Pattern seminar 16042014

PATTERNS REALLY16 APRIL 2014Greg Kangleas

What are Patterns? T-30

2Trade Money Make Money

Swing Trading Patterns

THE T-30

The name T-30 refers to a "tail" that slices down through the "30" period exponential moving average

Looks like a hammer candlestick pattern I refer to it as a the FLUSH OUT Its aggressive and its quick Volumes are higher than normal How to trade: trade on day of hammer if volumes

have increased. Consolidation for a couple of days will confirm move.



T



THE GHOST TOWN PATTERN

What happens when traders ignore a stock? You get narrow range candles and low volume. When you see this developing on a stock chart, it will remind you of a ghost town - deserted. Get ready, the stock is about to explode.

Low Volatility is always followed by HIGH VOLATILITY Pull back to traders action zone = narrow range

candles = stars or doji’s Low volumes How to trade: Trade buy stop orders above the

highest consolidation level or sell stop below the lowest candle



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THE SWING TRAP

Most reliable of patterns Traps most momentum traders right in the middle of a move Elliot Wave A-B-C pattern on a smallest scale Rally hard then returns to consolidation range It rallies up a little bit, but then it fails and goes right back

down. This traps the swing traders who are long this stock. They put their stop loss orders under the first rally attempt. But, when the stock fell, it took out their stop loss orders.

Look for FLUSH OUT. The final swing MUST go below the low of the first swing. Many

times, this final swing will end in a hammer. This hammer will take out all of the stop loss orders and you are ready to go!


Swing Trading Patterns (ST)

T



SIDE TRAP We start with a consolidation phase…sideways

market

Most are buying in consolidation waiting for the breakout soon



SIDE TRAP Next move is unexpected by most

Traders stop out below the consolidation range and go short. Looks very bearish at this point



SIDE TRAP THE KEY DAY……

Sellers/shorts are flushed out and stock shall move



SIDE TRAP How to trade

Watch for consolidation – flush out and reversal and sometimes gap upside


HEAD AND SHOULDERS

(Insert H&S chart here)

Trade Money Make Money

Chart Patterns HEAD AND SHOULDERS INTERPRETATION After a consolidation period, prices move to a

peak or trough and then return to the consolidation base

A breach of consolidation confirms the H&S CALCULATION Calculate the length of the first breakout and

project the length in the opposite direction for target

How to trade: Wait for breach of right shoulder. For confirmation wait for slight selloff and ‘sellers remorse’ to return to shoulder. This shall confirm the trade


CHART PATTERNS

ROUNDING TOPS & BOTTOMS Rounding occur from a expectation shift

from bullish to bearing (Tops) bearish to bullish (bottoms)

The move is gradual and often mirrors a bowl –like shape

Volumes decrease as expectations shift

Variation – CUP & HANDLE a very powerful formation


Rounding Bottom

Cup n Handle (cup a T)


Triangles

Triangles

TRIANGLES Occur as the range between peaks and

troughs narrow SYMETRICAL TRIANGLE occurs when prices

are making both lower highs and higher lows ASENDING TRAIANGLE – break to upside DESENDING TRIANGLES – break to the

downside Prices break out rapidly from triangles and

confirmed with increase in volume A breakout is unlikely if prices move to the

APEX


Triangles

FLAGSTrade Money Make Money

Flags FLAGS & PENNANTS INTERPRETATION A flag is formed after an aggressive move in

either direction FOLLOWED by a period of consolidation

The consolidation period can form a triangle or a consolidation box

CALCULATION The pattern is confirmed only after a breach of

the consolidation phase Calculate the length of the flag POLE and

extend in the direction of the breach for target


FLAGSTrade Money Make Money

FLAGS egTrade Money Make Money

Dow Theory THE MARKETS DISCOUNT EVERYTHING All information, past, present and even future, is

discounted and reflected in the price of currency pair

THE MARKET TRADES IN 3 TRENDS/PHASES 1. The Principle Trend - either bullish or bearish.

Upward trend is identified as several rallies where the market makes successive higher highs and higher lows.

Downward trend, several sell-offs where the market makes successive lower lows and

lower highs.


Dow Theory UPTREND


Dow Theory Down Trend


Dow Theory 3 PHASES OF THE PRIMARY TREND – Bull Market The Accumulation Phase – The start of the trend.

Informed investors accumulate when the market sentiment is in ‘doom & gloom’ mode, near the end of a downtrend. Prices are attractive and most bad news is priced into the market. This is difficult to identify as most investors think that things will get worse. Prices consolidate or flatten out, selling pressure start to dissipate.

Public Participation Phase – Negative sentiment start to diminish, characterised by increased earnings and stronger market data. Investors increase participation and accumulate as conditions improve, sending prices higher. This phase is the longer and this is were technical trend traders take long positions.


Dow Theory The Excess Phase , also called the blowout phase -

Markets move higher on better than expected earnings and peak economic data. The general public now feels comfortable participating in the stock market, convinced that the market is heading to Mars and beyond. Buying frenzies occur and valuations go out the window. The buyers in the first and second phase start to liquidate their holdings in anticipation of a downtrend.


Dow Theory

3 PHASES OF THE PRIMARY TREND – Bear Market The Distribution Phase – This is the opposite to the

accumulating phase. Informed investors sell the overbought market. Sentiment remains positive and identifying this phase is difficult. Selling pressure increases and is confirmed when a higher high/low fails.

Public Participation Phase – This phase is similar to the bull participation phase whereas it lasts the longest . Business conditions worsen confirming the downtrend. Technical investors start dumping and reversing position.

The Panic Phase – This phase is characterised by panic indiscriminate selling by mainly the participants that entered during the excess phase. When the situation looks the worst, the accumulation phase begins repeating the cycle.


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Q&A

Thank you for attending the Pattern Seminar

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Thank youGreg KangleasVunani Private Clients151 Katherine StreetSandownSandtonDir: 011 [email protected]

Pattern seminar 16042014

Economy & Finance

Transcript of Pattern seminar 16042014