Use Additional Indicator Confirmation with Bollinger Bands®
Support and
Resistance training is one area where most Technical and Retail Traders lack
skills. Most traders can read candlestick patterns, have read every book on
candlesticks, or have taken tons of webinars on the subject. However when it
comes to really knowing how a stock will behave in the near term based on
candlestick charts support and resistance factors traders tend to
struggle, causing losses or minimal profits on their trades.
Knowing with
confidence and consistency how a Support or Resistance level will affect price
in the near term eludes most traders. However it is in fact, one of the most
important areas of training needed.
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For those who seek to
trade as successfully as Professionals do, then learning the skills of
accurately determining how Support and Resistance will factor into the
price action is a skill you must develop.
The reason why
Support and Resistance analysis is difficult for most traders is the fact that
they assume it is always the same, however it is not. Support and Resistance
change depending on WHERE the Support and Resistance forms in the stock Trend,
what Trendline Patterns have formed recently, and the current Market
Conditions.
A bottoming Market
Condition will have so much momentum after Dark Pools cease their accumulation,
that Resistance which would otherwise halt price is blasted through with
surprising ease. Velocity runs are most common in bottoming action after a Dark
Pool Quiet Accumulation phase.
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for Beginners Webinar, to experience for yourself the excellence of
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Support weakens even
if it is wide as a stock heads into speculation, new highs, all time highs, and
business cycle market saturation phases. These factors are usually overlooked
as a stock runs toward its final high before a sudden collapse.
What is missing in
the analysis of Support at this juncture of a Trend are Dark Pool Quiet
Rotation™ patterns. Dark Pool Quiet Rotation is not visible using just
candlesticks, MACD, or Bollinger Bands as indicators. It begins to weigh
heavily on the stock price, as the runs move into the rotation selling zones.
When this happens a sudden High Frequency Trading gap down frequently occurs,
and is often a surprise to Swing Traders who did not see the rotation in the
charts.
The chart example
below is moving in a Platform sideways pattern after a gap up, caused by High
Frequency Trading forcing the gap at market open due to Retail Trading news
feeds.
Bollinger Bands
applied to the candlesticks has anomalies on them, due to the huge High
Frequency Trading gap interference with normal price action. That has patterned
out to some extent but Bollinger Bands do not reflect whether there is
accumulation or rotation present in the current sideways pattern.
Hybrid Indicators
that include Volume or Quantity in addition to Price and Time in the formula,
provide far more information about what is going on for Dark Pool activity.
Immediately after the
High Frequency Trading huge gap up and long white candle, Dark Pool Quiet
Rotation and Professional Trader profit taking occurred as seen in the Volume
Bars and Accum/Dist indicators. However as the stock moves sideways, the
rotation ceases. Even though there are several heavy selling days, the hybrid
indicators bottom and start to rise.
TechniTrader is
"The Gold Standard in Stock Market Education." Go to the
TechniTrader.com Learning Center and watch a wide variety of webinars, to
experience for yourself the excellence of TechniTrader education.
Summary
Support for this
current Platform candlestick pattern is strong, due to several factors which
are the following:
1. Prior
Support from prior sideways highs.
2. Accumulation
patterns.
3. Consistency
of price action within Dark Pool Buy Zone range.
4. The type of
gap that occurred.
5. The Market
Participant Group that is currently controlling price.
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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a StockCharts chart, courtesy of StockCharts.com
Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDs with every course.
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