Trade Strategies

 1. MACD Trend Following Strategy

A general MACD 

https://tradingstrategyguides.com/macd-trend-following-strategy/

2. Using Moving Averages Perfectly

a. For cross over purpose, use both 20 days and 50 days moving average

b. Some stocks might not react to cross over. Hence backtest before you use

c. Use ATR trailing stoploss indicator to fix the exit point

d. Use stochaistics indicator too in addition to the moving average

e. Combining the PSAR or Supertrend with moving average cross-over would giver better results

Technical Indicators

1. Williams %R

• This is basically a momentum indicator.
• The value of the indicator oscillates between 0 and -100.
• %R reading above -50 means the price is moving upward. A reading near -100 means oversold levels.

2.  MACD

• The MACD displays a MACD line (blue), signal line (red) and a histogram (green) - showing the difference between the MACD line and the signal line.

• When the MACD line crosses ABOVE the zero line, this signals an UPTREND
• When the MACD line crosses BELOW the zero line, this signals an DOWNTREND

• When the MACD line crosses ABOVE the signal line, traders use this as a BUY indication
• When the MACD line crosses BELOW the signal line, traders use this as a SELL indication

• When the MACD line is above the signal line, then the histogram will be positive. 
• The opposite is true when the MACD line sits below the signal, whereby the histogram will plot below the zero as a negative value.

3. Stochastic Indicator

The stochastic oscillator has 2 lines (%k) and (%d). 

%K = (C-L5close)/(H5-L5) * 100

%D = 3-day SMA of %K.

where,

C = the most recent closing price.

L5 = the low of the five previous trading sessions.

H5 = the highest price recorded within the same 5-day period.

However, the period can be changed.

The 2 lines cross each other and we consider this as the buy/sell signal. 

We call the %k line crossing the %d line above as the buy signal. Whereas we call the %k crossing the %d line below as the sell signal.

The traders consider a stochastics value close to 0 as oversold, i.e, market is enough sold and can bounce back any time. Whereas they consider the stochastics value close to 100 as overbought, i.e, the market is enough bought and can take a correction any time.

Doji-s and What they mean

1. Dragonfly 

It gives a buy signal when the the doji, high is broken on the next candlestick.

2. Gravestone

It’s a bearish Doji.  If the market is in an uptrend and if you notice a Gravestone Doji candlestick, it may be the first indication that the trend may start to reverse to a downtrend.

3. Four price

This means that the price did not change at all during the period of a candlestick.

It’s common to see the Four-Price Doji in markets where trading volume and liquidity is extremely low.

If you see many Four-Price Dojis on the chart – stay out of this market.

Because liquidity is so low, you won’t be able to get in and out of your trades easily.

Sources:

https://www.tradingwithrayner.com/doji-candlestick-pattern/

https://www.investarindia.com/blog/importance-of-doji-patterns-in-trading/

Snippets from the book "The Ultimate Guide to Price Action Trading"

 Tried to snip the key-take-aways from the book authored by "Rayner Teo" on Price action trading

What are Impulsive and Corrective moves ?

Next, the author discusses four key technicalities to look gauge the trend and its strength

I found the following mention to be trivial. But the lead the Rising three method gives is what that causes me to mention this here.

Variation of rising three method- Penants, Flags- a forerunner to a breakout

To throw more light on the penants and flags, quoting from here

• Bullish Penant

To identify a bullish pennant, you’ll need to watch for two elements. Firstly, a pronounced upward movement beforehand known as the ‘pole’. Secondly, a price consolidation that forms a roughly symmetrical triangle with its support and resistance lines.

• Bearish Penant 

To identify a bearish pennant, look for a consolidation between support and resistance after a major bearish price move (the pole). The support and resistance lines will form a roughly symmetrical triangle, showing that the market is in conflict between positive and negative sentiment.

• Other similar patterns

The following readings would give a deeper understanding of the commonly observeable patterns

1. https://www.ig.com/en/trading-strategies/how-to-trade-bullish-and-bearish-pennants-200428 
2. https://www.dailyfx.com/education/technical-analysis-chart-patterns/pennant-pattern.html 

Disclaimer

The above excerpts are based on my understanding of important mentionings in the book and are not exhaustive.

 

Major Buys by Major Buyers