diff --git a/MEV_and_trading/day-trading/technical_analysis/README.md b/MEV_and_trading/day-trading/technical_analysis/README.md index f7d7535..b04b051 100644 --- a/MEV_and_trading/day-trading/technical_analysis/README.md +++ b/MEV_and_trading/day-trading/technical_analysis/README.md @@ -8,265 +8,16 @@ * gives us data points to compare and contrast * uses chart patterns, price data, trading volume and indicators * allows us to follow a systematic strategy that can be improved -* cannot predict the future - - -
- ---- - -### candlestick charts - -
- -* data rich trading analysis -* time and price details -* traders use candlestick chat patterns to antecipate the future -* show market high and low for a given time period -* each candle is a period in time -* tells: open/close (body) high/low (wick) for a period of time - -
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- - - -##### hammer pattern - - - -* bullish pattern -* sellers drove price lower during the day -* buyers came in and the price finished higher -* will continue tomorrow? -* where are open, close, high, low? - - -
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- -##### shooting star pattern - - - -* bearish pattern -* buyers drove price high -* sellers won and price fell lower -* will this continue tomorrow? - - -
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- -##### bullish engulfing pattern - - - -* bullish pattern -* bullish candlestick "engulfed" the bearish candlestick -* represents a strong reversal in the price action -* will continue tomorrow? - -
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- -##### bearish engulfing pattern - - - -* bearish pattern -* bearish candlestick engulfed the bullish candlestick -* represents a string reversal in the price action -* will continue tomorrow? - -
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- ----- - -### chart patterns - -
- -* used in conjuction with candlestick charts -* longer-term analysis of market movements -* bullish and bearish patterns -* used with day trading and swing trading -* dont tell about longer term trends - - - - -##### double top - - -* bearish pattern -* buyers tried wtice to push price higher -* buyers unable to push price higher -* price has no moment at this level -* buyers run ot of steam -* sellers are in the market - - - -
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- -##### double bottom - -
- -* bullish pattern -* sellers came in twice -* price found support of buyers twice -* buyers happy to pay up -* sellers may run out and buyers need to pay more -* buyers are in the market - - - - -
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- - -##### asceding triangle - -* charts never trade in a straight line -* charts trend -* highs and lows are important -* consolidation is imporant -* higher highs or higher lows is bullish -* narrowing of a range can preceed a breakout - - -
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---- - -### trends - -
- -* we can't trade from patterns all the time, they are quite rare -* trends patterns will guide us more often -* patterns can be housed within trends -* if we can find the trend, we can ride the trend for profit - - - -##### asceding wedge - higher lows +#### 👉🏼 [reading candlestick charts](candlesitck_charts.md)
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- -##### desceding wedge - lower highs - - -
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- -##### consolidation - -* give us a strong area of trade where traders have been before -* area in the chart moving sideways -* we can use consolidation as a guide for our entry/exit points -* sometimes preceed breakup -* where buyers/sellers are at equilibrium and can't last forever -* use these levels for our stop loss levels - -
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- -##### support and resistance - -* support and resistance are simply significant price levels -* resistance can become support if a price breaks through that level in an uptrend -* vice versa for a downtrend - - -##### moving averages - -* SMA: arithmetic mean of prices over a given time period -* EMA: weighted and give more importance to recent prices - -##### relative strength index (RSI) - -* plots the relative strength of the price compared to previous prices -* momentum indicator -* above 70: price is relatively expensive (overbought) -* below 30: price is relatively cheap (oversold) -* can't predict how the price will change in the future - -##### average true range - -* measure of daily price volatility -* tell us the true amount the price could move in a given day -* largest probably move for one day based on previous data -* can be used to set our stop loss and give the trade some breathing room - -
- ---- - -### how to trade with trends - -
- -1. Identify the market trends -2. Ask where are the main areas of trade - - where is support and resistance? - - any chart pattern? -3. Make your entry based on the daily trade action - - is the candlestick telling us that the trade will go in the direction of our trade? - - is the trade bullish or bearish based of candlestick patterns? - -
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