Failure Test
Video Blog: the Failure Test
This video blog is a follow up from this post, and digs into some of the details behind the Failure Test trade in a little more depth.
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Failure Test
Trading Pattern: the Failure Test
[dc]I[/dc] want to do a small series of posts looking at some of the most important trading patterns I've used over the years. Rather than go in-depth with multiple examples, I'll keep these posts as a high level, introductory overview and will focus only
General Comments
Chart of the Day: The need for entry triggers
This is why we have entry triggers. I posted this chart pointing out a bear flag in EL on the day marked with an arrow, suggesting that a good entry would be to enter on a weak close. A few days later, the stock is higher, but disciplined traders should
Anti
Chart of the Day: Russell 2000 Index
I tend to believe it's usually counterproductive to do too much in-depth technical analysis on different market cap or sector indexes. Everything is so tightly correlated anyway, so differences often become a matter of analyzing noise. Looking at retracement ratios and trendlines on these instruments and trying to
General Comments
Tracking the Stock Market Intraday
[dc]O[/dc]ne of the main challenges for stock traders is understanding the ebb and flow of the broad market on the shortest timeframes. There is so much noise in price movement at this level, and so many instruments are traded, that it is hard to know what is
General Comments
Chart of the Day: Bear Flag in EL
The daily chart of Estee Lauder Companies Inc (NYSE: EL) shows a clear bear flag, which sets up a potential trade on any breakdown. Note that this is only a setup, and still requires an entry trigger. In this case, shorts could be initiated under the previous day's
General Comments
Two Modes of Market Behavior (1/2)
[dc]W[/dc]hen trying to master any complex subject, it can be helpful to reduce things, as much as possible, to basic elements. Price movements in markets are very complex; so many competing influences and timeframes, combined with a good dose of randomness, conspire to hide any simple tendency
General Comments
Chart of the Day: A Difficult Environment
[dc]O[/dc]ne of the advantages of using properly calibrated bands is that they can show when markets reach emotional price extremes. It should be rather unusual for a market to go from being outside one side of the band to the other, as happened on this 5 minute
General Comments
Why Is Trading So Hard?
[dc]I[/dc] receive a lot of notes and messages from people who are struggling to learn to trade. One of the common threads is that many of them are discretionary traders, and they find that their decisions, made in the heat of battle, often result in the worst possible
General Comments
Chart of the Day: XLY/XLP spread
Traditionally, the spread of Consumer Discretionary stocks over Consumer Staples stocks has been taken to be a gauge of market sentiment—a clear expression of a cyclical sector compared to a defensive sector. Note that this is a coincident indicator, meaning that is has not led the market at major
The Book
The Art and Science
[dc]I[/dc] wanted to take a few minutes today to share some thoughts about my book, The Art & Science of Technical Analysis , which is now available for purchase on Amazon.com and in bookstores. I think this book is a valuable contribution to the trading literature, as it
General Comments
Chart of the Day: EURUSD set for breakdown?
Longer-term patterns in the EURUSD are strongly supportive of a bearish trade, perhaps targeting parity or lower. This is an aggressive entry, but it is often possible to enter after a very small consolidation near recent lows. In this case, stops could be established somewhere in the neighborhood of 1.