Sunday, February 8, 2015

Gartley Pattern






The Gartley Pattern was designed as a swing  trading strategy. It was originally discovered by H.M Gartley in 1935. This pattern can be identified on any timeframe. Gartley described both buy and sell patterns identically, he had different diagrams for each. It was the AB=CD pattern within the Gartley sell pattern that led to the nickname Gartley “222.” Gartley applied this particular pattern to all the market indexes.
Larry Pesavento found about 20 years ago that by further adding the ratios from the Fibonacci summation series, he could develop a solid trading pattern. Gartley also used ratios of one-third and two-thirds with this pattern but did not use ratios from the Fibonacci summation series. The main Fibonacci retracement ratios that we apply to the Gartley pattern include:.618, and .786.
Gartley stated in his 1935 masterpiece that over a 30-year period he found these patterns to be profitable in 7 out of 10 cases. The statistics validating this are still the same as Gartley suggested over 70 years ago.

Market Structure

There are tons of different indicators that you can put on your charts to help you identify a trending market and trade with it. Many traders spend countless hours and dollars on trend-following trading systems or on indicators that just end up confusing them and making the process of trend discovery a lot more difficult than it needs to be.
As a market moves higher or lower, its previous turning points, or swing points, become reference points that we can use to help us determine the trend of a market. The most basic way to identify a trend is to check and see if a market is making a pattern of higher highs and higher lows for an uptrend, or lower highs and lower lows for a downtrend. Take a look at this simple diagrams below; it shows us the basic idea of looking for higher highs (HH) and higher lows (HL) for uptrends and lower highs (LH) and lower lows (LL) for downtrends:

Bear Continuation Pattern




Saturday, January 31, 2015

PIVOT LEVELS

Pivot Points are sub-set of Support and Resistance. This special form of projected Support and Resistance from base trading methodology used be the local traders on the floor of the exchange.

Pivot Points are calculated Price Levels that the floor traders, and those who read the tape, like to watch during the trading session.

Candlesticks - Harami



Harami

The harami is comprised of a long real body and a small real body withinnnits range. The harami is the reverse of an engulfing line. Whereas in an engulfing pattern there is a long candle engulfing the previous real body, a harami is an unusually long real body followed by a very small real body. A harami, after an advance shows that the market must have failed to maintain higher prices.

Candlesticks - The Engulfing







The Engulfing Patterns


A bullish engulfing pattern is formed when, during a downtrend white real body wraps around a black real body. A bearish engulfing pattern is completed when, during a rally, a black real body envelops a white real body.

The engulfing pattern visually shows how the opposing forces had gained control of the market. For example, a bullish engulfing pattern reflects how the bulls have wrested control of the market from the bears. A bearish engulfing pattern shows how a superior force of supply has overwhelmed the bulls. This means that the bearish engulfing pattern is more bearish than a dark cloud cover, and a bullish engulfing pattern more bullish than a piercing pattern, it is equally important to see where these patterns emerge before deciding which is more important. For instance, a piercing pattern that confirms a major support area should be viewed more likely as a bottom reversal signal than a bullish engulfing pattern that does not confirm support.

Candlesticks - Doji


Doji

Doji session has a horizontal line instead of a real body. This is because a doji is formed when the session's open and close are the same price (or almost the same). In essence the doji is echoing, on a micro scale, the indecision reflected on a more macro scale by the market's sideways action. However, a doji that emerges after the mature part of an uptrend or sell-off has a greater chance of a market turn.

Candlesticks - Spinning Tops




Spinning Tops

Small real bodies, which would tell us that the bulls and bears are in a tug of war and that there is more of a balance between supply and demand. Spinning tops, tell us that the power to move up or down is lacking, or as the ]apanese phrase it, the "market is losing its breath." Real body can be black or white.