There is an old rule in trading that is tried and true – “Never short the first top”. The principle applies equally to stocks that have fallen significantly, and can be considered as “Never buy the first bottom”. Today we will look at the analysis for tops, but it is equally applicable to bottoms – just turn everything upside down.
How to Buy Shares - Stock Market Education
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One of the most widely recognised patterns in technical analysis is the bearish ‘head -and-shoulders’ pattern. As the pattern is a reversal pattern, the first requirement of the formation is that a valid uptrend is in place. This pattern tells us that, initially, the market was moving in the usual way during an uptrend with higher
This week’s focus is on the use of ‘bullish confirming price bars’ to give traders reliable signals to buy into up-trending stocks or indices. While there are a plethora of ‘bullish key reversal bars patterns’ with various uses and definitions, here we focus primarily a favourite price bar reversal signal – the ‘Pinocchio Nose Candle.’ Some argue that a simple
The market’s sharp pullback in September left many traders burnt as they tried to latch onto the momentum too late, with the ASX 200 rebounding last month in equally dramatic fashion. This lesson may help those who wonder whether it’s worth trying to catch such a ‘runaway train. Slope-a-dope So how steep is steep? If
When in a bull market or a bear market, it is relatively easy – the key word is relatively, here – to predict the general direction of a stock: up or down. However, in today’s current market volatility, it seems as though guesstimates for a stock movement (or even the whole market!) may as well be
Any security containing price data over a period of time can be demonstrated in a chart, and this is why charts are the weapons of choice for technical analysts. When certain trends are identified, specific names are given to them. For example, the “head and shoulders” is a name given to a chart pattern that
Line charts and bar charts are common methods of displaying price information on a chart. However oHowevJapanese Candlesticks are another popular way to interpret charts due to their superior ability to convey crucial information about the price action. There are many Japanese candlestick patterns around, so we will simply introduce the concept of Japanese Candlesticks
When deciding what shares to invest in next, many investors select one of two popular types of investing – the top-down or the bottom-up techniques. The approaches are both at stark odds to each other and investors usually heavily favour one approach to the other. But what do these techniques involve – and is one
One of the most fundamental aspects of investing has nothing to do with charts, prices, financial data or economic news. As most market psychologists will tell you, our emotions can play just as a big role in our investing decisions. It’s ridiculous to think that every investor works without emotion, because emotions are part of
There are two schools of thought when it comes to exiting losing trades. The first says you should never make the decision yourself – for any trade! This school says that once you’ve entered a position, you should only let the market take you out. This holds for both directions: a losing trade should see