Technical analysis

[Kicking]

I didn't find any thread on TA, so I thought it would be great to have one to post questions/remarks regarding the use of technical analysis and/or the technical state of the market. My question is : how important is the technical picture on an EOD basis in the futures market when you trade the cash? For example today's NQ fut. candle looks much stronger than the hanging man on the cash NDX, I understand this is due to the fact that it includes the overnight action in the fut, but does it have any implication for what to expect next? I would appreciate your comments.

 

[trinfo]

Also possibly important in general is the 15 minutes of index futures trading after stocks close, which often factors in news releases after the bell.

 

[tymjr]

I personally have found EOD analysis very rewarding in helping to evaluate which side of the market I may favor. Many days EOD doesn’t give me much of an idea as to the next day’s bias but on occasion I find it has helped to determine how I may chose to play a daytrade.

For instance, I may find that we appear to be in position for a possible reversal on the daily, therefore if and when the intraday indications are to the downside I will hold a part of my short position overnight with a wide stop. If I am long in a daily area of limited upside probability I will tend to be much more conservative in my targets. In my methodology intraday indications always take priority but having observed the daily technicals can assist in my evaluation.

As far as overnight data, I think looking at the contract volume, high/low, general behavior, and how the futures trade around these areas once the pit session begins is very important. I prefer to segregate my pit and all-session charts. I try to develop a scenario for both and see how they relate to one another.