Technical analysis Archives • Futures Day Trading Strategies

Posts Tagged Under: Technical analysis

Support and Resistance Levels: An Order Flow Perspective

 

All technical traders are familiar with horizontal support and resistance levels in the market formed by prior occasions of price bouncing off of certain price levels. They are a foundational construct of technical analysis, and rather simple to spot and apply on charts. The simplicity that comes with dragging across a horizontal line on a chart is also what makes these levels so popular and widely followed by traders.

In this article, we will discuss how support and resistance levels can help you better filter trade setups when you combine them with order flow dynamics.

First – Let’s Talk Liquidity

Ideally, a nice mix of buyers and sellers are needed to make a market liquid, which prints on the chart as normally sized candlesticks either moving in a pattern or sideways. But occasionally the market will spring out of balance that some traders label as “liquidity flux” or “liquidity vacuum.” On your

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How to Trade Divergence the Right Way!

 

Spotting and trading divergence is a common practice employed by technical traders, irrespective of the time frame or market. There is a lot of literature around the web sharing the nuances of spotting divergence correctly, including the use of swing points and drawing reference trend lines on the oscillator and price itself for assistance and visual clarity.

But there is clearly more to divergence than just spotting it right. And that truth jumps out at you more than ever when you notice instances where price continues on with the trend while your favorite oscillator indicator continues to print diverging highs or lows, leaving you scratching your head. How exactly do you time your trades to make the most of the divergence?

Let’s take a deeper look to explore how divergence works in the marketplace.

Divergence is an Indication, NOT a Trigger

The first thing we need to understand is that divergence alone is

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6 Chart Patterns Every Trader Should Know

 

Today we will expand on the previously discussed single and multi-candlestick trading patterns and focus on broader chart patterns. There are six patterns in particular which can help traders make sense of charts by understanding the buyer-seller balance and we will go over what each of those patterns reveal about overall market sentiment.

Double Tops and Fake Breakouts

Double tops happen regularly across different timeframes and markets and are usually a reliable pattern. To potentially increase your chances, traders can wait for a fake breakout around such a pattern. Many traders will jump on an initial breakout of a double top, not waiting for any confirmation. Therefore, be one the lookout for trading opportunities when a double top is holding and a breakout doesn’t succeed. The fake breakout at a double top can be an especially good pattern to know about at important swing points, support/resistance areas and after extended trending periods.

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Candlesticks vs. Line Graphs vs. Point and Figure – The Benefits of different Charting Methods

 

In order to make the best trading decisions and trade at your optimal level, you must choose your tools wisely. This involves understanding the differences and benefits of the various charting methods. In this article, we will explore the differences between candlestick charts, line graphs and point and figure charts and look at the advantages and disadvantages of each method and which trading style goes best with each chart.

 

Candlestick Charts

Many traders use Japanese candlesticks, bar charts, renko, etc. However, in our opinion, for many futures traders, Candlestick charts provide the most information out of any chart type. At the same time, it can also be overwhelming and confusing if a trader doesn’t know how to interpret and read the specific candle formation.   As a trader gains more real time screen experience, he/she will memorize these formations and potentially be able to apply a better analysis to the charts.

A candlestick provides

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Trend Channels – How to draw and use them to make Trading decisions

 

Price and trend channels are tools in technical analysis to make sense of charts. Further, trend channels can be used to stay in trades as well as enter new trades. In this article, we show you how you can draw and use trend channels in your trading to have a potentially positive effect on your decision making.

 

Drawing trend channels 101

Trend channels consist of at least two trend lines that connect the swing highs and the swing lows of a trending or a sideways moving market. It’s important to understand that trend channels don’t have to be completely parallel and it’s even possible that one side of the trend channel is a horizontal support or resistance – in such a case, we typically speak of triangles or wedges as we will see later.

Furthermore, when drawing the trend lines you can use both, the wicks and the bodies of the candles. Here

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