Breakouts and breakout failures: real world trading
One of the disconnects for new traders is seeing how patterns play out in the real world. When we learn patterns, we usually start from pristine, idealized examples. But in…
ChartSchool: What exactly do we mean by context? And a long trade in CCE.
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Trading lesson: copper futures
Recent action in copper futures gives us some market lessons. These can be adapted to other markets and timeframes (so if you just trade stocks or currencies, don’t skip over…
Hidden in plain sight: trading multiple timeframe influences
Multiple timeframe analysis is almost a buzzword in technical analysis. I have been involved in markets actively for two decades, and have been an active participant in dialogue about markets…
To buy or not to buy…?
We can simplify many of the problems of technical or tactical trading to one question: assume that a market just made a large move. Do we want to fade (go…
The Failure Test
Despite all the good reasons for focusing on with-trend trading, the first pattern I taught in my book was a little countertrend pattern--the failure test. Why? In this case, the…
Followthrough matters: using subjective analysis in the S&P 500
I've focused quite a bit here on quantitative aspects of trading and market analysis, and I've also just scratched the surface of the thorny subject of intuition. Today, I want…
Watch the S&P 500 index tomorrow
US Stocks stand at an important potential inflection. Structurally, we have seen much support for US stocks to emerge as the global relative strength leader, should stocks break out into…
What’s Next for the S&P 500?
[dc]L[/dc]et's take a quick look at some developing market structure in the US stock market. First of all, consider the broad context: we are firmly ensconced in summertime trading conditions.…
Trading Volatility Compression
[dc]I[/dc] want to write what might be a complicated blog post, but stick with me. I'll try to make it as clear as possible, because there is a good lesson…
Failure Test Followthrough in the EUR
[dc]T[/dc]he chart above is a daily chart of the EURUSD. I've written before about some of the challenges with using technical analysis in currencies—it's not that it can't be done,…
Chart of the Day: Managing the Failure Test in AAPL
The failure test trade in AAPL develops.
Chart of the Day: Failure Test in AAPL
A failure test in AAPL gives a long entry.
Chart of the Day: Pattern Breakdown in Corn
Grains have had dramatic uptrends for most of the summer. At A on this chart, we were looking at a possible long entry—had prices quickly recovered back above the bottom…
Chart of the Day: Failure Test in AAPL
This chart shows a clean failure test in AAPL. The pattern is a brief probe above resistance, followed by an immediate failure and sharp reversal. Many traders would be reluctant…
Chart of the Day: Breakout in the S&P 500
One of the tools I use to evaluate market action is the standard deviation spike, which expresses each day's return a standard deviation of the previous 20 trading days. (This…