The Most Reliable Trading Tool You Will Ever Use! Written by Greg Capra President and CEO of of Pristine Capital Holdings WWW. PRISTINE.COM
What is Technical Analysis? The analysis of past price changes in the hope the hope of forecasting future forecasting future price changes. changes. The studies of supply and demand in a market in an attempt to to determine determine what direction (trend) prices will continue in the future. future. Investing in in which price price movements movements are predicted from charts charts or patterns patterns of past price price movements. movements. Technical analysis is a financial markets technique that claims claims the ability the ability to forecast forecast the the future direction of security prices prices through the study of price and volume. volume.
How Will The Analysis Be Done? Types of Analysis / Methods and Technical Tools Cycle Analysis
Trendlines
Gann Analysis
Moving Averages
Astrology Analysis
Price Oscillators
Fibonacci Analysis
Volume Oscillators
Elliot Wave Analysis
Bollinger Bands – Envelops
Point and Figure Analysis
Volume Weighted Average Price VWAP
Simple Technical Analysis Pattern Recognition Price Support and Resistance Study of Price and Volume trends
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Technical analysis is about reading the interaction between buyers and sellers. That prior interaction between buyers (demand) and sellers (supply) forms chart patterns. Patterns show past beliefs and expectations of the traders that created them and where they will act again. Their thoughts and expectations of the moment will be displayed in the most recent data. There are many patterns, we must define the ones to use.
Candlestick Analysis Candle Language Produces Thoughts Proper trading is said to be proper thinking, but how do we know what to think? Pattern recognition is a recurring arrangement of price bars that suggests the future movement of prices, which guides our thoughts. These patterns communicate how traders have acted and what their beliefs ( expectations ) are in that time frame, at the moment. Candles provide a picture of those expectations on an ongoing basis. Those pictures speak to us in “ Candle Language” and are the basis for our continuous thoughts and trading decisions.
Understanding Candlesticks Bulls Win
Bears Win
Closing Price
Opening Price
Opening Price
Closing Price
Topping Tail (TT)
Momentum Slows - Neutral
Botto ming Tail (BT)
TT = Sellers have taken co ntr ol
BT = Buyers have taken contro l
What did this look like before it became a Toppin g Tail?
What did thi s loo k like before it became a Bot tom ing Tail?
Where and how these occur within a trend makes All the difference!
DEFINE A PRICE PATTERN Trading is psychological to a great extent. Let’s use that to our advantage through technical analysis. Price patterns are pictures of psychology in motion. Have you ever bought a breakout or shorted a breakdown? Have any of those breakouts or breakdowns ever failed? How did it make you feel, think and what did you do?
Shock Bar Patterns A candle is not complete until that time period ends, so don’t assume. A candle’s message will be confirmed or negated on the next candle. What were traders thinking when the bar was forming as a –WRB , and then when it became a BT ?
B
A
What are they thinking after the reversal at ( C )?
C What about the +WRB at ( B ) becoming a TT ?
Shock Bar Patterns Normal or obvious Reversals
Potent Reversals = Shocked Expectations
BOF
BBF
BDF
Shakeout
Candlestick Analysis
Can you see how various combinations of opens and closes “ speak” to us about ours and others’ expectations! Go Baby!
It gapped down near the prior low and then closed under it!
It opened ok, but closed under the prior low, and at the low of the day!
TREND and TREND REVERSALS Strong Uptrend
BO
Higher highs and higher lows. Buy pullbacks against the trend or breakouts (BO) from a base.
Short pullbacks against the trend or breakdowns (BD) from a base. Strong Downtrend
BD
All retracements stall and reverse at or above/below MS / MR .
Shock Bar Patterns increase the odds of a successful trade!
Lower highs and lower lows.
TREND and TREND REVERSALS Breakout Failure
Breakout Failure (BOF) is defined as prices moving above a consolidation and then closing back below it.
Base No stall Pivot or Swing Low
Short retracements Shock Bar Patterns increase the odds of a successful trade!
Pivot or Swing High A break of a prior swing high or after a lower low negates the downtrend and breaks above Major Resistance ( MR ) .
LH LL Downtrend Failure
LL
Buy Pullbacks
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After a break of a downtrend buy pullbacks or after a correction bar.
New high bar High prior to new low
Correction bar Break PBS
New low
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Breakdown Failure is Complete
Pullback Breakdown
Educating Investors And Traders For Success In Today’s Market!™
Shock
Shock Same as TT
Break
Educating Investors And Traders For Success In Today’s Market!™
Once a trend reversal occurs buy pullbacks and/or after a Shock Bar Pattern. Prices must trade above a bar’s high for confirmation.
Support and Resistance Analysis The Theory of Self-Fulfillment Trendlines, Moving Averages and Fibonacci Retracement levels are used to “locate” Support or Resistance. Traders ask, “Why do prices reverse there?”
They reverse there, at times, because so many “believe” they are support and resistance and act there.
If enough people believe something, whether factual or not, they can have an effect when they act on that belief (e.g., buying or selling at a MA, or T-Line).
Much of technical analysis is a Self-Fulfilling Prophecy Pristine Capital Holdings, Inc.
Prices Move Between Reference Points Traders Bid at references of Support and Offer at references of Resistance , which may create enough Demand or Supply to form reversals.
Reference points of support and resistance can be based on Actual Price or Subjective tools. When both aligned the odds are the best.
As technical traders, our job is to define a trend and reference points with a trend to assess the likelihood of trend continuation points.
Trader Pivot Lines provide a subjective, but reliable reference point that e-mini traders focus on as support and resistance. Pristine Capital Holdings, Inc.
TRADER PIVOT LINES How they are calculated Resistance 3 = R2 + ( High – Low ) Resistance 2 = Pivot + (R1 – S1) Resistance 1 = 2 * Pivot – Low Pivot Point = ( High + Close + Low ) / 3 Support 1 = 2 * Pivot – High Support 2 = Pivot – (R1 – S1) Support 3 = S2 – ( High – Low ) Midpoints are simply lines between pivots
TRADER PIVOT LINES General Trading Concepts For Trader Pivot Lines
Once a pivot line is violated, a retest of that line may be an opportunity to fade the move to it. Buying pullbacks in an uptrend to a pivot line and vice versa Against the trend, pivot lines are a lower odds tradable reversal point. Unless the move lower has become climatic. Best used for profit-taking. The addition of trend analysis, market internals and price pattern recognition will increase your odds of using these lines as “ reference points” to place a trade.
Educating Investors And Traders For Success In Today’s Market!™
Buyers at Pivot after move above Shock Bar at Pivot
Educating Investors And Traders For Success In Today’s Market!™ Retest of Pivot Line after a break and sellers Breakout
Failure
What are traders thinking after the failure? Where are they likely to act? Wait for a setup!
?
Educating Investors And Traders For Success In Today’s Market!™ Shock bar at mid-point, but trend in this time frame is not down.
Longs are caught!
Break
What happened here? What did it look like before it became a BT? What were they thinking?
Educating Investors And Traders For Success In Today’s Market!™
PP
Breakout Failure at the Pivot Point. This is an obvious reference point to sell longs, use it!
Buyers are here
Break
Mid-Point Failed attempt to move lower. You know what to do!
REVIEW Define the trend or the lack thereof Define when the trend breaks Define the reference points that buyers and sellers will use Define the price patterns are that will signal an entry Define your money management and position management Remember that much of technical analysis is a self-fulfilling prophecy, so defining where others will act is key.
FINAL THOUGHTS Price patterns are pictures of the thoughts, expectations and emotions of the traders that formed them.
When those pictures tell you that others have been caught on the wrong side of the trend and market internals, you have an opportunity to take advantage of it.
Odds of similar patterns repeating an outcome in exactly the same way are low.
That said, pattern recognition does suggest a similar outcome.
Accept the fact that you do not know what will happen next.
The odds will be on your side, if you have a method of trading that you have internalized, have confidence in – and, of course, have the discipline to foll
Thank You for Attending ! This is a great start to understanding price action and putting together a trade plan. If you have not taken a Pristine Seminar, consider it. Success in anything comes from education, then practice. We will be happy to assist you further in order to help you achieve the financial goals you have set for yourself.
In closing, we at Pristine wish you great success!
