Category Archives: Trading Tips

Non Farm Payroll – What Direction for the S&P500? | 3rd August, 2017

A simple classic technical analysis pattern may answer the question of what direction to expect tomorrow from the S&P500 upon release of Non Farm Payroll data. This release is expected to move markets strongly:.

Gold Daily 2017
Click chart to enlarge.

Pennants are reliable continuation patterns. The pattern is supported if volume declines as the pattern forms. Pennants normally appear about halfway within a trend.

The measured rule takes the flag pole which precedes the pattern and adds that length to the expected breakout of the pattern.

If this pattern is correct, then tomorrow may see an upwards breakout to new all time highs for the S&P500.

Published @ 06:28 a.m. EST.

MotiveWave Hot Days of Summer Sale

MotiveWave Hot Days of Summer Sale

MotiveWave is having a Hot Days of Summer Sale for 7 DAYS ONLY starting Tuesday, July 25th, 2017, with 20% off most products.*

MotiveWave Hot Days of Summer Sale

This means 20% off Lifetime Licenses*, 20% off Leases, and 20% off Add-On Modules.

This sale is for 7 days only!

This special 20% off sale starts Tuesday, July 25th and ends Monday, July 31st at Midnight EST.

Make sure you take advantage of this sale before it’s gone!

* Excluding the Charts Edition and the Additional 1 Year of Updates and Support products.

Note: The prices you will see on the MotiveWave website are regular prices, but you will see the special 20% off Summer Sale discount applied during the purchase process before you are asked to pay. If, for some reason, you do not see the discount on the checkout page, please contact MotiveWave before purchasing and before the end of the sale.

USDCAD Elliott Wave Technical Analysis – 24th January, 2017 – MotiveWave Video

This video is not my usual analysis video. This video shows the entire process of how I do Elliott wave + classic technical analysis on a new market, using the MotiveWave trading platform on a MacBook.

For Elliott Wave geeks only 🙂

On Balance Volume

On Balance Volume was originally developed by Joseph Granville in 1976. Today, it is considered the grandaddy of all volume indicators.

Daily data is accumulated. If price closes higher, then volume for that day is added to the prior total. If price closes lower, volume for the day is subtracted from the prior total. If there is no change in the closing value of price, then OBV does not change.

OBV is used in three basic ways:

1. Confirmation of a trend. If over several time periods OBV moves in the same direction as price, then this confirms a trend. If over several time periods OBV does not move in the same direction as price, then the trend is weak and expect a reversal.

2. Divergence. Between highs and lows, if price makes a new extreme and OBV does not, then it indicates weakness in the direction of price, so expect a reversal.

3. Trend lines. It is my experience that this is the best use of OBV. When price is consolidating OBV will find support and resistance at trend lines. OBV is a leading indicator. If it breaks support or resistance, then the direction of the break from OBV is often a warning that price will break out of a consolidation zone in the same direction.

The example from Gold below illustrates all three ideas.

Gold Elliott Wave Chart Daily 2015
Click chart to enlarge.

From July to October 2015, Gold consolidated in a wide price range delineated by the blue horizontal lines of resistance and support. What direction would the breakout be?

The first indication was divergence between the price highs of 24th August and 15th October. While price made a new high OBV did not. This indicated weakness in upwards price movement. Divergence is indicated on price and OBV by green lines.

The final indication came when OBV broke below its pink trend line in 23rd October. Note that this break came prior to the strong downwards movement from price. OBV indicated that price was likely to break out downwards from the consolidation zone and that is what it did.

As price fell strongly from 28th October to about 18th November, OBV also moved strongly lower confirming the price trend. At the end of the trend, OBV again diverged from price. The final low in price at 3rd December did not see a corresponding low from OBV, so this divergence indicated the downwards trend was weak and another consolidation should be expected.

The Trend Is Your Friend

The flip side of the title to this post is “don’t trade against the trend”.

The fact that markets trend is why traders make profits. Price is not completely random. Price tends to move in trends.

Trends are often delineated by trend lines.

When price is consolidating it tends to move in whipsaws about a moving average with choppy overlapping sideways movements. Price tends to move from resistance to support and back again, but not in a straight line. Overshoots of resistance and support can also happen yet price can turn back into the consolidation zone. It is impossible to tell exactly when and where price will turn, so if trying to trade a consolidating market losses are inevitable. Mean reverting systems for trading during a consolidating market are suited for the most experienced and nimble of traders only, not at all for beginners or those with only a few years experience.

When price has been consolidating for a while, then horizontal lines can be drawn to show the upper and lower boundaries of the consolidation zone. It then becomes a waiting game. Waiting for a breakout. When price breaks above resistance or below support on a day with an increase in volume, then a breakout is indicated and the market has begun to trend again.

When price is trending it moves in a clear direction, usually finding support (an upwards trend) or resistance (a downwards trend) at a sloping trend line. The clear direction of price movement is what makes profit easier, so the trick is to identify a new trend early enough to allow for profit to be made and then to identify when it is over early enough to exit the trade with a profit. For less experienced traders, it is advised to wait for a clear trend to be evident and then to only trade in the direction of that trend. Profits should be relatively easy as long as the trend is not exhausted.

If staying with the trend is the easiest way to make a profit, then it makes sense to avoid trading when the market is not trending.

It is often the trades that a trader does NOT take which makes the difference between profit and loss. Cut losses by avoiding consolidating markets.

If there is only one lesson that new traders can learn which will improve trading performance, it is to only trade a clear trend in the direction of that trend.

MotiveWave Elliott Wave Software for Mac & Windows – Hot Days of Summer Sale 2015 – Starts Thursday, July 23rd and ends Thursday, July 30th at Midnight EST

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MotiveWave is an incredibly feature-rich platform that works with multiple brokers and data services.

MotiveWave has the most advanced Elliott Wave Software and Elliott Wave Tools available. Elliott Wave Tools range from manual to semi-automatic to automatic Elliott Wave to suit your preference. Elliott Wave labels are always automatically added for you, cutting down your analysis time significantly. Manual Elliott Wave tools let you plot your own wave counts easily. Our Auto Elliott Wave tool will fill in Elliott Wave counts automatically on one chart based on a selected area of a chart. Our Auto Analyze Elliott Wave tool will automatically plot Elliott Waves over a specified range of data to a specified level of decomposition on one chart. The Elliott Wave Scanner (pattern recognition tool) allows you to search for specific Elliott Wave Patterns across multiple symbols/instruments based on options you choose. All wave counts can be moved or adjusted after being placed on the chart and can be decomposed as many levels as you want.

MotiveWave is having a Hot Days of Summer Sale for 8 DAYS ONLY starting Thursday, July 23rd, 2015, with 20% off most products.*

Summer sale means 20% off Lifetime Licenses*, 20% off Leases, and 20% off Add-On Modules.

This special 20% off hot days of summer sale starts Thursday, July 23rd and ends Thursday, July 30th at Midnight EST.

Make sure you take advantage of this sale before it’s gone!

* Excluding the Analyst Edition and the Additional 1 Year of Updates and Support products.

** The prices you see on the MotiveWave website are regular prices, but you will see the special 20% off Summer Sale discount applied during the purchase process before you are asked to pay. If, for some reason, you do not see the discount on the checkout page, please contact MotiveWave before purchasing and before the end of the sale.

MotiveWave Hot Days of Summer Sale

MotiveWave Hot Days of Summer Sale

MotiveWave is having a Hot Days of Summer Sale for 7 DAYS ONLY starting Wednesday, July 30th, 2014, with 20% off most products.*

This means 20% off Lifetime Licenses*, 20% off Leases, and 20% off Add-On Modules.

This special 20% off sale starts Wednesday, July 30th and ends Tuesday, August 5th at Midnight EST.

Make sure you take advantage of this sale before it’s gone!

* Excluding the Analyst Edition and the Additional 1 Year of Updates and Support products.

** The prices you see on the MotiveWave website are regular prices, but you will see the special 20% off Summer Sale discount applied during the purchase process before you are asked to pay. If, for some reason, you do not see the discount on the checkout page, please contact MotiveWave before purchasing and before the end of the sale.

New to Elliott Wave? Read This First!

Upon first hearing about the Elliott wave principle most people have one of two reactions.

Many will disclaim the concept that it is social mood which moves the markets (it’s normal to think it’s the other way around) and they will insist that the market cannot be patterned and must be random. That’s okay. If this is how you think you’re with the majority. I must ask though, if the market is random then how do some people manage to consistently profit from trading it?

Others may think that they have found a magic bullet and can use Elliott wave to tell them where and when the market will move with enough accuracy to profit from the principle. This is problematic for a few reasons.

If you are already a trader then I would point out that you probably do not make trading decisions using only one technical analysis tool. This would be extremely unusual and mostly confined to those new to trading. Most traders know that in order to make good trading decisions a variety of tools should be used. Elliott wave is no different. It is best used as one tool amongst several when making trading decisions. If a wave count agrees with your other tools you may have increased confidence in your trading decision. If the wave count disagrees it is up to you to decide what to do based upon your risk appetite and experience.

However, Elliott wave is one of the most difficult tools to learn to apply. It takes years of daily analysis to become truly proficient and it takes hours each day to analyse a market in enough depth for the analysis to be useful to traders. This is why traders subscribe to my service.

Elliott wave is the best tool I know of for predicting price direction. It can sometimes be uncannily accurate in target calculation. Sometimes does not mean it is always accurate though, as not all waves have Fibonacci ratios between them. Elliott wave cannot always be accurately applied however because the analyst who never makes mistakes simply does not exist. No method will have 100% accuracy.

At any one point in time there may be multiple alternate Elliott wave counts possible. An expert analyst should be able to see as many alternates as possible and present them ranked in order of probability. Probability of a wave count is based upon several factors, the strongest being the likelihood of the structure unfolding. If the structure is common the wave count would have a higher probability. Rare structures must have a low probability. This means that when a rare structure unfolds (as probability says they must do sometimes) then the analyst would have advised that wave count has a low probability and would not have expected price to move in that direction. Many people fail to understand how probability works in Elliott wave and so dismiss it when they see an analyst make a wrong call when a rare structure unfolds.

Most of the time it is common structures which unfold, that’s why they’re common, and most of the time an analyst should predict the next movement correctly.

A common complaint of Elliott wave is changing targets. Again I must say that you would not expect any other technical analysis tool to predict tops and bottoms and be always right, and for a prediction once made to never change. Why should Elliott wave be any different? There are several Fibonacci ratios. No analyst is going to be able to predict which Fibonacci ratio will be the relationship which is eventually seen. All an analyst can do is to state which is the most commonly seen ratio (there’s that probability again!) and calculate targets based upon several possible ratios ranked in order of probability, or in price order.

Another common complaint of those new to Elliott wave is an analyst changing a wave count. This complaint shows a depth of misunderstanding of not just Elliott wave but markets in general. If an analyst were to never change a wave count what they must do is to pick the right wave count from the very start of a movement amongst several possibilities, and they must pick the right wave count even if it has a lower probability than others. Which is patently ridiculous.

If you can get past the initial enthusiasm and see Elliott wave for what it is, an exercise in probability, then you’re on your way to learning how to profit from it.