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Identifying market reversal
- Using technical analysis
In this recorded webinar, we learned about applying:
i) Technical Analysis with the understanding of behavioural science or market psychology and
ii) Identifying market reversal, of those with higher weighting
I would like to thank you Chicago Mercantile Exchange for inviting me to share on this topic. Though I am using examples on S&P, Dow Jones and Nasdaq, the application can be apply throughout all markets.
Micro E-mini – Its attribute
Common application – Superficial
Behavioural application – Understand from market psychology perspective
The structure of “reversal up”
The formation before “reversal up”
Recognising the “reversal up” with higher weighting
Case studies examples on 15 min chart
Micro E-mini Dow Jones
Micro E-mini S&P
Micro E-mini Nasdaq
There were many good questions asked at the end of this webinar, I managed to take two of them and the rest of the questions and my replies as follows:
Good evening Kon How, would like to check with you again what is the expected profit taking range for S&P 500 again? Is it 15 points? Secondly, do you take into account price gaps, and also gaps that happens before the hammer? Do you consider the whole range with the gap or just the hammer’s candle high and low?
As for the current 15 min market dynamic, I am using 12 points as my initial profit target. My preference is to only consider chart analysis reference with the cash market presence or regular trading hours. Why? Because when there is mass market participation, we can study into the mass behaviour more accurately.
Do you also hold any open positions over the weekend?
If it is part of my plan, I will.
If a hammer formed during a DT, but then followed by a Bearish Engulfing Pattern, does this negate the entry signal?
Yes, if you have not entered yet, I will void that view. Bearish engulfing, it is another powerful indicator.
How will the equity market move on Trump’s impeachment news when US market open later tonight?
Negative news likely to affect market negatively, but that not my point. "…but suddenly market move higher with no positive news…" This is what we should be looking out for.
How to identify short position besides long position?
It is similar to what I have shared, but you reverse the whole concept, instead of identifying Fear, we look-out for Greed.
How to set proper stop loss so you wont be cut off from a retracement?
I believe you are asking about not to get stop out from market whipsaw. The key is in under-trading, I hope to discuss this another time in detail, this will be another topic on it's own.
If monthly chart is uptrend, will you enter market if 15 minutes chart shows a short signal?
Yes, definitely, but I will keep it really short term as I am going against the main trend.
Chart pattern vs indicator, which one you think is more reliable.
Indicators are laggard, patterns is a study of the current prices. First pattern, then indicator.
Can I use this in other time frame ? or what time frame is not suitable?
I always emphasis on profiling, I uses different time frame(s), it depends how I want to fit it in - long term investing, short term investing, short term investing or intra-day trading.
Is there any website or online reading that we can study more about candlestick behavior?
I have not come across much reading material or class related to these studies on behavioural science, therefore I create my own. Can attend when you are available: https://www.weipedia.com/invest-and-trade-with-precision
What is the difference between a hanging man and and a hammer?
My Webinar should be posted on youtube soon, I did quite a lengthy explaination about it, please watch it.
For the entry level after the hammer pattern happened, should'nt we only take a long trade when the next candlestick open either above the High or close of the Hammer candlestick to be on the safe side. SL is still set below the low of the hammer candlestick.
Those are conventional thoughts. However, if you can derive that "the hammer" carries strong weighting, I will just go for it with a measured risk in place. Pricing the stop loss correctly and managing it correctly, I hope I can do another session with you guys.
Entry after the completion of the hammer because we will know it is hammer after it is completed?
Yes, definetely, that’s one of my rule. Thanks!
Could you explainthe entry plan after the hammer spotted?
As long as the entry price and your stop loss price, the differences, it is part of your risk management mandate, that will be the best price.
Please show us entry and stop loss level
Study the whole thread above or watch the webinar again, I spoke about it.
Is fibonacci tool useful for 15min chart?
I love fibonacci, I use it on 15min chart too.