Trade Chart Patterns Like The Pros
Don't read this book - MAKE MONEY WITH IT Trade Chart Patterns Like The Pros by Suri Dud-della is one of those rare opportunities to build a base of knowledge that can take you further each time you trade. Suri has laid out an indispensable tome on trading chart patterns based upon his real-life experiences in a format that will work well for the spectrum cf investors - from novice to expert. Trade Chart Patterns Like The Pros stays focused and does not overwhelm you with mathematical...
Linear Regression Channel
A Linear Regression Channel LRC is created by drawing an equal Standard Deviation SD distance from the Linear Regression based trend line. A Linear regression trend line shows equilibrium prices, where as Linear regression channels show the deviation of prices from the equilibrium or center line. A Linear regression channel is plotted on the price chart using the least squares method. In a LRC, the bottom channel indicates support and the top trend line indicates resistance. Prices trade within...
Fibonacci Bands
Fibonacci Bands are derived from Fibonacci ratios expansion from a fixed moving average. These bands help traders find key areas of support and resistance. Fibonacci bands are computed by adding a Fibonacci ratio distance Up and Down from a key moving average 21, 34, 89 periods . An 8 period average of True range is computed. The multiples of Fibonacci ratios of this range are added to the fixed moving average to compute Fibonacci Bands Fib. Bands formulas are provided below . One of the best...
Trading Spike and Ledge Pattern
The example above illustrates a Spike and Ledge pattern from the QLogic QLGC daily chart. QLogic made a new high in November, 2006 and closed near 23. The last few days in November, 2006 were of high volume trading. After making a new high, QLogic attempted to sell-off and formed a Ledge pattern with matching highs and lows. In January 2007, QLogic broke out of the Ledge pattern and presented a short trading opportunity. 1. Enter a short trade below the low of the breakdown bar at 21.50 2....
Trading Three Hills and A Mountain
Trading Three Hills and A Mountain Pattern The example above shows the Three Hills and a Mountain pattern from the daily Silver futures chart ZI . From July 2006 to September 2006, Silver futures traded from 10.800 to 13.300 in a Three Hills and A Mountain pattern. A trend line was drawn in the chart above connecting the bottom of the Three Hills. In September 2006, Silver futures closed below the trend line at 12.000, signaling a potential short-trade. The short trade target is set for 62 of...
Spike and Ledge Pattern
The Spike and Ledge pattern was first defined by Larry Connors and Linda Raschke in the book, Street Smarts. As the name suggests, markets make a climax high or climax low New High or New Low spikes followed by a resting point or ledge then a reversal of the prior trend. A Ledge pattern is defined as a series of bars with matching lows and highs within a certain number of bars, namely 20. Usually ledge patterns are considered as a resting point before markets pick a clear direction, which is...
Trading Crown Bullish Pattern
The example above illustrates a Bullish crown pattern from the Nasdaq futures NQ weekly chart. NQ made series of Fibonacci based swings to form a Crown pattern. The swing BC is 1.27 of AB and CD is 1.27 of BC and DE is 0.618 of BC. After series of spikes, look for a trend reversal to close above the first swing high at B. 1. Enter a long trade above level B. 2. Place a stop order below the low of recent swing low at E. 3. Target a major swing high prior to the crown pattern formation. Chapter...
Trading Globex Pivots
The chart above shows Globex pivot values from the Dow YM Emini Futures 15 minute chart. The chart shows January 22nd and January 23rd Globex pivots. On most trading days, when markets trade through Globex lows, it strongly suggests a weaker market, and when markets trade above the Globex highs it suggests a stronger market. On January 22nd, YM traded below the Globex low during the first hour at 12600 and traded all the way to a low of 12500. On January 23rd, YM traded above the Globex high...
ZigZag Patterns
Market prices move in a non-linear format and form peaks and troughs to signal the end-of-trends and the begin-of-trends. Connecting these peaks and troughs generate a pattern called ZigZag, which are used in Elliott Waves to detect various waves, using Fibonacci retracement to detect price clustering sequences. ZigZag patterns are also used to detect price patterns like M and W patterns. The construction of ZigZag patterns includes finding the key peaks and troughs with pivots and determining...
Trading Fibonacci Zone Pivots
ER2.D - 610 Tick Bara L 811.40 -8.00 ER2.D - 610 Tick Bara L 811.40 -8.00
Trading Bearish Crown Pattern
The example above illustrates a Crown pattern from the Russell 2000 EMini futures chart. On April 04, 2007, during the morning session, ER2 traded higher and formed a Crown pattern based on Fibonacci ratios. The pattern continued its down trend after trading below recent swing low at 817. After a series of spikes, a short signal was triggered below the first swing low at D level. 1. Enter a short trade below the low at D level 817 . 2. Place a stop order above the E level at 818.7 3. Target a...
Trading Gartley Bullish Pattern
The example above shows a bullish Gartley formation from the daily GE stock chart. From mid September 2006 to November 2006, GE formed a Gartley formation. The B level retracement was 60.1 near the minimum of Gartley's requirement. The PRZ level was formed at 88.6 area at D. After D level, the price action is closely watched for a long trade entry. GE made higher-highs from D level suggesting a completion of the Gartley formation. A long entry is triggered at 35.35 area with a stop below D...
Trading Bearish Crab Pattern
The example above illustrates a bearish Crab pattern from Merck's MRK daily chart. MRK formed a bearish Crab pattern as it rallied from 43 to 53 from February 2007 to May 2007. After completion of the PRZ at D level, a reversal bar from the PRZ confirmed the completion of the Crab pattern. A short trade is triggered at the 51 level. 1. Enter a short trade below the low of the confirmation bar at 51. 2. Place a stop order above the high of the D level at 52.75. 3. Targets are set at X level at...
Trading Bearish Bat
The example above shows a bearish Bat formation from the NASDAQ futures NQ chart. NASDAQ futures formed a bearish Bat from January to April in 2006 from the range of 1872 to 1845. The B retracement level was at 51.3 confirming the Bat pattern. The D level was formed at 0.886 of XA range. A PRZ was computed from 1845 to 1853 levels for a reversal at D. Once prices traded inside the PRZ, a reversal bar is anticipated to signal a short trade. 1. Enter a short trade below the low of the reversal...
Trading Donchian Channel 1
The example above illustrates a Donchian channel from the Johnson and Johnson JNJ daily chart. A 4-week Donchain channel is plotted on JNJ's daily chart. In late July 2006, a long signal was triggered when JNJ closed above the 4-week upper channel at 62. The Average True Range 10 period for JNJ was 0.85 cents. 1. A long trade was entered above the breakout bar's high. 2. A stop order was placed at the mid Donchain channel line and used as a trail stop. 3. Targets were either set at fixed ATR...
Fibonacci Zone Pivots
John T. Jackson described a concept called Zone Probability Pattern Analysis, in his book Detecting High Profit Day Traders in the Futures Markets. In his book, he describes the dynamic statistical analysis of Fibonacci Zones using Open, High and Close to find high percentage support and resistance zones for the entire trading day. Robert Krausz has completed extensive analysis on High Probability of the Fibonacci Zones HPFZ concept by using Probability Matrix. Krausz used various close and...
I
A Market Structure High MSH is formed when markets are making major tops. They form near key resistance areas or key moving average levels, which is very significant. There are many theories of using MSHs in trading. One theory of MSH, is to find a critical resistance area and trade a short position. The other way is to find a series of past MSHs and build a trend line for resistance. The third way is to use MSH in a fractal wave form and build a larger wave structure using the distances...
nBar RalliesDeclines
Stocks making new Highs and new Lows with high volume attract momentum players. Momentum players continue to push these stocks until the supply or demand diminishes. But as in any rally or decline, these trends stop and reverse. The prices become oversold and overbought creating a condition for exhaustion of the supply and demand. Hence, if these prices reverse could be brief , an opportunity is presented. Traders who wait and take advantage of these counter-trades are daring and risky, but...
Info Qpv
Seven Day Wide-Range and Outside Day Pattern WR70D A 7-day Wide Range bar is formed when a current bar has the widest range in the last 7 bars. An outside bar develops when the low of the current bar is lower than the previous bar and the current high is higher than the previous bar. Trades are only entered in the direction of the current trend. Wide Range bars forming at the start of a trend or at key reversal levels could signal strong bullish and bearish trends. If Wide-Range bars are...
Globex Overnight Pivots
Pit traders use Globex or overnight trading information extensively to determine key market trading levels for the current trading day. Globex trading hours start after the regular markets close and end before the regular markets open. For example, the Russell 2000 EMini futures on Chicago Mercantile Exchange CME , the regular market hours are from 9 30 am ET to 4 15 pm ET. Globex trading hours for Russell 2000 futures starts at 4 30 pm ET and ends at 9 29 am ET. Similarly, the Dow Emini...
Trading Candlestick Charts
The chart above illustrates various Candlestick patterns from the S amp P 500 Futures 610 tick chart. Various Candlestick patterns have been marked in the chart above and explained as follows 1 . A Doji pattern to suggest indecision in the prior direction. 2 . A Dark Cloud to signal a potential end of trend. Also see Hammer pattern prior to the Dark Cloud . 3 . Another Doji to signal indecision. 4 . A Piercing line followed by a strong trend reversal bar. 5 . A Bullish Engulfing pattern to...