'How to' : Market Technical Analysis Tutorial
'How To' : Technical Analysis
Learn the technical skills that I used to make a perfect 'Sniper' trade.
Brace yourself for the easiest techniques used to perform a market technical analysis. All of the techniques I use are incredibly simple to learn and teach. My goal is to help anyone who has some patience and intelligence to be able to read charts in a way that can help guide financial decisions. My future posts will be weekly market analyses for everyone's benefit. I will focus on the major markets that I analyze and the occasional request. If you find my write-ups helpful, give me an upvote!
As this is my first post on Steem, I thought it would be best to explain how and why I use technical analysis to assess markets and make trades. I am not living on income from trading yet, but this is my ultimate goal. I am mostly self-taught when it comes to trading. Over the last 5 years, I have learned my lessons thoroughly by blowing out multiple accounts and making numerous mistakes. I believe the best way to learn the markets is to start putting money on your ideas. Start small, learn, and build your accounts. I've played with forex, commodities, ETFs, leveraged ETFs, options, stocks and continue to learn every day about different markets and how to profit in them. My future posts will provide only my best analyses.
This week, I will show a Technical Analysis of the Gold Market and SP500 showing how each tool can be used on a chart. At the end, I will provide a Confluence Chart that I used to get returns of 30-400% in 6 months.
Tools and Terms
TA
Technical Analysis: The art of reading charts, independent of Fundamentals, to find signals and determine the short, mid, and long-term trends.S/R
Support and Resistance lines are based on previous market movements. They are the price points that have proven to be significant turning points and strength points for the markets. They often align with Fibonacci's. The best way to draw them is to zoom out to weekly and monthly candlestick charts over 10-20 year timeframe.
MA's
'Returning to the Mean' is the way of the market. Moving Averages give the ''mean'' that price will always respect. Prices constantly return to the Moving averages and bounce off them a few times before deciding which way to go next. When exponential moving averages such as a 50 day and 200 day MA cross, this is generally a sign of a major trend change.
Fibs
Fibonacci Retracement and extension tools show areas that have had or will have significant resistance and become strength points or turning points. Fibs are based on naturally occurring patterns in nature that are reflected in market behavior.
Candles
Candlesticks give timely signals of market sentiment. Candles with long tails signify traders rejecting lower or higher prices. When this happens at any of the above levels (S/R, Fibs, MAs), the signal is backed by confluence. (The below is from the SP500.)
Bollingers
Bollinger bands are really a vague sentiment indicator. They are on the outside of the candlesticks. When price touches bollingers, there is a high probability of a short term direction change AKA return to the mean (MAs). This is not always the case, but when it lines up with other signals, it can provide further confluence for market predictions.
Confluence
When multiple signals all line up at the same time in support of each other. I never trade without multiple indicators in confluence with each other. This image shows almost complete confluence of factors. I made a lot of money on this trade.
Notice in the above the Confluence of Long term monthly support line, Touching the extended Bollinger, Significant deviation from the Moving Average, 50% Fibonacci Retracement from the 2000-2011 Fib. Combine this with the Fundamental Analysis that Gold ''should'' go up based on global conflict, central bank currency manipulations, negative interest rate yields, and a questionable economy, this was one of the most 'Sure' bets one could have made in any market in January 2016. At this time, I put 100% of my free capital and savings into metals stocks, as well as opening a family managed account to do the same. My returns range from 30-400% at this time, 6 months later.
It is in my best interest to provide the highest quality chart analysis for others. This is not investment advice. Always trade at your own risk, obviously. Each week, I will share what I believe to be the most important factor driving the trends in each of the major Markets: SP500/Dow, Gold/Silver, USD index, and Crude. Though I will never recommend buying or selling something, if you enjoy my writeups, upvote me on steem or tip me with bitcoin 1BgyoS3wsaxMxNPSua6M3VKPDoeF3sZsvE.
-JT
Voluntaryist, Market Analyst, Sports Performance Specialist
really nice explanation @jttheat. Hope to see more of your work
Technical analysis is great, just remember it only takes one news item or one bogus government report and you can throw it all out the window.
Not quite so fast my friend! Most news reports are pre-priced right into the market. If you know what to look for, you will see the signals. I will give you a perfect example. Right before the Brexit happened all safety trades declined and markets went up. Leading up to it, everyone knew it was about 50/50 based on polls. However, the day before the vote, Gold went down, USD went down, treasuries went down, GBP went up, Market indicies went up. This is a classic shakeout pattern and I posted this to all of my investing friends. This is the exact comment copied from June 23rd:
''In my experience, everything moves the opposite direction before a big move. Gold is down, vix is down, usd is down. Everything is telling me that they will all reverse tonight. All the technicals are screaming brexit tomorrow. I'm considering 200 shares of UVXY, risk of 10-20% downside if I can get out early tomorrow, 200-500% upside if brexit goes.''
I bought UVXY options and made I think 15% over night, though if I had been able to sell them at 4am, I would have made 200-400%.
So aaronh, yes, I agree that some news can change the markets, but much more often the markets move before the news. Here is a second example: Last week, everyone was super bearish on Crude and every news article was talking about 20$ for crude. Crude, however, was at it's 50% retracement of the previous upward move in a bullish market. I bought triple leveraged uwti and have made a good amount of money watching as crude goes up. This week's headlines are all about reasons explaining crude's rise such as a potential Opec freeze (which will never happen) and other silly headlines. The point is, markets move before the news and despite the news, very often.
Lastly, look at Brexit ''terrible news'' and yet all markets are rallying up above all time highs...
Just some things to think about!
-JT
Your absolutely right. I do better when I don't know the news. It's all about supply and demand / patterns and rules.
I appreciate what you're doing Joshua. The more people understand how to make money investing in stocks and cryptos, the more upward mobility there will be for more people. I included this post in my Steemit Daily Roundup for today!. Great job, bro.
Thank you matey! Nice hearing from you on here :)