How To Read Chart

dozu888 said:
goodness.

and honestly I am not impressed.... this reading the chart bar by bar stuff, Brooks and others already wrote extensively... and anyone who has applied this type of stuff to real trading will know, there is very little edge to be read, just by reading the bars...

the context is very important, the earning/news/story cycles how they unfold, how they affect trader sentiment etc.... the results become much better when these pieces are considered.
More...
You’re preaching to deaf ears. The bar-by-bar stuff is elementary. A certain level of intelligence is needed to see the true market structure contextually. The chart/bar stuff can provide a starting point, but most here will never evolve past that, as their mental laziness just won’t allow it.
 
The Concept of Breakouts

Sometimes in my posts, I use the word breakout. Let me clarify what meaning I put in this term.

Simply talking,

  • -> breakouts, bullish breakouts - is the process of the successful crossing of resistance line. Price struggles above resistance (or zone of weakness) and does not move back.
  • -> breakdowns, or bearish breakdowns - is the process of the successful crossing of support line. Price struggles below support line (or zone of strength) and does not move back.
  • -> fake breakouts, or traps for bulls - is the process of false crossing of resistance line. Price attracts traders in longs, because they think the advance will continue. Unfortunately for them, soon price moves back.
  • -> fake breakdowns, or traps for bears - is the process of false crossing of support line. Price attracts traders in longs, because they think the advance will continue. Unfortunately for them, soon price moves back.

Let’s go to an example.
In the morning I’ve posted this picture in Telegram:



Here is the original big picture


My goal was to turn your attention to following idea:

After period of dullness (flatty sideways movements), traders and trading bots become sensitive to breakouts as they desire to open trade at the very beginning of the planned trend.

Now turn to cluster chart. Red clusters - executed SELL orders, green clusters - executed BUY orders. Below the clusters - delta indicator, it shows the difference between BUYs and SELLs


  1. The balancing wedge, or the zone of dulling flat. We got resistance line above range, and support line below the range. The profile forms the shape of a gaussian bell. Which way the market will move from it? Here is the clue comes…
  2. Trap for bears started to form here. You see effort of sellers (red clusters) to breakdown the support.
  3. Price quickly reversed. Green clusters point on buying. Trap formed. It increases chances on genuine bullish from initial balance.
  4. here is mentioned bullish breakout (effort of buyers to overcome resistance).
Setup worked fine. And it works fine often.

Hope, this post was helpful to understand the concept of breakouts.

Thanks for following
 
I see the exhausting of uptrend on #USDJPY market and here is why:

1> the decreasing of the bullish progress
2> EVRT. The tiny range on up-bar with volume above average. This is a hidden supply.
3> No demand
4> SLKT (Trap for bulls) Note price did not reach top line of the up-trend channel.

Some support should arrive from center line. But nevertheless, In described conditions, I expect the breaking down the center channel with reaching the bottom line.

 

xcSqDGZ[1].png1550x1012 96.2 KB


AB balancing wedge is narrowing. The NS+DB sequence did show that #BTC was not ready to break down B. But this scenario remains valid as we have


  • Major zone of weakness above 9300 (from 21/Jun till 24/Sep)
  • Big SB 24/Sep
  • Fake breakout (circled blue).

The recent up-bar with big volume looks like killing SLs above 8300. Note, we have minor SB on background. Many Sellers, who entered shorts on 15th/Oct, placed their SLs above 8300. Now they knocked out. If this interpretation true, we will see a building of a Shape of weakness (Red triangle) with a new attack on line B.


Be cautious, price is moving near the center of the wedge. This is why the market is vulnerable to send confusing signals.
 
#GBPUSD is losing its bullish character

  1. I think, it was FOMO Buying culmination. Probably, some bullish news was released there. This is ultra-wide bar. Small retail traders can not move the currency rates so wide. Big professionals was active there. What was the result of that activity.

  2. #GBP was capable to reach (and even overbought) the top line before huge up-bar 1 (green). But it was incapable to reach top line of the channel after huge up-bar 1 (red circles).

  3. EVRT- sign of weakness

  4. The first Minor Bearish Cha Cha

  5. ND - No demand

  6. Supply Pressure and breakdown the support line

  7. testing the breakdown

  8. Resuming the bearish pace.
I’d like to expect the reaching of the bottom blue line.

 
When analyzing any market, the global context is vitally important.

In the case of #oil, we have:

  1. HUGE TRAP for bulls and Exploding totally sellers from market by killing their SLs. This is the starting point that produces impact over the #oil market.

  2. As a consequence after Trap we got a development of S-Wave, …

  3. …which culminated (Panic Selling moment) on 03/Oct.
Since that day, market entered consolidation zone A-B (balancing wedge).

  1. Here is a clue. Fake breakout (with an increase in volume) of line A yesterday, with a decline today.
From the arguments mentioned above, I have more bearish expectations in the nearest hours or even days.

 
LINK market overview

  1. The uptrend started (as in 95% cases) from big red downbar (trap).

  2. No Supply + Entering of Genuine demand around 2.0 level. 2$ and 2.2$ become the price of support.

  3. The volume increased up to abnormal numbers. Ultra-high volume on up-wave/bars = sign of Hidden weakness where professionals fix profits from longs using the buying rush from the ordinary public who was impressed by advance. “Oh, LINK is going to breakout above 3.0 and go to the Moon!” - they suggested. But…

  4. As a result of FOMO, LINKUSD started down-move, which culminated in minor Panic Selling Bar around old support level $2.2.

  5. NS+DB at the level of Panic selling (4) - market resumed upward movement.

  6. SLKT and the manipulative move. 3.0 still contains a lot of supply.

  7. another minor Panic Selling. The whole crypto market dumped, but LINK is feeling much better.
What is next?

While price is holding above the bottom trend line, this market has arguments for trading in the bullish team. IMO, professional buyers preparing a new attack on 3.0 level.

 
Here is an analysis of TSLA stock. I did not pay attention to its price for a long time. Chart formed a great story here.


Blue line is 200 round number level.


  1. As price broke under the blue line, market did feel some sort of Panic. The Panic increased by breaking down the support line of big range channel. … But look the volumes/price range. Narrow range amid too much volume. What does it mean? Professional buyers absorb cheap good stock.

  2. Genuine Demand Pushed Price Higher.

  3. Here is the next decline and approaching 200 line. But look the volumes this is a lack of Supply Pressure. Market experienced lack of Sellers.

  4. Fake down move (Trap) before advance.

  5. Demand up-move (probably, on good news about Earnings).
So, shorting this stock is risky. I believe, price has the potential to reach the top orange line of big multi-months channel.


 
Some good news from China has arrived. What the chart is telling?


  1. The highest volume on up-bar with the next bar down. A lot of SLs of sellers were triggered when price broke out above 10k. Many FOMO-buyers and their bots entered long (they planned new ATH above 20k). But what did happen next?

  2. ND - attempt to advance on low volume. Weak activity caused by lack of buyers - BTC is too expensive around 9800. Next SB confirmed ND.

  3. The decline culminated in Panic Selling bar around 9k. What next? We got Panic+SLKB+NS sequence around 9k.

  4. So, the appearance of this DB was very promising for bulls.

  5. But what did happen when price achieve the previous zone of weakness 9800? ND = No Demand and SLKT (Stop loss killing at Top). Bearish sequence.

  6. Here is ND+SB and Bearish Cha Cha.
So, after Major FOMO sign, 9800 is controlled by bears. Currently, the bearish wave is developing.


from the facts above, I’d like to expect more bearish development with attempt to breakdown 9k.


Remember, we have Huge 3-months 10k-13k ZOW overhead.


 


BCH is acting stronger than crypto market during the current moment. Let’s read its chart.

  1. I always claim: uptrends start from fake down-move (SLKB) in 90% of cases. here is Trap / SLKB before up-trend. Professionals did kill SLs of buyers under ‘safe’ level 200.00 before pushing price higher.

  2. Demand bar

  3. No Supply bar

  4. Demand Bar.
While you have NS+DB+NS+DB … - sit calm and wait while your longs go higher and higher.

  1. China-news-powered Pump with breaking above level of resistance (dotted level)

  2. EVRT (built-n weakness)

  3. No-Supply during testing of breakout level.

  4. Demand bar as the response to NS

  5. Here is the bar when BCH demonstrated its relative strength in comparison with TOTAL index (orange line).
What’s the outlook / idea?

I suggest BCH operators are interested in Fake penetration of 300 round number (a reversed version of bar number 1).
 
You must log in or register to reply here.
Back
Top