Charting for beginners

[Porper]

Richkid and myself think it could be a good idea to post a few charts and do a few exercises, helping each other out, maybe of some interest to a few people just starting out learning about TA like myself and Richkid.

BOC is my pick for the comp, purely as a learning curve, I do not hold shares in this company, so may as well start with this chart.

My view is a strong breakout, a strong uptrend, initiated by large volume creating a gap.Might consolidate now before the next rise ?, any views ?.Is the trendline in the right place ? This is purely trend trading using candles and moving average.

All constructive criticism welcomed.

 

[The Barbarian Investor]

i think its a great idea Porper..however i'm a novice so will 'watch' the thread with interest..

 

[Porper]

We all have to start somewhere, Richkid is obviously a lot further advanced than myself just having read some of his posts, and I am sure that some of the experienced traders will be having a sly chuckle to themselves, but that is fine, everything we learn has the potential to help us make money in the market.

Come on you semi-pro's, give us some ideas.

 

[GreatPig]

Porper,

I think it's rather short (time-wise) to be calling it a trend yet.

Which I guess leads to the question of how many days make a trend.

Cheers,
GP

 

[RichKid]

Hi Porper,
Great to see you've got this thread going, let's see if we can debate the merits of our technique and learn something. It's hard to say which level we're at since we're all starting out, my fancy lines and charts may be leading us in the wrong direction so have a go at my TA whenever it's warranted, I'll probably learn something important. It'll be great as Porper said to have the TA experts lend their views as well, especially the lurkers.

I'll need to have a look at BOC and post a chart soon to give an idea of where I think it is. Just as an initial point I normally try to start with a long dated graph (eg at least 1 yr or much more for Bluechips) and then work my way to the current price action. Kinda like reading a book (in English), start at the left and read to the write (not vice versa).

 

[Porper]

I'll need to have a look at BOC and post a chart soon to give an idea of where I think it is. Just as an initial point I normally try to start with a long dated graph (eg at least 1 yr or much more for Bluechips) and then work my way to the current price action. Kinda like reading a book (in English), start at the left and read to the write (not vice versa).

Rich,

Good point, maybe I should have posted the yearly graph, although as you can see there has been a very narrow trading range until very recently.I have included a graph below .

I am just playing around with all the different indicators. (I had no idea there were so many).I am just reading a book by Louise Bedford called Charting Secrets, very good for beginners in this area like myself.If anybody can suggest any other good books on the subject please post.

Look forward to your graph Richkid.

 

[RichKid]

Rich,

Good point, maybe I should have posted the yearly graph, although as you can see there has been a very narrow trading range until very recently.I have included a graph below .

I am just playing around with all the different indicators. (I had no idea there were so many).I am just reading a book by Louise Bedford called Charting Secrets, very good for beginners in this area like myself.If anybody can suggest any other good books on the subject please post.

Look forward to your graph Richkid.

Hi Porper,
Apologies for the delay, but here it is. I'm still studying gaps so not much commentary on it. The line graph is not as useful in volatile stocks so better imo to use ohlc or candles or atleast hlc bars. I know you don't hold this but I've added some comments on position sizing, just my views. The prices are from about an hour ago this morning so that last candle will change at end of day.

As for books- Bedford is good but a bit simplistic at times (which is what people say once they are no longer absolute beginners so keep my remark in perspective- I still read her book to brush up). Edwards and Magee (Technical Analysis of Stock Trends) is my favourite for TA. Try Steve Nison's books for candlesticks (see Amazon), he introduced candlesticks to the west on a large scale, they are a bit expensive but quite good. Don't buy anything yet, just try the library and the free stuff on the web. Also don't forget to search ASF for the old discussions on books and candlesticks, there were quite a few good threads....

PS Just noticed, note the volume pattern, like a bowl, significance isn't that clear to me maybe suggests change in balance from bears to bulls. May now be overgought as at extreme end of bowl.
Price may turn out to be a cup and handle or frypan or something like that, I need to do more research on it if I have time...

PPS This is one of those charts that looks great in hindsight but for an inexperienced person like me I doubt I would have found it sufficiently attractive to enter in real time. You could have added a few horizontal resistance lines to help with an entry on breakout at the end of the symmetrical triangle (eg bottom of first green candle in current uptrend) but there was nothing obvious imo and it clutters the chart. I know next to nothing about it fundamentally so that probably affects my thinking.

 

[RichKid]

Geez! This is looking more and more like a rounding continuation pattern, shows how tough it is to spot early- but the rewards are huge. Would've been good for the old rounding bottom thread, except it isn't a bottom. Highly likely to either pull back or collapse imo. This is the high risk phase of the move, we missed the low risk entry, the volatility proves it.

 

[Porper]

Geez! . Highly likely to either pull back or collapse imo. This is the high risk phase of the move, we missed the low risk entry, the volatility proves it.

Well, you were spot on there Richkid, big dump today.Looking back at the chart it definately needed spotting early on like you say, to avoid the volatility.I don't know a lot of the indicators yet, but for this chart the Histogram (which I like) and the MACD (at the crossover) with the increase in volume were strong signals to buy as can be seen on the attatched chart.

Also when looking at a chart I suppose you look back and test with different indicators to see which ones have been predicting the trend correctly, then go with that one ?.A very long drawn out way to do it, I suppose when you buy the better software a lot of this is done for you ?, again any input from the experienced traders as well as us newbies greatly appreciated.

 

[RichKid]

Well, you were spot on there Richkid, big dump today.Looking back at the chart it definately needed spotting early on like you say, to avoid the volatility.I don't know a lot of the indicators yet, but for this chart the Histogram (which I like) and the MACD (at the crossover) with the increase in volume were strong signals to buy as can be seen on the attatched chart.

Also when looking at a chart I suppose you look back and test with different indicators to see which ones have been predicting the trend correctly, then go with that one ?.A very long drawn out way to do it, I suppose when you buy the better software a lot of this is done for you ?, again any input from the experienced traders as well as us newbies greatly appreciated.

Hi Porper,
I'm not that good with indicators and don't use them that much, I like MACD too and money flow but I still have to understand them, working on it slowly.

 

[DTM]

Geez! This is looking more and more like a rounding continuation pattern, shows how tough it is to spot early- but the rewards are huge. Would've been good for the old rounding bottom thread, except it isn't a bottom. Highly likely to either pull back or collapse imo. This is the high risk phase of the move, we missed the low risk entry, the volatility proves it.

Looks like a lot of profit taking to me. Seems as if the price moved up too quickly. Will be able to see better tonight once my eod data is received.

 

[DTM]

Looks like a lot of profit taking to me. Seems as if the price moved up too quickly. Will be able to see better tonight once my eod data is received.

Sorry, forgot to add that when Bollinger bands are pierced with such strength, in my opinion, more often than not, it would force the price down as people take their profits. ie Most price range movements stay within the bollinger bands.

 

[RichKid]

Sorry, forgot to add that when Bollinger bands are pierced with such strength, in my opinion, more often than not, it would force the price down as people take their profits. ie Most price range movements stay within the bollinger bands.

I've forgotten about Bollinger Bands completely, another interesting one to keep an eye on, I don't use them that much now but worth noting in future for these types of moves. Only issue is as it shows past price action (as do most technical indicators) it may be hard to time trades since prices fluctuate so quickly in these low priced stocks. I guess they are useful when there is a major change in trend. So many indicators, so little time....

 

[DTM]

I've forgotten about Bollinger Bands completely, another interesting one to keep an eye on, I don't use them that much now but worth noting in future for these types of moves. Only issue is as it shows past price action (as do most technical indicators) it may be hard to time trades since prices fluctuate so quickly in these low priced stocks. I guess they are useful when there is a major change in trend. So many indicators, so little time....

I normally estimate by seeing where the lines would project to for working out the next day's estimated range. A rough estimation at the best but it helps me see where people will take their profits.

 

[kirtdog]

any1 looked at BOC lately?? its pretty cheap and if you look at it over a year it looks like a sine wave and its at the bottom now... im considering taking a risk with it..

 

[It's Snake Pliskin]

any1 looked at BOC lately?? its pretty cheap and if you look at it over a year it looks like a sine wave and its at the bottom now... im considering taking a risk with it..

The liquidity looks a problem.

 

[Triathlete]

Hi All,
If there are any chartist out there that could confirm my thinking in regards to the direction of Iluka.I have been following this stock for a while and believe it will continue to move down towards $5.50 based on my analysis.Your feedback is much appreciated

 

[Nortorious]

I would agree ILU is heading down further or at least there is a high probability. So far as a target, I would merely be riding the trend down until it plateaus if you are shorting.

 

[Triathlete]

I would agree ILU is heading down further or at least there is a high probability. So far as a target, I would merely be riding the trend down until it plateaus if you are shorting.

Thanks for that I will see where it plateaus as you suggest but in my way of thinking the stock would be weak once it closes below $7.30 on the weekly chart and time to get in again short and I believe the stock will move to the next strongest support level around the $5.50 area, just my opinion based on the analysis I am doing .Thanks again for confirming.

 

[pixel]

Hi All,
If there are any chartist out there that could confirm my thinking in regards to the direction of Iluka.I have been following this stock for a while and believe it will continue to move down towards $5.50 based on my analysis.Your feedback is much appreciated

Interesting coincidence:
Check out what I posted a couple of hours ago in the Gold thread:
https://www.aussiestockforums.com/forums/showthread.php?t=2366&p=848434&viewfull=1#post848434

The same pattern seems to develop on the ILU chart.



From that perspective, doubling the range from $11 to $4 (in round number) makes $5 a reasonable target. Remember though, we're talking possibilities; charts never "predict" anything with certainty.