Ascending Triangle – Bullish Reversal
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Factor LLC and Tech Charts Member Webinar – September 2017
Member Webinar and Q&A with Peter L. Brandt and Aksel Kibar – Recorded live September 21, 2017
Opening discussion/presentation by Peter and Aksel
- Favorite classical chart patterns
- Establishing timing of entry and targets
- Current markets
Live questions from Members
- Peter: Do you track prices of rice separately or is it included in the grains chart that you already are tracking? 46:02
- Aksel: How important is the volume when price break out from the chart pattern? Is it more reliable with higher volume in your opinion? 47:01
- Either: CS – (as an example) You pull up a chart on interactive brokers, big charts, metastock, etc., and you get different break out resistance lines — what is the “official” chart? 48:23
- Peter: Since I traded more in India, can you please tell what is the strongest sector that can be played for nifty move up to 11250? 50:54
- Aksel: What risk management / trade management rules of thumbs do you apply when trading? 51:41
- Both: From observing your trades/recommendations you seem to have a different time frame for your ideal trade setups (10-26 weeks vs 4-24 months) — would be curious to understand if this is a function of the different markets you trade or if you just have different experiences with the reliability of time frames or something else? 52:51
- Both: Neither of you use volume in your analysis, to confirm breakouts , etc., can you talk a little bit about why you don’t use it, especially for stocks Aksel as volume is more readily available there compared to forex. 54:54
- Peter: Can the right shoulder in gold chart morph into an abbreviated one and thus making it breakout powerfully? What is the reason for you to have the H&S to be symmetrical in case of gold? 58:13
- Aksel: I have a general question concerning the neckline of HS-Formation. I noticed the neckline/boundary can be horizontal, and diagonal as well. Is that of any significance? 1:00:12
- Either: With regard to futures the successful patterns are 12-16 weeks long. In light of having to wait for the “right” patterns as a trader are you not significantly limiting yourself in building significant equity due to the few opportunities that emerges. 1:00:52
- Either: What do you see as the pros and cons of using CFDs for trading stocks? And is it an instrument your recommend using? 1:02:42
- Either: If a flag/pennant correction after a previous move, where you ideally enter and set the stop loss? 1:04:10
- Peter: You mentioned the tactical challenges in trading 1-2 year patterns — would you mind explain how you address these challenges tactically? 1:06:10
- Aksel: Do you agree with Peter that profits should be taken when target is met? 1:08:03
- Either: Do either of you have a real preference for bars over candles and why? 1:09:29
- Peter: Do you also watch bar-by-bar in order to identify patterns more accurately. Kind of “tape reading”? I understand you trade the break out, but are you more alert when e.g. bars are more narrow ranged at the moment you think breakout comes? 1:10:25
- Either: Where do you place initial and subsequent stops on BO? What do you consider too late a BO entry? 1:11:18
- Either: There are so many great trade set up ideas provided for in your chart analysis. Practically when managing capital, you are constrained by the number of trades that you can take. How do you manage the process of selecting the “best trades” and what criteria do you use to define those? 1:14:06
U.S. DOLLAR INDEX ETF (UUP)
While still at the early stages, an important chart development might be taking place on the U.S. Dollar Index. In the second half of 2016, the U.S. dollar index breached the upper boundary of its consolidation range at 100.3 levels. The breakout was a bull trap (false breakout) and after couple of weeks, the price reversed back into the trading range and traveled sharply towards the lower boundary of the rectangle. In the beginning of September 2017, the price breached the chart pattern boundary on the downside. Those who are looking for a possible reversal of the downtrend on the U.S. dollar, should keep an eye on the 93 levels on the U.S. Dollar Index Futures chart and 24.15 levels on the US Dollar ETF (UUP) chart. A reversal above the mentioned levels can result in a bear trap (false breakdown) and turn out to be positive for the U.S. dollar in the coming months.
Symmetrical Triangle – Bullish Reversal
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GLOBAL EQUITY MARKETS – September 23, 2017
REVIEW
Another Emerging Asia equity index broke out to new all-time highs. Philippines SE Composite index breached the 8,125 level after moving in a 2 year-long, wide trading range between 6,500 and 8,125 levels. The equity benchmark has been in a steady uptrend for the past year. Last two week’s price action cleared the strong horizontal resistance and pushed the index to uncharted territory. Once a strong resistance, 8,125 level now acts as support. As long as the index holds above that level we will expect positive momentum to continue in the Philippine Stock Exchange. An efficient way to take advantage of the recent bullish technical development in the Emerging Asian country is through iShares MSCI Philippines ETF (EPHE.K) that is listed on the New York Stock Exchange. The chart below reviews the iShares MSCI Philippines ETF.
PREMATURE & FALSE BREAKOUTS
Below two paragraphs are taken from Peter L. Brandt’s Diary of a Professional Commodity Trader – Lessons from 21 weeks of real trading.
“A premature breakout is different from an out of line movement in the sense that a premature breakout can close outside of a predrawn boundary line and even spend several days in breakout mode. Prices then return back to the geometric pattern. However, the initial breakout was only a harbinger of things to come, and within a few weeks a genuine breakout occurs. I call these subsequent breakouts secondary breakouts or pattern recompletions.” – Ch 3, page 38, Identifying the trades and the trading vocabulary
“Unlike the premature breakout, which is followed by a genuine breakout in the same direction, the false breakout results in prices either developing a much larger pattern or strongly moving in the opposite direction. Some traders refer to false breakouts to the downside as a bear trap and false upside breakouts as a bull trap. This means that traders who normally position themselves in the direction of the initial price thrust get stuck on the wrong side of the market.” – Ch 3, page 40, Identifying the trades and the trading vocabulary
GLOBAL EQUITY MARKETS – September 16, 2017
REVIEW
Global equity markets continue to remain in a steady uptrend. iShares MSCI All Country World Index, a benchmark for global equity market performance, continued to hold above its multi month-long upward trend line. The minor low and the upward sloping trend line are forming support at 66.15 levels. Uptrend is intact.
Factor & Tech Charts Member Webinar – Thursday, September 21st at 11am Mountain
Thursday, September 21st at 11:00 am MST
Members of the Factor and/or Tech Charts Service join us for our first joint webinar with Peter Brandt and Aksel Kibar. Peter and Aksel will give examples of major chart patterns. They will discuss current trades that performed well and showcased classical charting patterns. Peter and Aksel will also discuss any current developing trades. As time allows we’ll end with member questions.
H&S CONTINUATION
Head and shoulder chart pattern can form as a continuation on price charts. In uptrends, a H&S continuation will be similar to a H&S bottom and in downtrends it will resemble an inverse H&S. The implications and interpretations continuation H&S are usually the same with reversals. Price objectives can be derived in the same way as it is calculated on a reversal chart pattern.
Head and shoulder continuation is one of my favorite chart pattern. A head and shoulder continuation that forms in an uptrend, will usually breakout to all-time highs once the chart pattern is completed. Breakout to all-time highs from bullish continuation chart patterns are usually reliable and powerful.
A head and shoulder continuation that forms in a downtrend will usually take out the minor lows and move in the path of least resistance. Price that is already in a downtrend is likely to accelerate on the downside (sometimes in a sharp fall) as it breaks down a well-defined horizontal support.
Below are some examples of H&S continuation chart patterns in up and down trends.
GLOBAL EQUITY MARKETS – September 9, 2017
REVIEW
I am not sure if Volatility index can be analyzed from a classical charting perspective but over the past few months, the VIX futures and since 2016, the CBOE Volatility Index respected important support/resistance levels. Irrespective of the headlines related to geopolitical tensions, the three different continuation future price charts of the Volatility Index (Oct, Nov, Dec) are showing signs of multi-month bottoming process. The importance of 15-16 area as a resistance can be seen on the Volatility Index and the VIX futures price charts. Last one month’s price action arguably formed tight consolidations in the form of a pennant/symmetrical triangle below the important horizontal resistance. I think we should keep a close eye on these charts in the coming weeks. Completion of the month-long tight consolidation range can result in a breakout above the strong resistance area between 15 and 16 levels.
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