In my opinion, every chart has its own characteristics that makes it unique; why not, otherwise everything would have been simple, which – of course – is not what the creator wants us to feel. !
In this post, I’ll try to brain dump the entire characteristic I could see & analyze. I’m not sure if those methods are captured in some other posts. Anyways, here is my input !
Looking at the TASI chart, I have tried to match the important points with the suitable Moving averages. As you can see, the weighted moving average (Blue Line) gets touched at various points (Blue Arrows). I have used the number 131 for the WMA to get the best matching. On the other hand, I have used the simple moving average (Red Line) to get closed to the prices, yet keep enough gaps to represent the strength of retracement and the breakouts. We could arguably say at SMA of 40 fits the chart, as the MA doesn’t overlap with values, its either retrace or break as indicated by Red Arrows.
So what does this mean for trading?
If the SMA-40 is broken, then it would go to WMA-131, and then be careful from any buy trades!
Let’s look at some other details; for the same the head and shoulders pattern that I’ve already highlighted above I’ve noticed there is an almost identical pattern on the same chart. The two vertical lines represent the start points for those identical patterns. The two patterns differ in size and this behavior / structure in Elliot waves study is called Elliot Fractals ! – Please correct me if I’m wrong -
So what does this mean for trading?
The previous pattern will repeat its self, and the current neck line will be broken. !
To sum it up;
- Head and shoulders with a confirming sign of rising volume; known direction.
- Matching of Moving averages to set boundaries.
- Elliot Fractals theory
- My view, buy Representing stocks, target WMA-131, stop below last shoulder
- I didn’t talk about Candles !
Wish you best of luck.
Regards,
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