Climax
One of the features of financial markets is that they often react to new information with emotional volatility, and overshoot extremes. Understanding this element of price behavior can give us good insight into future direction and even some specific trade setups. Efficient Markets Hypothesis One of the enduring points of
Climax
Bands or channels are usually set up around some type of moving average. They define what is normal for a market, so excursions outside the bands are potentially interesting. There are many ways to create bands. Two of the most common are Bollinger Bands and Keltner Channels. (We prefer Keltners
Climax
A few lessons from a simple short trade in silver. First, a little bit of history. I’ve been trading gold fairly actively this year, and have published five trades in my published research. These trades were in gold, but, in every case, I considered whether silver was a more
Climax
A quick lesson on trendlines and what they can tell us about market dynamics. Take a look at a fairly long-term chart of the Dow Jones Industrial Average (below) with trendlines doing back to the low in early 2016. First, notice the light little trendline that ends in late 2016.
Anti
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 this because it’s a futures market!) I’ll try to keep this as short as possible, but there
Climax
This podcast episode looks at trading around market extremes, Acts of God, and very large market moves. From market history, some examples might be 9/11, 1987, Fukushima, Katrina, etc. Today, Greece has the potential to lead to these types of moves and extremes. Technical traders need to understand these
Climax
The US Dollar is in a trend of historic proportions; the strength and rapidity of its advance has shocked many other currencies as they scramble to adapt to the new US Dollar. This creates an environment with considerable risks, but also brings some opportunity for traders who understand how currencies
Breakout
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 against) that move, looking for reversal, or do we want to take a position with that move, looking for continuation?
Climax
Continuing from yesterday's post, I wanted to dig a little bit deeper into the idea of what happens when markets go too far, too fast and snap back. This concept is called overbought/oversold in the traditional technical literature, and it is one of the most important elements
Climax
Double, double toil and trouble Fire burn, and cauldron bubble. -Shakespeare [dc]B[/dc]ubbles seem to be the theme of the day. Headlines like "Why Stocks Are Undoubtedly Experiencing a Massive Bubble", "Nobel Prize economist warns of U.S. stock market bubble", and "Shiller
Climax
A simple pattern often marks the end of trends.
Anti
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