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Divergent BarsDivergent bars help a trader identify a potential shift in the current price trend. Divergent bars are an effective technical tool for futures, options, and stock traders using any timeframe. A divergent bar is defined as the following: 1. A potential shift from a bullish trend to a bearish trend is evidenced by the current price bar showing a higher high than the previous bar and the current bar closes in the bottom 50% of the price bar. Also known as a Bearish Divergent Bar . This indicates that bullish movement higher is weakening. 2. A potential shift from a bearish trend to a bullish trend is evidenced by the current price bar showing a lower low than the previous bar and the current bar closes in the upper 50% of the price bar. Also known as a Bullish Divergent Bar . This indicates that bearish movement lower is weakening. To open a position using the divergent bar: 1. When the divergent bar indicates a possible bearish entry , place an order to buy to open a put (for options traders) or sell short (futures traders) at the low of the divergent bar. If the bullish trend is not complete, it is likely this position will not be filled. If, before the order is filled, the price moves above the high of the divergent bar, the bar is no longer valid as an entry signal and open orders should be cancelled. If the order is filled, use your usual profit targets, which will vary by trader. If the position is filled, futures traders should set a stop based on the high of the divergent bar. Options traders should monitor the price action and close the position if price moves above the high of the divergent bar. 2. When the divergent bar indicates a possible bullish entry , place an order to buy to open a call (for options traders) or buy long (futures traders) at the high of the divergent bar. If the bearish trend is not complete, it is likely this position will not be filled. If, before the order is filled, the price moves below the low of the divergent bar, the bar is no longer valid as an entry signal and open orders should be cancelled. If the order is filled, use your usual profit targets, which will vary by trader. If the position is filled, futures traders should set a stop based on the low of the divergent bar. Options traders should monitor the price action and close the position if price moves below the low of the divergent bar. The most effective way to use the divergent bar signal is to view it as one signal aligned with another reliable signal, such as the Bollinger Bands, Awesome Oscillator, or other momentum/trend shift indicator. The signal is so specific that it adds exceptional strength to the likely reversal. For example, on the chart of TVC:SPX , two divergent bars are highlighted, each one anticipating a strong and clear reversal in the swing trend. In the first example, a Bullish Divergent Bar appears at the beginning of October. The low is lower than the previous bar’s low and the current bar closes in the upper half of the price bar. This indicates a potential long entry. It is also paired with a Bollinger Band Snap. The next day stochastic crosses up and the high of the divergent bar is broken, signaling a long entry. The second example occurs in late January with a Bearish Divergent Bar . The high of that bar is higher than the previous bar’s high and it also closes in the lower half of the price bar, signaling a bearish divergent bar. The next market day the low of the divergent bar is broken, the Awesome Oscillator (AO) is red, and stochastics is crossed down. This alignment between divergent bar, AO, and stochastics signals a short entry. In both of these examples there is strong follow through from the divergent bar entry. Moving 35 points immediately to the upside on the bullish divergent bar entry and trending about 100 points lower the days following the bearish divergent bar entry. Divergent bars, when paired with other indicators, can be a reliable indication of a potential shift in the trend.
SP:SPXEducation
by NewCycleTrading
3
Bollinger BandsBollinger Bands Timing for options trades relies on many price signals and confirmation. Even so, knowing when trends are likely to continue or to end is a skill of its own and many traders have timed entry and exit poorly because the trend was misread. One signal helps overcome this problem. Bollinger Bands (BB) track the trend with three bands. The middle band is a simple moving average of 20 sessions, and the upper and lower bands are each two standard deviations of that average. This sets up a great visual, forming a “probability matrix” of both price and trend. Because price is not likely to trade above the upper band or below the lower band for very long, any move outside of this matrix is likely to be followed by a retreat back into range. However, BB is not just a price-specific analytical tool. It also sets up a version of resistance and support as a dynamic factor rather than the traditional straight line. The chart of the Nasdaq 100 Index shows this relationship between the upward-moving trend and resistance. It is possible to draw straight lines to identify resistance or support as well as times of breakout. BB tends to provide a dynamic version, which is more accurate and more predictive. As the price trend is upward-moving, the upper band tends to track resistance with extreme accuracy. And as a trend moves downward, the lower band tends to track support In the NDX chart, three examples of the relationship between the upper band and the dynamic price movement are circled. The most revealing aspect of this is how accurately the band points to both entry and exit. As the price moves close to the upper band, it marks the beginning of a strong bullish move. This is seen in all three of the highlighted examples. These are highly reliable entry points for bullish trades such as long calls or short puts. The bullish trend ends as price moves away from the upper band. This is also seen clearly in all these instances on the chart. Logically, this marks an exit point, but not necessarily the start of a bearish move. Unlike most reversal signals, the move of price away from the upper band signals only the end of the price move. The next phase could be resumption of the trend, retracement, or reversal. To decide, requires a new set of signals. The interaction between the bands and identification of the trend also works when a dynamic trend ends and moves into a period of consolidation. This occurred at the beginning of December. Notice how strongly the band width narrows, going from 600 points in beginning November down to under 250 points. This shrinking band width signals a likely period of consolidation, which serves as a rest between dynamic trends, a plateau before trend resumption or reversal. This also points to the timing for a different type of option trade, which exploits a range-bound tendency in the short term. In fact, consolidation may be the most profitable trend for short-term trading because breakout is easily identified. Look for a widening of the band width to anticipate a new dynamic move. It does not matter whether that will be bullish or bearish; the issue is that a widening band width signals likely end to consolidation. Entering a consolidation-type trade like an Iron Condor (with strikes far outside the band width), a short covered straddle, are well-timed as consolidation begins, but should be closed as consolidation ends. At that point, a new trade can be opened to exploit dynamic price movement, such as synthetic stock (long or short) or simply a long option. The issue to keep in mind in all of these timing decisions is that BB provides more than a reliable tracking device for price. It also marks the nature of short-term trends, whether dynamic or sideways-moving. It is one of the most reliable predictive signals options traders can find.
Editors' picks
TVC:NDQEducation
by NewCycleTrading
18
Price Action & Psychology - Pullback, accumulationHello ! Key points : Accumulation zone Halfway retracement Volume uptrend > volume downtrend Currently, I feel like there's an accumulation going on. In fact, we have some clues that buyers were strong : 1) we see several spikes in volume 2) the bodies of the candlesticks grew wider the more the trend advanced As you can see, we've had a little 1-candle pullback at first. Then, the trend resumed, the stock encountered a resistance (previous support on the left side) and pulled back halfway before accumulating. Obviously, from a realistic point of view, the stock could go any way from here. But, as always, we're trying to stack the probabilities in our favor. During the accumulation, the volume was relatively "normal", except for that spike I highlighted. The thing is, despite the high volume, the price didn't move. This tells us that sellers are not able to win the fight against buyers (since we're pulling back from an uptrend movement, buyers are still dominating). Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
NYSE:MODLong
by UnknownUnicorn6734025
BTC Not Actually In An Ascending Triangle?So lately in the TA world I've noticed a lot of people pointing out something similar to this green ascending triangle. To me that triangle looks sloppy at best and I personally believe we are in more of a rising parallel channel like I've outlined in purple. I've had this channel mapped out for a couple weeks now (since about June 3) and it's been filling out beautifully up to this point. I am currently still in part of my long position from breaking that red downtrend line (zoomed in to 15min to enter trade) within the channel recently as it confirmed that we could in fact be moving back toward the top of channel possibly shooting for approximately 10.8k? have to see how the channel plays out. I have locked in most of my profits by now, but don't mind keeping part of position open incase we test up higher for a 3rd touch point at purple resistance.
BITMEX:BTCUSD.PLong
by StuTubeTrading
2
BTC Fueling Up For Journey To 28K???Here on my weekly chart we have a couple of interesting trend lines. First we have a MASSIVE triangle pattern which dates back to July 2017 continuing to coil up currently. Things to consider is that we have not had a new macro higher high in about 2 and a half years, so that being said we COULD still be in a down trend facing resistance ready to plunge currently. HOWEVER! the fact that we hammered up so fast toward our horizontal resistance as well as the very top of our triangle resistance without getting a violent rejection makes me think the price is currently tapping away as resistance getting ready to smash through. The measured move (height of triangle) would give us a price target of about 27-28k usd. On top of that if we break out of my top resistance triangle line it looks like we will also be breaking above my purple horizontal resistance setting a long awaited higher high. In my opinion this pattern is NOT valid until we see a confirmed breakout but I have been following all white weekly trend lines very closely since March and they've been playing out exactly as expected. EVEN THE COVID DUMP TESTED MY TRIANGLE PERFECTLY! I assumed after we broke my first line there that we could coil up between my trend lines before a proper breakout. Even with a candle close above my triangle pattern we could hug the resistance as what I would hope to be a flip to support for some time before actually blasting off. Triangles are my favorite patterns to play so this one makes me excited to watch play out in what could be the not too distance future. With the breakout of a triangle pattern as well as setting a new macro higher high we could really see fomo kick into gear with the start of a proper new bull market cycle which COULD send prices much higher, but 28k is more of a realistic target to shoot for I figure with the measured move :) Of course this isn't an over night type of trade, this is my weekly chart so it would take time to play out IF it does.
BITSTAMP:BTCUSDLong
by StuTubeTrading
4
Price Action & Psychology - Trend following, pullbackHello ! Key points : Wide range candles in the direction of the trend Pulling back after over-extension Significant support area After a period of consolidation, the double bottom ignites the new trend. We notice how the wide range candles support the trend. On the hourly chart, there's a break of the trendline, a retest and a failed attempt to push prices down. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
ALong
by UnknownUnicorn6734025
Price Action & Psychology - TAZ, Relative StrengthHello ! Key points : Pullback in Traders Action Zone Significant support zone Volume increasing Buyers threatening downtrend ("inverted hammer") For more information about the Traders Action Zone, please take a look at my previous analysis ("Related ideas"). The correction yesterday provided us with quite some opportunities. Just as on the idea I linked, we can assume that this stock is pretty solid. By comparing yesterday's overall market correction (near -7% on the Dow Jones) with the price action on individual stocks we find out which stocks are "strong" and which ones are "weak". The stock pulled back into the TAZ and formed an "inverted hammer". In other words, buyers are threatening sellers. The stock gapped down, got bought up and came back down before consolidating (on high volume ) around the opening point (hourly chart). Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
QLong
by UnknownUnicorn6734025
Price Action & Psychology - Traders Action Zone, Relat. StrengthHello ! Key points : Significant support zone : That zone has been significant since the stock market crash in March. It acted as resistance, aswell as a small consolidation area (02/06 - 03/06). It is showing relative strength : Considering yesterday's correction of the overall market, the behavior of individual stocks tell us how strong they are. Price rejection + volume : They day before yesterday, the stock gaps down a lot, triggers stop-losses and panic selling, but eventually, it got bought up (5 or 15 min chart). Traders Action Zone : To define that zone, I'm using the 30 EMA and the 10 SMA . Basically, the TAZ is pretty useful when stocks are trending. It defines a zone where the general trend resumes after a "breath-taking" pullback. Traders Action Zone As you can see on the left side of the chart, it is considered that whenever the 10 SMA is above the 30 EMA , we look for opportunities to go long and vice-versa. After some time, the price over-extends and retraces in the TAZ. Obviously, it should be combined with other signals, in this case what gives us a signal is the relative strength of the stock, aswell as the signficant zone. Here's an example on SPY : Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
NYSE:EBLong
by UnknownUnicorn6734025
Price action & Psychology - Ascending channel,breakout,pullbackHello, Key points : Ascending channel : clear uptrend ignited by the double bottom Breakaway gap + breakout : psychological shift causing the breakaway gap, buyers still strong Halfway retracement : after a breakout stocks tend to pullback halfway Previous resistance = support The double bottom ignites a new trend and creates the ascending channel. The stocks makes higher highs, higher lows. Everytime it pulled back from there on, it always retraced halfway (didn't draw it in because the chart would look messy). It makes up for a decent swing up to the swing high where I'll start scaling out. Make sure you keep an eye on the gap on the left side if the stock breaks the resistance. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
TLong
by UnknownUnicorn6734025
5
Price action & Psychology - MTFA, counter-trendHello ! Key points : Significant zone : that confluence area around 7.00 seems to be kind of special, as you see on the left side of the chart, everything prices dipped below, buyers started getting aggressive and eventually caught up. Bearish momentum fading : the downward movement seemed to be pretty strong, but again, it lost all it's momentum once that 7.00 area reached Trendline break on the hourly chart : on the hourly chart, we see a trendline break after some consolidation, prices might retest The stock makes lower highs. Selling pressure is building up. It is very unlikely that we're going to break through that confluence zone considering how fast sellers lost control here. I'm going to monitor this area for an entry (on the hourly chart), either after the stock retests the trendline break or once it breaks the resistance around 7.50. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
NASDAQ:AKTSLong
by UnknownUnicorn6734025
2
Price action & Psychology - Possible first pullb. after breakoutHello ! Key points : The double bottom ignites the breakout Strong breakout, wide candles + high volume to confirm it Breakaway gap, psychological shift Significant support zone (left side of the chart in light blue) Here we are trading another first pullback after breakout pattern. I personally do not short, but this could be a decent short setup from here. The focus here, is on the pullback. As we can see, the double bottom ignites the breakout from the that trading range. On the left side of the chart, we see that confluence zone, which kept being an important level while the stock was trading in a range the last few weeks. The breakout is strong, it is made of the 2 wide range candles. Notice on the second candle, the rejection, considering the lower wick, we can assume that some people sold, but clearly got caught up because the momentum was way too important. Also, the breakaway gap, signals a shift in people's conviction about the stock. If people are willing to bid higher in pre-market, they must have the conviction that the stock is cheap. Now, we know that whenever a stock breaks out of a trading range with such a momentum, it must retrace. What causes this retracement are breakout and momentum traders taking profits. On the left side, circled in orange, you can see that "unsignificant" gap. What I started noticing is that often times stocks get rejected from such gaps, i.e they act as a resistance. What I expect the stock to do within the next few days : Maybe some upside today caused by too optimistic people (PS : It's already up a few points pre-market) A drastic decrease in volume A move to the downside Usually, such pullbacks retrace halfway from the breakout. I'll start monitoring lower timeframes once prices come down around the 61.8% or 50% Fibonacci. I'll swing the leg up and start scaling out at the swing high. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. PLEASE , if you got any VALUE out of this analysis, make sure you hit the LIKE BUTTON . Thank you ! ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
M
by UnknownUnicorn6734025
Price action & Psychology - MTFA, Double bottomHello ! Key points : Double bottom Significant support area, also on higher timeframes Bearish momentum is over It looks like the bearish momentum that carried the stock price down is now over. That particular candlesticks tells us that an attempt was made to push the stock further down, but it didn't work out. On the 5-min chart, the interpretation of that daily candle becomes clear, at market open the price went down ("Morning panic" I guess) and came back up to consolidate around the closing area. This tells us that the control of the stock is changing hands. Be aware of that gap at 8.50 that might act as a resistance if the momentum is not strong enough. The monitoring area, for scaling out, begins around 9.30. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
CLong
by UnknownUnicorn6734025
2
Price Action & Psychology - Pattern & MTFAHello ! Key points Triple bottom pattern Price rejection Significant support zone Hourly chart : On that timeframe, we get a confirmation from the price rejection we see on the daily chart. The stock gapped down, triggered stop-losses and panic selling. Afterwards, we see a wide bullish candlestick (kind of "Tweezer Bottom") that has approximately the same volume. I see two different ways to play that trade : "Aggressive" entry : buying around the previous close "Safer" entry : waiting for a breakout on the hourly chart Either way, in my opinion the stop-loss should go above the Tweezer Bottom. On a 15-min chart, we see that the price action was pretty straightforward, kind of an instant correction from the morning panic. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
NYSE:UALong
by UnknownUnicorn6734025
2
Price action & Psychology - First pullback after breakoutHello ! Key points : Breakaway gap Breakout on high volume First pullback Volume sinks The stock consolidates within an ascending triangle, it gets rejected from that significant confluence zone (circled on the left). It makes higher lows but not higher highs, buying pressure slowly builds up, people gain in confidence and are willing to pay higher prices to get on board. Finally, the stock breaks out - psychological shift in people's mind, they expect the price to go higher, therefore they are willing to pay higher prices. The pullback is caused by profit-taking. In fact, we see a decrease in volume that might keep on going today. The Fibonacci Retracement is only a reference point, other people are monitoring these levels, which make them significant. We will monitor the circled zone and wait for a "confirmation" that tells us that buyers are stepping in and that sellers are losing control. Thanks for reading and if you have suggestions or want to discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
NYSE:AXLLong
by UnknownUnicorn6734025
Price action & Psychology - Inside trader's mindsHello ! Key points : Double bottom Volume on uptrends > volume on downtrends Indecision + rising volume It all starts with the halfway retracement. The stock makes a new low, buying pressure kicks in, drives price up. The halfway retracement is the result of traders taking profits, see how the volume fades ? Anyway, the momentum is not enough to break through the resistance and keep the trend going, it reverses. See how that 50% retracement seems to be a reference point, marked by the indecision candlestick (doji) and the spike in volume. The gaps on the way up tell us that buyers are really aggressive (or covering their shorts). On the way down, there's once again buying pressure (candlestick + volume) around that previous halfway retracement. Note how the volume crumbles down and the bearish candlestick marks the last burst of the downtrend. Volume is rising, there's still a healthy balance between buyers and sellers, we should see an increase in traded shares today. Summary : Those that bought too early (circled zone) either sold or are still holding (an might re-enter or add to their loser) Some will probably buy the double bottom or the just the support It is very unlikely that traders are going to short this zone Those that have an open short position will cover Thanks for reading and if you have suggestions or wanna discuss the idea, just leave a comment, I'll be happy to answer. ***Disclaimer : This is not an advice to buy the stock. Please, be aware that trading is a matter of probabilities and that it only takes ONE trader to deny your trade.***
MLong
by UnknownUnicorn6734025
1
ETHUSD Topping out? Time to Dive? BTC price dependent?ETHUSD price has rejected off the supply zone giving the first indication a correction could be upon us. I'm waiting for the break of the raising wedge before entering a short position. The conservative option would be to wait for price to break down and create a lower low before contemplating a short position. Thanks for a having a look at my analysis, all feedback is welcome. Would love to hear from you and your ideas particularly if you are seeing a long opportunity. Give me a follow and a like, to keep seeing similar charts. Thanks again
BITMEX:ETHUSD.PShort
by CoinProfiteer
13
Price action & Psychology - Triple bottom reversalHello ! Key points : Triple bottom pattern (laws of mass psychology, in my opinion a very reliable pattern) Support held despite high volume Indecision rises even though overall market turmoil ( relative strength ) Rising volume compared to the previous trading session I usually never wait for the breakout when trading double or triple bottoms. I tend to buy the bottom immediately. Therefore, I will use the 4.00 zone as my initial target. If the reversal happens and my target is reached I decide whether I hold or sell based on the current conditions. Using the S&P500 index as a guide On my S&P500 chart I have the Williams %R (3) indicator plotted. I noticed that during that market crash, whenever the indicator enters the oversold zone (< -75) the S&P500 tends to bounce back up. i.ibb.co ***Disclaimer : This is not an advice to buy the stock.*** Thanks for reading and if you have suggestions or wanna discuss the idea, just leave a comment, I'll be happy to answer.
GLong
by UnknownUnicorn6734025
Price action & Psychology - First pullbackHello ! Key points : Fading volume : The fact that volume is fading indicates that the pullback is losing momentum, we should see an increase in volume tomorrow compared to today. Interest in stock is rising. The wide range bullish candlesticks shows that bulls are strong and there's actually interest in the stocks (i.e. those that didn't trade have a chance to buy now) The stock gapped down, probably out of fear considering the overall market conditions, there's been a selling wave driving prices down but bulls caught up ***Disclaimer : This is not an advice to buy the stock. You should never ever blindly follow a trader's idea without knowing exactly what he talks about.*** Thanks for reading and if you have suggestions or wanna discuss the idea, just leave a comment, I'll be happy to answer.
TLong
by UnknownUnicorn6734025
2
Price action & Psychology - Reversal after panic sellHello ! Key points : Gap down : The stock gaps down probably because of bad news; opens at old support level Panic selling : The bad news and the gap down triggers panic selling which explains the surge in volume The stock finally settles on a previous support area Last selling burst occurs and indecision rises as volume goes back up Through this trade I want to emphasize the fact that one should be careful when evaluating the shadows (or wicks) of a candlestick . On this particular trade, there is no need to put the stop loss below the shadow, because it is the irrational behavior (fear) that formed it. Watch out the area around 7.00 as it is an important congestion zone on a weekly chart (3 years - weekly). The final target would be the 8.00 area. ***Disclaimer : This is not an advice to buy the stock. You should never ever blindly follow a trader's idea without knowing exactly what he talks about.*** Thanks for reading and if you have suggestions or wanna discuss the idea, just leave a comment, I'll be happy to answer.
PLong
by UnknownUnicorn6734025
Trend continuation after pullback - Psychology & Price actionHello ! Key points : Support on previous gaps (highlighted on the chart) 50% Fibonacci retracement, after starting a new trend, stocks tend to pullback halfway after resuming Fading volume signals the end of the current trend Indecision candlestick ("Doji") signals that indecision rises What's the plan ? From a "daytrader" perspective (that I'm not, but I have some basic knowledge), I saw that morning panic which led to a reverse and a spike to 8.10 (5 min chart). A pullback was obvious, so I placed my buy limit at 7.95 and got filled. Now I'll let the trade unfold and will add the other half on my position once the trade advances in the desired direction. The initial target is the first encountered resistance. ***Disclaimer : This is not an advice to buy the stock. You should never ever blindly follow a trader's idea without knowing exactly what he talks about.*** Thanks for reading and if you have suggestions or wanna discuss the idea, just leave a comment, I'll be happy to answer.
NYSE:SBHLong
by UnknownUnicorn6734025