Get started

Trend Analysis

Understanding Moving Averages (MA): A Beginner’s GuideMoving Averages (MA) are among the most fundamental and widely used tools in technical analysis. They smooth out price data to create a trend-following indicator, helping traders identify the direction of an asset’s trend over a specific period. What is a Moving Average? A Moving Average calculates the average price of an asset over a set number of periods. By doing so, it reduces the impact of random price fluctuations, providing a clearer picture of the trend. There are two main types of moving averages: Simple Moving Average (SMA): The SMA is the arithmetic mean of prices over a specified number of periods. Formula: Exponential Moving Average (EMA): The EMA gives more weight to recent prices, making it more responsive to price changes. Formula: Smoothing factor: How to Use Moving Averages Trend Identification: Rising MA: Indicates an uptrend. Falling MA: Indicates a downtrend. Flat MA: Suggests a sideways or range-bound market. Crossover Signals: Golden Cross: When a short-term MA (e.g., 50-day) crosses above a long-term MA (e.g., 200-day), signaling a potential uptrend. Death Cross: When a short-term MA crosses below a long-term MA, signaling a potential downtrend. Dynamic Support and Resistance: Moving averages often act as support in uptrends and resistance in downtrends. Prices tend to bounce off the MA during retracements. Combination with Other Indicators: Moving averages can be paired with RSI, MACD, or Bollinger Bands for better signal confirmation. Strengths of Moving Averages Simplicity: Easy to calculate and understand. Trend Focused: Effective in identifying and confirming trends. Versatility: Applicable to various timeframes and markets. Limitations of Moving Averages Lagging Nature: Moving averages are based on past prices, which can delay signals. Less Effective in Sideways Markets: May produce false signals in range-bound conditions. Best Practices for Using Moving Averages Choose the Right Period: Shorter periods (e.g., 10, 20) make the MA more sensitive to price changes, suitable for short-term trading. Longer periods (e.g., 50, 200) provide a smoother line, ideal for long-term trend analysis. Combine with Multiple MAs: Use a combination of short-term, medium-term, and long-term MAs to understand different trends. Context Matters: Understand market conditions. Moving averages work best in trending markets and are less reliable in choppy conditions. Example of Moving Averages in Action Imagine a stock is in a clear uptrend, with the price consistently trading above its 50-day SMA. When the price retraces and touches the 50-day SMA but bounces upward, this can act as a signal to enter a long position. If the price breaks below both the 50-day and 200-day SMAs, it may indicate a trend reversal. Conclusion Moving Averages are a foundational tool in technical analysis that helps traders identify trends, dynamic support and resistance levels, and potential entry or exit points. While they are simple to use, their effectiveness improves when combined with other indicators and a solid understanding of market dynamics. As always, backtest your strategies and adapt your moving average settings to your specific trading style and market conditions.
Education
by CRYPTONIC_trend
Reversal Trading Strategy Using GOLDEN RSI Divergence Indicator Overview Reversal trading strategies capitalize on identifying turning points in the market where a potential reversal from a downtrend to an uptrend, or vice versa, occurs. In this post, I will introduce a strategy based on divergence patterns spotted with a custom RSI (Relative Strength Index) indicator. This method enhances traditional RSI analysis by making divergence detection clearer and actionable. By combining it with a strong understanding of price action, traders can gain an edge in timing market reversals effectively. Key Features of This Strategy Divergence Analysis: The core of this strategy is to identify bullish or bearish divergences between the RSI and price action. Custom RSI Indicator: The custom RSI indicator simplifies divergence detection by highlighting critical levels and marking divergence points directly on the chart. Confluence with Price Action: Reversals are validated using trendlines, support/resistance zones, and candlestick patterns. Chart Example: S&P 500 Index In the attached chart: Bullish Divergence: The price made lower lows, while the RSI made higher lows (indicated by green arrows). This divergence signaled weakening bearish momentum and potential reversal. Entry Point: A clear breakout above the trendline validated the reversal. Enter long positions near this breakout level. Stop Loss: Place the stop loss just below the recent swing low. Target Profit: Aim for the next major resistance zone or use a fixed risk-reward ratio (e.g., 1:2 or 1:3). How to Spot Divergence Bullish Divergence: Price forms lower lows. RSI forms higher lows. This indicates waning bearish pressure and a potential upward reversal. Bearish Divergence: Price forms higher highs. RSI forms lower highs. This suggests weakening bullish pressure and a possible downward reversal. Why This Strategy Works Strength of RSI Divergence RSI divergence reflects the loss of momentum in the current trend. By detecting it early, traders can position themselves ahead of major reversals. Combining Confluence Factors The success rate of this strategy increases when RSI divergence aligns with other technical factors like: Horizontal support or resistance levels. Trendline breaks. Volume spikes. Practical Tips for Using This Strategy Use Multiple Timeframes: Confirm divergence signals on higher timeframes for stronger setups. Avoid Overtrading: Only act on clear and validated divergence setups to minimize false signals. Risk Management: Never risk more than 1-2% of your trading capital on a single trade. Conclusion This custom RSI-based divergence strategy is a powerful tool to identify high-probability reversal setups. When combined with proper risk management and confluence analysis, it can significantly improve trading outcomes. Start experimenting with this strategy on your demo account and refine your approach before deploying it in live markets. If you have questions or want to discuss this further, feel free to comment below!
SP:SPXEducation
by thejamiul
20
Example of Interpretation of USDT, USDC, BTC.D, USDT.D Hello, traders. If you "Follow", you can always get new information quickly. Please also click "Boost". Have a nice day today. Trading Strategy ------------------------------------- (USDT 1D chart) USDT is a stable coin that has a great influence on the coin market. Therefore, the gap decline of USDT is likely to have a negative impact on the coin market. Since the gap decline means that funds have flowed out of the coin market, it can be interpreted that funds have currently flowed out through USDT. (USDC 1D chart) USDC cannot help but have a lower influence on the coin market than USDT. The reason is that USDC markets are not operated in all exchanges around the world. In other words, USDC can be seen as having limitations compared to USDT as an American investment capital. Therefore, the gap increase of USDT is likely to have a short-term impact on the coin market. ---------------------------------- (BTC.D 1D chart) You can refer to BTC dominance to choose which side (BTC, Alts) to trade in the coin market. Since the rise in BTC dominance means that funds are concentrated on BTC, it can be interpreted that Alts are likely to gradually move sideways or show a downward trend. For this interpretation to be meaningful, USDT dominance must show a downward trend. (USDT.D 1D chart) Because the decline in USDT dominance is likely to result in a rise in the coin market. Therefore, if USDT dominance rises, it may be a good idea to pause all trading and take a look at the situation. - You can roughly figure out whether funds are flowing into or out of the coin market with USDT and USDC. You can roughly figure out which direction the funds in the actual coin market are moving with BTC dominance and USDT dominance. As I am writing this, BTC dominance is rising and USDT dominance is falling, so it is better to trade BTC rather than Alts. - Thank you for reading to the end. I hope you have a successful trade. --------------------------------------------------
CRYPTOCAP:BTC.DEducation
by readCrypto
1
VARAUSD vs MATICUSD - This is a bull flagIf you only trade the VARA chart without understanding how the market is trading within the lines of correlation, you will mistaken one pattern for another. The two market patterns I have circled are both bull flags. The problem is that VARA has a much lower amount of liquidity i.e. standing buy orders to support lower order walls. This causes patterns on this chart to become smeared. This is why a trader must always compare against correlated assets. Which is why my chart will often have Polygon right up next to VARA even though VARA is probably going to show a little tigher correlation with Polkadot. It is a preference I. DXY, USDX, and a number of other indexes correlate to Bitcoin however often either against or with and overall doesn't change much on the daily. It doesn't take long to see correlation since often whenever USDX or DXY goes up JPYUSD or BTC will fall. Reverse correlation most of the time although JPYUSD has been a bad example overall since that asset typically tanks long term. And going back to the current chart, the chart patterns are ugly and the overall market structure is full of volatility, fear and greed. I use this to my advantage.
COINBASE:MATICUSDEducation
by fritbjorn
BITCOIN // When was the best time to go long?Actually, 2 weeks before Trump became elected president, BITSTAMP:BTCUSD printed a nice trigger candle (Marubozu) on the weekly, with waves already up, breaking the previous counter impulse base, and the countertrend line, at the weekly target fibo 61.8. The rest is history. Did anyone here has this idea back then? Anyone thought it would go to the weekly target fibo 300 with one wave? ——— We may not know what will happen, but we can prepare ourselves to respond effectively to whatever unfolds. Stay grounded, stay present. 🏄🏼‍♂️ Your comments and support are appreciated! 👊🏼
BITSTAMP:BTCUSDEducation
by TheMarketFlow
Decoding the BTC-ES Correlation During FOMC Meetings1. Introduction The Federal Open Market Committee (FOMC) meetings are pivotal events that significantly impact global financial markets. Traders across asset classes closely monitor these meetings for insights into the Federal Reserve’s stance on monetary policy, interest rates, and economic outlook. In this article, we delve into the correlation between Bitcoin futures (BTC) and E-mini S&P 500 futures (ES) during FOMC meetings. Focusing on the window from one day prior to one day after each meeting, our findings reveal that BTC and ES exhibit a positive correlation 63% of the time. This relationship offers valuable insights for traders navigating these volatile periods. 2. The Significance of Correlations in Market Analysis Correlation is a vital tool in market analysis, representing the relationship between two assets. A positive correlation indicates that two assets move in the same direction, while a negative correlation implies they move in opposite directions. BTC and ES are particularly intriguing to study due to their distinct market segments—cryptocurrency and traditional equities. Observing how these two assets interact during FOMC meetings provides a window into macroeconomic forces that affect both markets. The key finding: BTC and ES are positively correlated 63% of the time around FOMC meetings. This suggests that, despite their differences, both markets often react similarly to macroeconomic developments during these critical periods. 3. Methodology and Data Overview To analyze the BTC-ES correlation, we focused on a specific timeframe: one day before to one day after each FOMC meeting. Daily closing prices for both assets were used to calculate correlations, providing a clear view of their relationship during these events. The analysis includes data from multiple FOMC meetings spanning several years. The accompanying charts—such as the correlation heatmap, table of BTC-ES correlations, and line chart—help visualize these findings, highlighting the periods of positive and negative correlation. Contract Specifications: o E-mini S&P 500 Futures (ES): Contract Size: $50 x S&P 500 Index. Minimum Tick: 0.25 points, equivalent to $12.50. Initial Margin Requirement: Approximately $15,500 (subject to change). o Bitcoin Futures (BTC): Contract Size: 5 Bitcoin. Minimum Tick: $5 per Bitcoin, equivalent to $25 per tick. Initial Margin Requirement: Approximately $112,000 (subject to change). These specifications highlight the differences in notional value and margin requirements, underscoring the distinct characteristics of each contract. 4. Findings: BTC and ES Correlations During FOMC Meetings The analysis reveals several noteworthy trends: Positive Correlations (63% of the time): During these periods, BTC and ES tend to move in the same direction, reflecting shared sensitivity to macroeconomic themes such as interest rate adjustments or economic projections. Negative Correlations: These occur sporadically, suggesting that, in certain scenarios, BTC and ES respond differently to FOMC announcements. 5. Interpretation: Why Do BTC and ES Correlate? The observed correlation between Bitcoin futures (BTC) and E-mini S&P 500 futures (ES) around FOMC meetings can be attributed to several factors: Macro Sensitivity: Both BTC and ES are heavily influenced by macroeconomic variables such as interest rate decisions, inflation expectations, and liquidity changes. The FOMC meetings, being central to these narratives, often create synchronized market reactions. Institutional Adoption: The increasing participation of institutional investors in Bitcoin trading aligns its performance more closely with traditional risk assets like equities. This is evident during FOMC events, where institutional sentiment towards risk assets tends to align. Market Liquidity: FOMC meetings often drive liquidity shifts across asset classes. This can lead to aligned movement in BTC and ES as traders adjust their portfolios in response to policy announcements. This correlation provides traders with actionable insights into how these assets might react during future FOMC windows. 6. Forward-Looking Implications Understanding the historical correlation between BTC and ES during FOMC meetings offers a strategic edge for traders: Hedging Opportunities: Traders can use the BTC-ES relationship to construct hedging strategies, such as using one asset to offset potential adverse moves in the other. Volatility Exploitation: Positive correlation periods may signal opportunities for trend-following strategies, while negative correlation phases could favor pairs trading strategies. Risk-On/Risk-Off Cues: The alignment or divergence of BTC and ES can act as a barometer for market-wide sentiment, aiding decision-making in other correlated assets. Future FOMC events could present similar dynamics, and traders can leverage this data to refine their approach. 7. Risk Management Considerations While correlations provide valuable insights, they are not guaranteed to persist. Effective risk management is crucial, particularly during volatile periods like FOMC meetings: Stop-Loss Orders: Ensure every trade is equipped with a stop-loss to cap potential losses. Position Sizing: Adjust position sizes based on volatility and margin requirements for BTC and ES. Diversification: Avoid over-concentration in highly correlated assets to reduce portfolio risk. Monitoring Correlations: Regularly assess whether the BTC-ES correlation holds true during future events, as changing market conditions could alter these relationships. A disciplined approach to risk management enhances the probability of navigating FOMC volatility successfully. 8. Conclusion The correlation between Bitcoin futures (BTC) and E-mini S&P 500 futures (ES) around FOMC meetings highlights the interconnected nature of modern financial markets. With 63% of these events showing positive correlation, traders can glean actionable insights into how these assets react to macroeconomic shifts. While the relationship between BTC and ES may fluctuate, understanding its drivers and implications equips traders with tools to navigate market volatility effectively. By combining historical analysis with proactive risk management, traders can make informed decisions during future FOMC windows. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
CME_MINI:ES1!Education
by traddictiv
Example of how to trade without chart analysis Hello, traders. If you "Follow", you can always get new information quickly. Please also click "Boost". Have a nice day today. ------------------------------------- Since the coin market can be traded 24 hours a day, 365 days a year, gaps do not occur as often as in the stock market. (However, gaps may occur frequently in exchanges with low trading volume.) In any case, I think that these movements provide considerable usefulness in conducting transactions. Sometimes I told you to buy when the price drops by -10% or more. Today, I will tell you why. -------------------------------------- In order to trade, you must have basic knowledge of charts. Otherwise, you are likely to conduct transactions incorrectly due to volatility. However, such cases are less common in the coin market than in the stock market. One of the reasons is that the current coins (tokens) are not being used for actual business purposes. So, I think there are quite a few issues that cause volatility other than charts like stocks. - If the price falls one day and falls by about -10% from the high before a new candle is created, I buy. The next day, if it falls by about -10% from the high again, I buy again. When it falls by about -10% like this, I continue to buy in installments. That's why I need to adjust my investment ratio. - If I buy like that, there will come a point where my price rises more than the average unit price. In that case, when I'm making a profit, I sell the amount corresponding to the purchase principal in installments and leave the number of coins (tokens) corresponding to the profit. If you want cash profit, you can sell a certain portion in installments. Also, on the contrary, when it rises by about +10%, we proceed with a split sale. - As shown in the example chart, you can see that there are not many cases where it rises by -10% or +10%. However, since it occurs more often in the case of altcoins than in BTC or ETH, you should pay special attention to adjusting your investment ratio when trading altcoins. That is why you must check the price fluctuation range 1-3 hours before a new candle is created on the 1D chart. This method is a method that can be traded even if you lack knowledge about charts. If you let go of your greed a little and have the ability to split sell when you are making a profit, you will be able to meet the moment when a crisis becomes an opportunity. - Thank you for reading to the end. I hope you have a successful trade. --------------------------------------------------
Education
by readCrypto
The Best Phase of the Trend: The Expansion PhaseBeing a successful trader requires the ability to identify the phase of the trend with the highest probability of success. The best opportunities arise during the expansion phase, where the prevailing trend resumes, pushing the market to new highs or lows. This phase is characterized by swift, decisive market moves with minimal pullbacks, aligning strongly with the overall trend. My Trading Steps: 1. Define the Primary Trend on the Daily Identify the dominant trend (uptrend or downtrend) to establish the broader market context. 2. Look for a Countertrend on H4/H1 Spot corrections or pullbacks against the primary trend, signaling potential setups. 3. Find a Trigger Candle Watch for a Marubozu-like candle at the zone of the countertrend line break or the last clean, untested breakdown. 4. Exit Rules Exit the position if the price closes below the trigger line. 5. Take Profits Target key Fibonacci levels and significant support/resistance zones. a countertrend on H4/H1 This is an 80% Setup: Targeting Fibo 138.2 The strategy has an 80% success rate when the target is set to the Fibonacci 138.2 level, calculated from the closing prices of the correction. This precise targeting aligns with the expansion phase of the trend, ensuring high-probability entries and exits while maximizing potential profits. ——— We may not know what will happen, but we can prepare ourselves to respond effectively to whatever unfolds. Stay grounded, stay present. 🏄🏼‍♂️ Your comments and support are appreciated! 👊🏼
TVC:DXYEducation
by TheMarketFlow
A big picture analysis of stock trends within a sectorThis kind of analysis helps in picking right stocks like the big boys do. The chart above showcases the normalized EMA lines of all stocks within the Consumer Services sector. By utilizing EMA(moving averages) lines instead of stock prices, we can observe a smoother and clearer representation of price movements across various stocks. On the left side of the chart, the upper half displays the price chart of Marriott International (MAR), while the bottom half illustrates a custom candlestick chart composed of approximately 25 stocks within the Consumer Services sector. This sector chart reveals a striking similarity to MAR's price movement, despite MAR's relatively small 6% weightage in the sector calculation. A closer examination of the EMA lines on the right side of the chart reveals that most stocks within the sector have exhibited similar price movement, underscoring the high correlation among these stocks. This phenomenon of similar price movement suggests that stocks within a sector tend to move in tandem, offering valuable insights for sector-based trading strategies. Few EMA lines(stocks) are flat or went down and most other stocks went up in line with the sector. Investors who invested in those uptrending stocks will take profits while the ones who invested in those non performing stocks would lose out on the profitable opportunity that created by sector up movement. Stay tuned for my next update, where I'll reveal how to use performance lines beside sector chart to uncover top-performing stocks within the sector that outshine their average-returning peers. What's your take on this sector-wide correlation? Share your thoughts in the comments below!
NASDAQ:MAREducation
by JKReddyLin
NYKAAOn this chart, there are lines called "Fibonacci retrenchment levels," which help predict where the price might go up or down. Here's the simple breakdown: The chart shows different levels where the price could stop and change direction. These levels are like markers on the chart. The blue arrow on the chart suggests that the price might go up. There's also a note saying that the price might increase. In short, the chart is trying to predict that the price will go up and shows some important points where it might change direction. If you have any specific questions, feel free to ask!
NSE:NYKAAEducation
by iVishalPal
WHAT IS QM (SIMPLY)Quasimodo trading setup or QM is an advanced reversal pattern in which its formation signals the end of a trend, and most traders use its variants to improve trading results in the forex market. If u don't understand it, there is high possibility for stop hunting. u may heard HEAD AND SHOULDER pattern, yes? QM is exactly HAD (head and shoulder) and u can trade it at: FL'S _ S&D ZONES and SR lines. it is also a Great show for money back and u can short it at all. What invalidates it? only Do not ENG the first support.
COINBASE:SHIBUSDEducation
by abdollah1386
Anatomy of a Breakout (Orderflow)I am sharing my current approach for trading breakouts , please share your opinion on the comments section so we can have a discussion. Used Tools: Number Bars (Footprint chart) Liquidity Heatmap Volume Delta Volume Support and Resistance ATR For bullish resistance breakout z we setup alarms that alerts us when price is 2 atr below the resistance when alarm triggered we set to watch as price approaches towards the resistance we expect higher volume and higher delta advance on poc and value areas and especially positive readings on footprint on the upper side in terms of liquidity we spot a vacuum zone in the target direction right after the resistance for price to advance and Liquidity thinning just below the resistance (indicates sellers pulling orders) as we breakout we spot a huge spike in the volume and delta indicating resting orders absorbed by the market buyer to confirm we look for not thin prints in the upper side of the candle but a good value area indicating price is doing business over there we wait for a confirmation candle with similar profile see liquidity flip at resistance becoming support then enter we also consider higher timeframe structure is it trending if ranging where is the range etc and asses volality in terms of is it increasing meaning there is enough volality for a breakout For exit we target the end of the vacuum zone aka nearest liquidity or nearest market structure, or a reversal in orderflow. For bearish support breakout We set up alarms that alert us when the price is 2 ATR above the support. When the alarm is triggered, we start monitoring closely. As the price approaches the support, we expect higher volume and higher negative delta, with the POC (Point of Control) and value areas advancing downward. On the footprint chart, we look for particularly negative readings on the lower side. In terms of liquidity, we identify a vacuum zone below the support, indicating room for the price to drop, and observe liquidity thinning just above the support (indicating buyers pulling their orders). As the breakout occurs, we expect a large spike in volume and negative delta, signaling that resting buy orders have been absorbed by market sellers. To confirm, we look for no thin prints on the lower side of the candle and a well-formed value area below the support, showing that price is establishing value there. We then wait for a confirmation candle with a similar profile and observe a liquidity flip where support turns into resistance before entering the trade. We also assess the higher timeframe structure, determining whether the market is trending or ranging, and identify the location of the range if applicable. Additionally, we evaluate volatility to ensure it is increasing, indicating sufficient energy for the breakout. For exit we target the end of the vacuum zone aka nearest liquidity or nearest market structure, or a reversal in orderflow. Additional Notes: S/R lines defined based on daily graph anti trend consolidation zones we are not defining numeric tresholds because context matters
Education
by mertenes3
2
Festive Learning: Using the MACD to Determine a TrendIn previous posts within this series, we have covered, Bollinger Bands and moving averages, where we’ve shown how each technique can help determine the trending condition of an asset. If you haven’t already, please look back at our timeline to view these posts. Now we want to look at another trending indicator, which can help to provide a quick and easy read of the current trend. This is called the Moving Average Convergence/Divergence indicator, or MACD for short. The MACD uses 12 and 26 day exponential moving averages (EMAs), which are the default settings within the Pepperstone charting system. Exponential averages differ from simple moving averages as they place greater emphasis on the latest closing data for a particular instrument. This goes someway to try and overcome the issue of averages being lagging in nature. By giving the latest closing levels greater importance within the exponential calculation, these averages can turn more quickly than a simple average, to reflect price direction changes earlier. What is the MACD and How Does it Use Moving Averages? The MACD uses 12 and 26 day EMAs and measures the gap between the two. This is important as the 12 day EMA will follow the price action of an instrument more closely than the 26 day EMA. Meaning, as prices rise above the averages in an uptrend, the gap between the shorter and longer term EMA increases in a positive way. While in a downtrend as price falls below the 2 declining averages, the gap increases in a negative way. Let’s look further at the daily chart of AUDUSD and add the MACD indicator to see how this works in practice. The blue line of the indicator shows the gap between the 2 exponential moving averages, while the red line is a 9 day moving average of the indicator line. What Does the MACD Show, and How Can We Use This to Help Within Our Day to Day Trading? It’s a trending indicator, so we use it to confirm the trending condition of an instrument, but we also use it to help us decide if whether our sentiment towards that instrument should be positive or negative. There are 4 possible signals we can highlight by using the MACD. These are, • an aggressive uptrend, • an aggressive downtrend, • a correction within an uptrend • a correction within a downtrend. An Aggressive Uptrend Signal. This is where the rising MACD indicator line (blue line on the MACD chart) is above zero and above its own average. This reflects the 12 day EMA being above the 26 day EMA, and the gap between the two averages is increasing, as the price of an instrument moves higher. This set-up reflects when sentiment should be positive towards an instrument, as the potential is that the current uptrend could continue. Aggressive Downtrend Signal The aggressive downtrend signal is when the MACD indicator line (blue line on the MACD chart) is falling below both zero and its own average. This reflects where the declining 12 day EMA is falling below the declining 26 day EMA, as both averages track the declining price of an instrument. This can highlight when sentiment should be negative towards an instrument because the current downtrend may extend further. But what about consolidation signals? Consolidation Within an Uptrend A consolidation within an uptrend can develop when the MACD indicator line (blue line on the MACD chart) while still above zero has crossed below its own moving average (re line on the MACD chart). This is not a negative signal because the MACD line is still above zero suggesting an uptrend is currently in place, but it highlights a reaction to the recent price strength is appearing and that a possible consolidation within the uptrend may materialise. It can suggest a period where we may wish to close any long positions in the instrument at this point and revert to the sidelines, as a downside correction could be due. We would then look for the MACD line (blue line on the MACD chart) to either break below zero to suggest a downtrend is now evident, or the more aggressive uptrend to resume if the MACD line breaks back above its own average. Consolidation Within a Downtrend A consolidation within a downtrend is seen when the MACD line (blue line on the MACD chart) is still below zero but has crossed above its own moving average (red line on MACD chart). Here, we may want to close any potential short positions, as a potential upside recovery may be developing. This is not a positive signal because the MACD line (blue line on the MACD chart) is still below zero highlighting a downtrend is still in play, but suggests a reaction to recent price weakness is materialising and that a recovery is possible within the on-going downtrend. We would then look for the MACD line to either break above zero to suggest an uptrend for the instrument could be starting, or for prices to resume their downside moves and for the MACD line to break under its own average (red line on MACD chart) to highlight the more aggressive downtrend is still dominating. We can use these signals to either initiate outright trades, or to help us gauge the trending set-up within any instrument at any given time. The MACD indicator could then be combined with other techniques to help time trade entry within the direction of the confirmed trend, which we hope to cover in future posts. So, in recent weeks we have looked at various techniques and indicators to help us gauge the trending condition of an asset at any given time. Each can be used either on their own or in combination with the other and price patterns, but we’re sure you will find them very useful to incorporate within your own analysis and trading. The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research, we will not seek to take any advantage before providing it to our clients. Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.
Education
by Pepperstone
1
Stock Market Logic Series #11If you are not adding the pre-and-after-hours of trading on your chart, you don't actually see the full picture of your trading analysis. A lot of times, the market makers will push the price on the pre/after-hours times on a light volume, and will define the true low or high of the day, where you could have gotten inside with a much better price and stop placement, so when the trading hours starts, you don't feel lost that you don't have a close risk point to put your stop at. Also, in those outside-hours, you can clearly see a much more sensible picture where the trendlines are much more clear and it is clear what the price is doing. Also, I don't even talk about when EARNINGS are happening... and there is a high chance for gap to happen in one direction or the other. After a gap happens, if you only look on the trading hours, you have only the information of the first 5 min of the day so you have some estimation of what could be the high or low of the day, but looking at the pre-market you could see what are the possible true high or low of the day, which is completely different. Also, after a gap happens, your indicators are "wrong", since they miss information. As you go into a higher frame this becomes less important, but still... some crazy huge moves start in the pre/after-hours and the price just never comes back, it just flies to the moon. So why not position yourself at a better price with better stop placement? The logic behind it, is that if BIG money wants a stock badly... he will buy it whenever it is possible and available before the other BIG money will snatch it from it... Look how clear price action looks in this chart:
NASDAQ:TSLAEducation
by ZoharCho
15
Dow Jones Trend Day Setup 5* OpportunitiesMy goal going forward into 2025 is to only trade the Parabolic Trend trades and to master them. They happen roughly 5-8 times per month. Just catching 1 of these per month is all I need. Using 3% risk per one of these setups can deliver 15-20% gains. The universal entry criteria is the 5 minute close back inside the 20sma. The timeframe for entries are either 1 hour before the open, the open, and 1 hour after the open. Profit targets are generally until the close or a range expansion target of 1-2 times the Asia/London box. Below are multiple charts of the same setup with the green box being the ideal entry. If I can only trade 1 trade PER MONTH, this is what I will focus on.
CBOT_MINI:YM1!Education
by Dow_Jones_Maestro
1
Fed Rate Expectations: How Are They Formed?Changes in the Federal Reserve's funds rate have far-reaching implications for nearly all existing assets. When the rate increases amidst moderate inflation, the U.S. dollar TVC:DXY typically strengthens, attracting capital from both the cryptocurrency and stock markets. Conversely, if inflation is rising rapidly and the Fed is compelled to aggressively raise rates to stabilize the economy, investors often interpret this as a sign of underlying trouble, prompting them to shift their assets into TVC:GOLD . However, it is essential to recognize that the Fed’s decisions are reactions to prevailing economic conditions. More crucially, market expectations regarding the Fed's rate movements—shaped by collective sentiment—play a significant role in shaping economic outcomes. This post explores the factors that form these expectations. 📍 Key Indicators Influencing Expectations for the Fed Funds Rate The market tends to respond significantly only when actual changes in the funds rate diverge from expectations. If adjustments align with market forecasts, the exchange rate of the U.S. dollar typically remains stable. Thus, accurately predicting the Fed's actions is vital for investors and traders. 1. Labor Market Dynamics The labor market is a primary focus for the Fed. The Bureau of Labor Statistics (BLS) releases employment reports every Friday, providing insight into unemployment rates. The Fed maintains a forecast range for acceptable unemployment levels—generally between 4.2% and 4.8%—indicating economic balance. An uptick in unemployment signals economic weakness, often prompting a reduction in the funds rate. Conversely, a decline in unemployment raises concerns about potential economic overheating, which could lead to tighter monetary policy. 2. Inflation Trends The Fed’s target inflation rate is set at 2%. As inflation rises, the Fed typically increases the funds rate to curb borrowing. This was clearly illustrated during the 2022-2023 period, where persistent inflation above 8% led to a series of rate hikes. In contrast, deflation would necessitate maintaining ultra-low funds rates. Additional indicators to monitor include wage trends, inflation expectations, and the consumer price index (CPI). 3. Overall Economic Health Gross Domestic Product (GDP) is a key indicator of economic health. Although GDP data is often retrospective, it reflects long-term economic trends. A decline in GDP may prompt the Fed to adopt stimulative monetary policies. Analysts often utilize the GDPNow model, developed by the Federal Reserve Bank of Atlanta, to obtain real-time estimates of U.S. GDP growth. 4. Treasury Yield Curve The yield curve illustrates the relationship between bond yields of different maturities from the same issuer. A flattening yield curve typically signals economic slowdown, while long-term bonds yielding less than short-term bonds can foreshadow a recession. The Fed could respond to such signs by adjusting funds rates higher depending on the crisis’s underlying causes. 5. Global Economic Influences Economic conditions in other major economies, particularly China and the European Union, can indirectly impact the U.S. economy due to deep economic ties. Monitoring central bank funds rates and the Purchasing Managers’ Index (PMI) in these regions is essential. 6. The Dollar’s Exchange Rate Against Key Currencies A strong U.S. dollar can adversely affect American exporters. If other central banks, such as the Bank of Japan or the European Central Bank, adopt accommodative monetary policies, the Fed may also consider lowering rates to avoid a detrimental trade balance caused by a strengthening dollar. 7. Market Expectations Investor sentiment creates a feedback loop. With over 50% of Americans investing in equities, a hawkish stance on funds rates tends to increase bond yields and instigate a sell-off in securities, negatively impacting overall economic wealth. Investors’ anticipation of potential rate cuts can pressure the Fed to align with these expectations. 8. Communication from Fed Officials The rhetoric from Fed officials often hints at future monetary policy, providing insights into rate expectations based on their communications. Numerous indicators, including analysts’ forecasts and futures trading on key rates, contribute to understanding the Fed's policies. Due to the complexity of these influencing factors, relying solely on fundamental analysis for trading is not advisable for beginners. 📍 Conclusion Forecasting changes in the Fed's funds rate often begins with the first clear signals about the Fed's potential actions. The primary motivations guiding the Fed are the control of inflation and the management of unemployment—making these two indicators crucial for predictions regarding monetary policy. Additionally, it is essential to consider fundamental factors impacting other major currencies. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment 📣
Education
by Lingrid
3