Reversal Patterns Candlestick patterns are very useful for spotting reversals but for the setup to mean anything there has to be a trend that is weakening. A reversal pattern is made of one or more candlesticks that often indicate a reversal in the trend. Three general points to note at the start -: the pattern […]

Spinning Tops and Long Bodies Spinning Tops Spinning tops are another variation of a candle. They tend to represent a period of indecision in the market. As can be seen there is a very small body showing not much difference between the opening and closing price during that period and yet very long upper and […]

Basic Shapes of Candlestick Technical Analysis Patterns The overall length of the candlestick, from wick to wick, is the trading range – daily for the charts I’ll be showing them on, but candlesticks can be used on any timescale. The body shows the distance between the opening price and the closing price, with the color […]

Module 8 – Further Charting Introduction We covered a lot of what you have to know about charting in Module 2 – but in this Module there is information that will be worth knowing and help in your trading. One of the aspects was already mentioned, and that is candlestick charting, which is a convenient […]

Moving Average Optimization Traders often discuss optimizing their systems, and with the widespread use of computers it is easy to change variables and back test many times to see if the performance improves. It might well be worth experimenting with different moving average periods for diverse markets when applying one of these systems, but you […]

Cycles We are due to discuss time cycles in Module 9, where we also consider the Elliott Wave. However, moving averages are bound up in cycles, so I need to mention them here. Many people have observed that prices move in cycles, and one of the most obvious cycles is the monthly cycle in the […]

Targets One of the simplest uses of the Bollinger Bands is to think of them as price targets. For example, when in May the prices bounced off the lower band and then rose past the moving average, the upper band became a price target. You can see that the prices followed it fairly closely through […]

Bollinger Bands Bollinger Bands are one of the more widely known technical indicators around but least understood. They are also very dynamic and have many uses. Invented by John Bollinger, they are best described as a way to visually measure volatility. What if you could create trading opportunities just from using bollinger bands and nothing else? Well […]

Moving Average Envelopes When you are using a single moving average, it can be useful to draw a percentage “envelope” or channel each side of the moving average. This gives you a pictorial representation of where the price may be overextended. A moving average envelope is simply the drawing of a line each side of […]

Using Three Moving Averages A further development on the crossover method uses three moving averages, and is appropriately named the triple crossover method. It’s just a development of the double crossover method which looks for some confirmation of the trade. You’ll find it used mostly in the futures market, and it was first mentioned in […]