Contrarian Indicator Patterns

Sideways Candlestick Price Action with MACD
Often times traders may be confused with conflicting indicator patterns. Contrarian patterns between Indicators, and between Price action and Volume based indicators are very common these days.
Understanding what the contrarian indicator patterns represent in terms of near-term price action, is crucial for higher profitability and strong stock picks in the current Stock Market.
A common area of difficulty for most traders is the various sideways patterns that are becoming more and more common in the new Market Structure, which is reshaping how Retail Traders will trade over the next decade.
There are massive changes going on behind the scenes of the Stock Market that only Professionals are privileged to know. This leaves most Retail Traders in the dark, and can often create more risk and lower profits for them.
Short-term trading analysis is entirely different than long-term investing analysis. The training in this article is for short-term trading, and not long-term investing.
The company for the stock chart example below is going to report earnings soon, and the price action is sideways.
chart example showing sideways price action - technitrader
The stock gapped up on earnings news, and shifted to a sideways pattern that compressed. Then it slipped slightly but quickly rebounded, and has begun another compression pattern recently.
Comparative and Relational Analysis™ is required for a stock chart like this, otherwise the interpretation of just candlesticks or just a couple of indicators will be incorrect.
This chart example shows contrarian indicator patterns. I have added MACD as an indicator since many of you really like it. It is a momentum Price and Time Indicator, which was originally designed for long-term investing and modified for short-term trading. It is declining and currently in a “floating” pattern, which is common for the price action occurring at this time.
The Accum/Dist Indicator has been climbing steadily during the sideways action. The ChiOsc Volume Oscillator Indicator has been holding steady, which is normal during Quiet Accumulation. So both of these indicators are telling you that although price is sideways, Quiet Accumulation has been present in this sideways action. In addition how price is behaving, also confirms accumulation.
Summary
Every indicator has limitations, and all fail to properly indicate under certain trading and price conditions. Sideways patterns are particularly sensitive to Price and Time Indicators, which can inaccurately depict the breakout direction. 
Knowing what conditions are optimal for your preferred indicators is important. Recognizing a failed or false signal is even more important, otherwise you will be buying or selling short at the wrong time. Understanding contrarian indicator patterns takes your trading to a professional level.
Volume and Time or Hybrid Indicators, tend to do a much better job of indicating breakout direction. 
Since the markets are moving sideways more often than ever before, Retail Traders must learn how to read the sideways candlestick patterns properly AND learn which indicators will perform best for that sideways pattern magnitude and duration. 
Some traders prefer learning candlesticks, while some prefer to learn one or two indicators. The highly successful traders learn to use both. Technical Analysis is a reflection of fundamental and financial values, based on which Market Participant Group is dominating and controlling price at that time.
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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
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