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TASUG Meeting – November/2003. Using its tools to spot Chart Patterns, Candle Patterns, Ratios, and Divergences. Andy Nogueira. Part I - Stockcharts Tools. Breadth Charts Market Carpet PerfCharts SharpCharts StockScans. Home Page. Candlestick Patterns Bullish / Bearish
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TASUG Meeting – November/2003 Using its tools to spot Chart Patterns, Candle Patterns, Ratios, and Divergences. Andy Nogueira
Part I - Stockcharts Tools • Breadth Charts • Market Carpet • PerfCharts • SharpCharts • StockScans Home Page
Candlestick Patterns Bullish / Bearish Divergences Positive / Negative Chart Patterns Reversal / Continuation Ratios Intermarket Analysis Part II – Using Stockcharts to spot
Breadth Charts • Shows Market Breadth for • NYSE • Advancing / Declining • Highs / Lows • NASDAQ • Advancing / Declining • Highs / Lows • AMEX • Advancing / Declining • Highs / Lows Page 1 Page 2
Market Carpet • Lets you see at a glance what the entire market is doing as well as the sectors and companies within the market. • Available Predefined Carpets • S&P Sector Carpet • Market Summary Carpet • Fidelity Fund Carpet • Rydex Fund Carpet • Toronto Stock Exchange
Perfcharts Carpet • Lets you compare two or more different stocks, indices, or mutual funds during a period of time. • Display price performance lines for up to 10 different financial datasets • Line Graph or Histogram (Total Return)
Sharpcharts • Create bar charts, line charts and candlestick charts for more than 20,000 stocks, indices, and mutual funds. • Intraday, daily, weekly and monthly charts in a variety of sizes and color schemes • Create lists of annotated charts
Stock Scans • Create your own scans to find stocks in the database that meet certain technical conditions and criteria • Predefined Scans: • Technical Indicators • Candlestick Patterns • P&F Alerts Page
Candlestick Patterns • Bullish Patterns • Morning Star • Bullish Abandon Baby • Bullish Engulfing • Bearish Patterns • Evening Star • Dark Cloud Cover
Candlestick Formation UP DOWN
Morning Star • A downtrend is under way • First day is a long black day • Second day gaps below the 1st day's close • Third day is a long white day.
Bullish Abandon Baby • A downtrend is under way • First day is a black day. • Second day is a doji whose shadows gaps below the 1st day's close. • Third day is a white day with no overlapping shadows.
Bullish Engulfing • The color of the first day's body reflects the trend. • The second real body should have the opposite color of the first real body. • The second day's real body totally engulfs the first day's body.
Evening Star (Bearish) • First day is a long white day. • Second day gaps above the first day's close. • Third day is a long black day.
Dark Cloud Cover (Bearish) • First day is a long white day • Second day is black with an open above the high of the previous day • Second day closes within but below the midpoint of the first day’s body
Divergences A divergence occurs when the trend of a security's price doesn't agree with the trend of an indicator. • Positive Divergence • Occurs when the indicator moves higher at the same time the stock price is declining. • Negative divergence • Occurs when the indicator moves lower as the stock price continues to rise.
Chart Patterns • Reversal Patterns • Head and Shoulders • Double Top (Bottom) • Continuation Patterns • Flag
Head & Shoulders • Consists of a peak followed by a higher peak and then a lower peak with a break below the neckline. • Volume Confirmation • First peak - High volume • Middle peak - Moderate volume • Third peak - Low volume • A sharp increase in volume on the break below the neckline
Double Top • Made up of two consecutive peaks that are roughly equal, with a moderate trough in between • Volume contracts on second peak as a further indication of weakening demand. • Support must be broken in a convincing manner, and usually with an expansion of volume Double Top
Flags (Continuation) • Mark a small consolidation before the previous move resumes. • Volume confirmation: • Expands to form the flagpole • Contracts during the flag's formation • Expands after the resistance breakout. • Usually the price target is the length of the flagpole
Ratios • Intermarket Analysis • Intermarket Technical Analysis is the study of the relationships between the four major financial markets: Stocks, Bonds, Commodities and Currencies. • 30 Year US Bond / S&P 500 • US$ Dollar / Gold
Links and Suggested Reading • Links • Stockcharts.com • Prophet.net • Hotcandlestick.com • Equis.com • Leavittbrothers.com • Chartpatterns.com • Suggested Reading • Japanese Candlestick Charting Techniques - Steven Nison • Beyond Candlesticks - Steven Nison • Technical Analysis of Stock Trends - Robert Edwards & John Magee • Encyclopedia of Chart Patterns - Thomas N. Bulkowski • Andy Nogueira – andy_nogueira@sympatico.ca