Best Thread learning to read price action with p/f charts

[isatrader]

AAPL double top breakout today. However, it's still got to get through the short term down trend lines and horizontal resistance from the September lows.

1% box size by 3 reversal with high/low plot

 

[Dentalfloss]

thnks isa
not really happy with % box sizes
are they log box or fixed
log really only for scanning..imho

 

[Dentalfloss]

Duplessis book...new edition
if anybody has read it,then could they enlighten us on
1. two new techniques on drawing p/f charts...the low/high method and ohlc method.please let us know how they are constructed,so we can judge their usefulness
2.new chapter on analysis and choosing box sizes.this was badly explained in the first edition
3.gaps..implications of showing them..does it give more info on the columns ?? yes that is very useful,especially for stocks
4.breadth...X column % and bullish trend %..these might be useful and give a better picture than bullish %
5.horizontal activity histogram...this is price/volume for each box level..another useful indecator similar to market profile

 

[isatrader]

thanks isa
not really happy with % box sizes
are they log box or fixed
log really only for scanning..imho

For the Apple chart I used a fixed percentage of 1%. I find percentage charts useful when looking at a medium term picture, especially when it goes through a box size change level like Apple did when it went through 500 earlier in the year. I agree that log charts would be better for scanning, but Stockcharts and Dorsey don't have log charts available.

thanks isa
4.breadth...X column % and bullish trend %..these might be useful and give a better picture than bullish %

I've not seen a X column % chart yet, but Dorsey have the bullish trend % chart as one of their broad breadth indicators, which is called PTNYSE (Percentage of Stocks in a Positive Trend for NYSE). It is very similar to Bullish Percent as it uses the same Market Breadth Status, such as Bull Confirmed, Bear Alert, Bear Correction etc, and is created using the same 2% percent box size as it's meant to be a long term breadth indicator. As you will see, it is much slower than the Bullish Percent, so the main focus is on the reversal from Xs to Os or vice versa, as that means 6% of stocks in the NYSE have changed from a positive to a negative trend. For example as there are currently 3110 stocks in the NYSE, which means that around 187 stocks would need to change from a positive to a negative trend to get a reversal. But at the same time other stocks will be doing the opposite, so you can see why reversals would be significant as it takes a lot to get a 6% shift. The other things to watch are the column it is in and it's position on the playing field. Currently it's in a column of Xs and 62.27% of stocks in the NYSE are in a positive trend. So it's currently bullish and it's field position is good.

Attached is the charts of the PTNYSE and the NYSE Bullish Percent chart so that you can compare. In my opinion it's useful as a secondary indicator, but the NYSE Bullish Percent Chart and the Percentage of Stocks above their 50, 150, and 200 day charts are better P&F breadth indicators to focus on.

 

[Dentalfloss]

hey isa
i want to know what youre breadth charts picked for last fridayto this monday.when stock index reversed that minor downtrend
are they sensitive enough to pick that up ??
which one worked the best ??

 

[isatrader]

hey isa
i want to know what youre breadth charts picked for last fridayto this monday.when stock index reversed that minor downtrend
are they sensitive enough to pick that up ??
which one worked the best ??

Most of them are medium to longer term measures. The short term chart to watch is the ($NYA50R) Percentage of stocks above their 50 day moving averages. The standard 2% box size reversed back to Xs on Tuesday, but if you want to use it on a faster time frame then the 1% box size reversed on Monday which I've attached.

The other two I find useful for short term timing is the New Highs New Lows and Cumulative Advance Decline. Both of these gave minor positive signals on Monday as New highs held above the 100 level and new lows stayed very low and the Advance Decline line made a small higher high above the previous weeks high and went on to breakout to new highs again on Wednesday, showing a positive divergence with the price action which hasn't yet made new highs.

The key to the breadth charts I think is to look at them as a group of charts and not just one chart in isolation, as they are most useful to help determine more meaningful changes in trend and to identify weakness or strength in market before the price action shows it's hand.

 

[isatrader]

AAPL testing it's lower support levels. Two charts attached. Traditional 5 pt box size by 3 reversal chart and Fixed Percentage 1% box by 3 reversal chart.

 

[Dentalfloss]

nas 100
3 min data
3 point box size by 1 reversal
shows a well defined downtrend
trend ends when 2700 taken out
$700 res on goog on friday prompted the selloff...aswell as earnings from mcdonalds
imho

 

[malaguti]

Duplessis book...new edition
if anybody has read it,then could they enlighten us on
1. two new techniques on drawing p/f charts...the low/high method and ohlc method.please let us know how they are constructed,so we can judge their usefulness
2.new chapter on analysis and choosing box sizes.this was badly explained in the first edition
3.gaps..implications of showing them..does it give more info on the columns ?? yes that is very useful,especially for stocks
4.breadth...X column % and bullish trend %..these might be useful and give a better picture than bullish %
5.horizontal activity histogram...this is price/volume for each box level..another useful indecator similar to market profile

Thats really annoying, 2nd edition and my book has hardly been used.
Is it worth spending another £60 Dentist?

 

[Dentalfloss]

Hi malaguti
first of all ,you can get the 2nd edition on amazon for 40 quid
but..not sure if you need it..i have not bought it as yet
please could someone input regarding the new edition....please
mainly on the stuff i posted about the second edition
1.the chapter on analysing p/f charts has been rewritten,according to the stuff on amazon
seems to be mainly about choosing box sizes...this was badly explained in the first edition and gave no insight into really short term trading with p/f.This actually comes with a bit of practice and a cheap p/f charting package eg bullseye.Updata is too expensive to fool around with and get this knowledge..imho
so,maybe,the new edition might have a few new facts about this...but at the end of the day,it is more about practice than books for this .you must be able to move around box sizes and reversals quickly to gather information....imho
2.gaps..i would be interested to hear about that piece he has done
gaps do give alot of info
3.the low/high and ohlc method of charting for p/f
i think this might have limited use..possibly just a gimmick like heikin-ashi and ichimoku
you really cannot beat tracking the close price..imho
4.new market breadth tools..yes ,can be useful...just another add on...there are -plenty of breadth tools out there
5.horizontal activity histograms...useful tool.a bit like market profile...but if you do good analysis on prev s/r..then it really is a confirmation tool..so just another add on
overall...it looks like there is nothing much that is really useful if you are doing good analysis
but if anybody has bought the new edition,please let us know what is good

 

[isatrader]

Attached is the S&P 500 traditional Daily 10 box by 3 reversal chart and the Fisher/Gartman Risk On ETF (ONN) 60 minute fixed percentage 1% by 3 reversal chart. Both attempting to make double bottom breakdowns within their longer term uptrends.

ONN Tracks This Index: Fisher-Gartman Risk Index
Description: The index consists of a mix of long and short positions in various asset classes whose overall value is expected to rise when the outlook on markets and the broader economy is positive and to decrease when such outlook is negative. The Index is comprised of long positions in "risk on" instruments and short positions in "risk off" instruments in the following sectors: energy, agriculture and metals (through long positions in futures-based commodity indices); equities (through a long position in an index of exchange-traded products); currencies (through long and short positions in currency futures contracts); and domestic and foreign government bonds (through a short position in an index of sovereign bond futures contracts).

 

[isatrader]

Hi dentist, here's a Daily S&P 500 chart 10 box by 3 reversal and a 60 minute chart 2 box by 3 reversal. I highlighted the support zone from the August range on the 60 minute chart. Daily chart is approaching it's one year up trendline and horizontal volume support at 1400 box.

 

[Dentalfloss]

hey isa
too slow for me
3 min spx from 18oct
2 signals yesterday to go short
1.50% retrace of the pole
2.semi catapult breakdown
1 pt by 1 reversal

 

[malaguti]

Early yet to be talking about a down trend, I expect a bounce and then maybe I'll be shorting. 5x2 line is broken, but not convinced yet, and this corresponds to the 10x1 where support is obvious

 

[malaguti]

Hi dentist, here's a Daily S&P 500 chart 10 box by 3 reversal and a 60 minute chart 2 box by 3 reversal. I highlighted the support zone from the August range on the 60 minute chart. Daily chart is approaching it's one year up trendline and horizontal volume support at 1400 box.

Hi Isa, I'm curious, do you use the moving averages at all in conjunction with P&F? Other than having them on your charts. Does it help "confirm" anything, and if so, how?
Just out of curiosity, nothing sinister

 

[Dentalfloss]

hi malaguti,isa and all others
spx..looks like support is coming in....but...
if it bounces then we look at the test of res,particularly 1430
is it a bounce in a downtrend or a reversal
5 min data from 18 october
1.50 by 3 reversal..hilo plot

 

[isatrader]

Hi Isa, I'm curious, do you use the moving averages at all in conjunction with P&F? Other than having them on your charts. Does it help "confirm" anything, and if so, how?
Just out of curiosity, nothing sinister

I do use them, but mostly on relative performance charts as I find they help to give breakdowns or breakouts more significance in the similar way that trend lines do. For example attached is the Gold/Silver ratio which has been in favour of owning Gold over Silver since June 2011. I say this because it made a swing high above the falling MA in May 2011 and then broke above that swing high in June 2011. So that was the buy point using the MA imo and even though it fell back below it, it didn't break the swing low that it formed and then broke out in earnest in August 2011 and started making successive higher highs.

If you look at the chart now it made a swing low below the MA in September 2012 and reversed to Xs. The MA has gone flat and so it would need to reverse back to Os and make a double bottom breakdown below the swing low which I've highlighted for the major trend to have changed in favour of owning Silver over Gold imo.

Does that make sense?

 

[Dentalfloss]

eurusd 30 min data
that downtrend might be ending
3 pips by 1 reversal/close

 

[malaguti]

I do use them, but mostly on relative performance charts as I find they help to give breakdowns or breakouts more significance in the similar way that trend lines do. For example attached is the Gold/Silver ratio which has been in favour of owning Gold over Silver since June 2011. I say this because it made a swing high above the falling MA in May 2011 and then broke above that swing high in June 2011. So that was the buy point using the MA imo and even though it fell back below it, it didn't break the swing low that it formed and then broke out in earnest in August 2011 and started making successive higher highs.

If you look at the chart now it made a swing low below the MA in September 2012 and reversed to Xs. The MA has gone flat and so it would need to reverse back to Os and make a double bottom breakdown below the swing low which I've highlighted for the major trend to have changed in favour of owning Silver over Gold imo.

Does that make sense?

perfect sense thanks ISA and notably that buy would have been prior to the bearish resistance line being broken. Ok thanks

 

[malaguti]

Dow Jones also coming into support here