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Showing posts from June, 2024

Stock Market Sorcery: The Wizards Behind Your Favorite Technical Indicators

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List of key technical indicators used in the stock market, along with their inventors and a brief description: Early 20th Century 1. Dow Theory - Charles Dow    - A framework for market analysis based on market trends and averages. 2. Point and Figure Charting - Charles Dow    - A technique to identify price patterns without considering time. 1940s-1950s 3. Elliott Wave Theory - Ralph Nelson Elliott    - Predicts market movements based on wave patterns. 4. Stochastic Oscillator - George Lane (1950s)    - Compares closing prices to a range over a period to predict price turning points. 1960s-1970s 5. On-Balance Volume (OBV) - Joseph Granville (1963)    - Uses volume flow to predict changes in stock price. 6. Accumulation/Distribution Line (ADL) - Marc Chaikin (1970s)    - Measures the cumulative flow of money into and out of a security. 7. Relative Strength Index (RSI) - J. Welles Wilder (1978)    - Identifies overbought or oversold conditions by measuring the speed and change of price

From Rice to Riches: The Evolution of Japanese Candlesticks in the Global financial markets

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The evolution of Japanese candlesticks in the stock market is a fascinating journey that spans several centuries. Pre-20th Century: 1. Early 1700s: Munehisa Homma, a Japanese rice trader from Sakata, is often credited with developing the principles behind candlestick charting. He used these charts to track and predict rice prices at the Dojima Rice Exchange in Osaka, the world's first futures market. Homma's work laid the foundation for modern candlestick charting. 20th Century: 2. 1930s-1940s: While candlestick charts were known and used in Japan, they were not widely recognized or utilized in Western financial markets during this period. 3. 1970s: Japanese financial markets began to open up more to international participants, leading to a slow but increasing awareness of Japanese trading techniques, including candlestick charting. 4. 1980s: Candlestick charts started to gain popularity outside Japan, particularly in the United States. Western traders and analysts began to

High probability intraday bullish trade: Demand zone within(over lapping, intersecting) daily CPR

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5 minutes chart of BTCUSD Coinbase In the above chart a demand zone Rally Base Rally is created between the Central Pivot Range (CPR) levels — Pivot Point (PP), Bottom Central Pivot (BCP) - its a high probability demand zone and we can see candles rallying upwards from the demand zone. High probability Demand zone within Central Pivot Range (CPR) levels When a demand zone is created between the Central Pivot Range (CPR) levels — Pivot Point (PP), Bottom Central Pivot (BCP), and Top Central Pivot (TCP) — it signifies a confluence of support levels, which can strengthen the case for a potential bullish price reversal or continuation. Here's a detailed breakdown of what typically happens in this scenario: Understanding the CPR Levels and Demand Zones: 1. Pivot Point (PP): The central price level calculated from the previous period's high, low, and close. It often acts as a key support or resistance level. 2. Bottom Central Pivot (BCP): The lower boundary of the central pivot rang

High probability intraday bullish trade: 5 minutes candles above daily, weekly and monthly CPR

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5 minutes chart of BTCUSD Coinbase In the above 5 minutes chart of BTCUSD we can see weekly CPR is above monthly CPR, and daily CPR is above weekly CPR, and 5 minutes candles consolidated for sometime above the daily CPR and later we can see a intraday upwards bullish rally after range breakout and a pull-back. Daily, Weekly and Monthly CPR When analyzing the relationship between daily, weekly, and monthly Central Pivot Ranges (CPR) and their respective positions relative to the price action, traders can gain insights into market sentiment and potential future price movements. Let's break down the scenario where the weekly CPR is above the monthly CPR, the daily CPR is above the weekly CPR, and the candles are above the daily CPR. Interpretation of the CPR Levels 1. Weekly CPR Above Monthly CPR:    - This indicates that the weekly market sentiment is more bullish than the monthly sentiment. The market is showing a strong upward momentum on a shorter-term basis compared to the longe

The Central Pivot Range (CPR)

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The Central Pivot Range (CPR) is a popular technical analysis indicator used in trading to identify potential support and resistance levels. It consists of three key levels: the Pivot Point (PP), the Top Central Pivot (TC) or Upper Central Pivot, and the Bottom Central Pivot (BC) or Lower Central Pivot. The CPR helps traders gauge market sentiment and make informed trading decisions based on the relative position of price action to these levels. Calculation of CPR Levels: Interpretation of CPR: - Above CPR: If the current price is above the CPR, it indicates a bullish sentiment. - Below CPR: If the current price is below the CPR, it indicates a bearish sentiment. - Within CPR: If the current price is within the CPR range, it suggests a sideways or range-bound market. Trading Strategies Using CPR: 1. Breakout Strategy:    - Bullish Breakout: Enter long positions when the price breaks above the TC level.    - Bearish Breakout: Enter short positions when the price breaks below the BC leve

Stock traders and tunnel visions

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In the Book "The Road Less Traveled" by M. Scott Peck, the concept of "tunnel vision neurosis" is discussed as a psychological condition where an individual's perspective becomes excessively narrow and limited. This term is used metaphorically to describe how a person's focus can become so restricted that they are unable to see the broader context or the full range of options available to them. Peck describes how this condition can lead to significant problems in a person's life. When someone has tunnel vision neurosis, they may be unable to adapt to changing circumstances or to consider alternative solutions to their problems. This limited perspective can result in repetitive and ineffective behavior patterns, exacerbating their difficulties rather than resolving them. For example, a person with tunnel vision neurosis might focus so intensely on a single goal or aspect of their life that they neglect other important areas, such as relationships or self-

Apophenia: A natural Psychological tendency

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Humans have a natural tendency to find patterns and meaning in random data, a phenomenon known as apophenia. This can lead us to see connections that are not actually there. Apophenia, the tendency to perceive meaningful patterns within random data, is a common phenomenon in the analysis of stock market charts. Here's how it relates and some points to consider: Apophenia in Stock Market Analysis: 1. Pattern Recognition:    - Investors often look for patterns in stock charts to predict future price movements. Common patterns include head and shoulders, double tops, and cup and handle formations.    - While some patterns have historical precedents and can sometimes provide useful insights, the stock market is highly complex and influenced by countless factors, making consistent predictions challenging. 2. Technical Analysis:    - Technical analysis involves studying past market data, primarily price and volume, to forecast future price movements. Analysts use various tools and indica