7. Three Black Crows
8. Hammer
9. Inverted hammer
Stay Tuned....
Disclaimer - For educational purposes only. Also, if there are any errors in any of the further posts on chart patterns, please do let me know and I will correct them accordingly
Subscribe to:
Posts (Atom)
