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THE ILLUSTRATED GUIDETO TECHNICAL ANALYSISSIGNALS AND PHRASES

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All About Technical AnalysisTechnical Analysis for the Trading Professional

THE ILLUSTRATED GUIDETO TECHNICAL ANALYSISSIGNALS AND PHRASESA Visual Dictionary ofthe Most Useful Chartsin Technical Analysis

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Copyright 2005 by Constance Brown. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0-07-145444-6 The material in this eBook also appears in the print version of this title: 0-07-144207-3. All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps. McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please contact George Hoare, Special Sales, at [email protected] or (212) 904-4069. TERMS OF USE This is a copyrighted work and The McGraw-Hill Companies, Inc. (McGraw-Hill) and its licensors reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, disseminate, sell, publish or sublicense the work or any part of it without McGraw-Hills prior consent. You may use the work for your own noncommercial and personal use; any other use of the work is strictly prohibited. Your right to use the work may be terminated if you fail to comply with these terms. THE WORK IS PROVIDED AS IS. McGRAW-HILL AND ITS LICENSORS MAKE NO GUARANTEES OR WARRANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANY INFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE, AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. McGraw-Hill and its licensors do not warrant or guarantee that the functions contained in the work will meet your requirements or that its operation will be uninterrupted or error free. Neither McGraw-Hill nor its licensors shall be liable to you or anyone else for any inaccuracy, error or omission, regardless of cause, in the work or for any damages resulting there from. McGraw-Hill has no responsibility for the content of any information accessed through the work. Under no circumstances shall McGraw-Hill and/or its licensors be liable for any indirect, incidental, special, punitive, consequential or similar damages that result from the use of or inability to use the work, even if any of them has been advised of the possibility of such damages. This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise. DOI: 10.1036/0071454446

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D E D I C A T I O N

When I was six, I was a horse.Soon after life became complex and difficult.

In my sixth life, I became a Horse Whisperer.Soon after life became less difficult, but I still made it too complex.

Then my friend and mentor Fouzi Al-Sabeeh, a People Whisperer,taught me to simplify, and that helped put focus back on the mostimportant goals along lifes path.

Soon after, everything in this Horse Whisperers life became less complex, and my spirit

rediscovered the simple joy

of runningwith horses.

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C O N T E N T S

CHART INDEX IX

ACKNOWLEDGMENTS XVII

INTRODUCTION 1

TECHNICAL ANALYSIS CHARTS 8

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C H A R T I N D E X

Bearish Divergence between Momentum Indicators 8Bearish Divergence Strong 9Bearish Divergence Very Strong 10Bearish Divergence Very Strong with Lower Volume Confirmation 11Bearish Divergence Very Weak (Too Wide) 12Bullish Divergence on Internal Momentum Support 13Bullish Divergence Very Strong on Momentum Support 14Bullish Divergence Very Strong with Volume Confirmation 15Bullish Divergence Very Weak (Too Wide) 16Bullish Divergence with Confirming Lower Volume 17Bullish Divergence with V-Reversal Bottom 18Bullish Divergence without Confirming Lower Volume 19Chart Scales: Arithmetic and Semilogarithmic 20Chart Styles: 3rd-Dimension Harmonic 21Chart Styles: Bar Chart 22Chart Styles: Candlestick Chart 23Chart Styles: Gann Swing Chart 24Chart Styles: Kagi Chart 25Chart Styles: Line on Close Chart 26Chart Styles: Percentage Swing Chart 27Chart Styles: Point-and-Figure Chart 28Chart Styles: Point Swing Chart 29Currency Exchange Rate 30Cycles: Fibonacci Time Intervals 31Cycles: Fixed Period 32Cycles: Gann Aspect Conjunction (0) 33Cycles: Gann Aspect Opposition (180) 34Cycles: Gann Aspect Sextile (60) 35Cycles: Gann Aspect Square (90) 36Cycles: Gann Aspect Trine (120) 37Cycles: Gann Declination Overlay 38Cycles: Gann Ingress Analysis 39Cycles: Gann Planetary Degrees (Saturn 15) 40Cycles: Harmonic Series 41Cycles: Historic Comparison Overlay 42

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x Chart Index

Cycles: Multiple Fixed Period 43Detrended U.S. Dollar Index Versus Gold 44Directional Signal: Bearish RSI Negative Reversal 45Directional Signal: Bullish RSI Positive Reversal 46Directional Signal: Capitulation 47Directional Signal: Close above the High of the Low Day 48Directional Signal: Close below the Low of the High Day 49Directional Signal: Divergence between Oscillators 50Directional Signal: Exhaustion Gap 51Directional Signal: Island Reversal (Bar or Candlesticks) 52Directional Signal: Key Reversal 53Directional Signal: Railway Tracks 54Directional Signal: Reversal Day 55Elliott Wave Applied to Point-and-Figure 56Elliott Wave: Corrective Waves in Five-Wave Rally 57Elliott Wave: Expanded Flat Rally within an Expanded Flat Correction 58Elliott Wave: Impulsive Waves in Five-Wave Rally 59Elliott Wave: Pattern 1 60Elliott Wave: Pattern 2 61Elliott Wave: Patterns 3 and 4 62Elliott Wave: Pattern 5 63Elliott Wave: Patterns 6 and 7 64Elliott Wave: Pattern 8 65Elliott Wave: Pattern 9 66Elliott Wave: Patterns 10 and 11 67Elliott Wave: Patterns 12 and 13 68Elliott Wave: Retracement to the Vicinity of a Previous 4th Wave 69Elliott Wave: Strongest Global Stock Index 70Elliott Wave: Third-of-Third Wave 71Entry Signal: Fibonacci Confluence Zone 72Entry Signal: Following Stochastic Flutter 73Entry Signal: Head-and-Shoulder Lowest Risk 74Entry Signal: Key Reversal Becomes Resistance 75Entry Signal: Multiple Confluence Resistances 76Entry Signal: Oscillator Confirmation in Different Time Charts 1 77Entry Signal: Oscillator Confirmation in Different Time Charts 2 78

Chart Index xi

Entry Signal: Oscillator Confirmation in Different Time Charts 3 79Entry Signal: Prior Horizontal Indicator Pivot 80Entry Signal: Resistance Becomes Support 81Entry Signal: Stochastic Buy at 80 82Entry Signal: Stochastic Sell at 20 83Entry Signal: Stochastic Low Risk 84Entry Signal: Support Becomes Resistance 85Entry Signal: Support within Stochastics Confirmed by Lower Volume 86Entry Signal: Testing Converging Trendlines 87Entry Signal: Testing Market Breakout 88Entry Signal with Low Risk after Resistance Becomes Support 89Exit Signal: Trailing Stop 90Fibonacci 50 Percent Retracement 91Fibonacci Price Projection: Bearish Extension Swing 92Fibonacci Price Projection: Bullish Extension Swing 93Fibonacci Ratios in Nature 94Fibonacci Retracement (Beginner) 95Fibonacci Retracement Confluence Zone (Intermediate) 96Fibonacci Retracement with Gann Confluence Target (Advanced) 97Fibonacci Speed Lines 98Fibonacci Speed Lines Angle Adjustment 99Fibonacci Spiral in Nature 100Fibonacci Support Confluence Zone Confirmed by RSI Trendline 101Fundamental Data with Gann Aspect Cycle Target Dates 102Fundamental Data with Momentum and Gann Analysis 103Gann and Elliott Wave Analysis Applied 104Gann Angles and Time Analysis 105Gap Defining Support 106Gaps: Breakaway, Runaway, Exhaustion 107History: 1-Month Certificates of Deposit (CDs) 108History: 6-Month Certificates of Deposit (CDs) 109History: 10-Year Treasury Constant Maturity 110History: 10-Year Treasury Constant Maturity Versus Unemployment 111History: 30-Year Conventional Mortgages 112History: 30-Year Treasury Bond Yield Constant Maturity 113History: Bank Prime Loan Rate 114

xii Chart Index

History: Inflation in Consumer Prices 115History: Japanese Long-Term Prime Lending Rate 116History: SP500 Total Return Versus Percent Change 117History: SP500 Total Return Versus Smoothed Percent Change 118History: The Great Crash 119History: Unemployment Rate 120History: West Texas Intermediate Crude 121Ichimoku Kinko Hyo 122Intermarket Comparison: Nikkei 225 Versus Gold 123Intramarket Comparison: Toronto TSE 300 Versus Dow Jones Industrials 124Leading Economic Index: Baltic Dry Index 125Most Active 126Moving Averages Compared 127Moving Averages Setup Simple with Exponential 128Moving Averages Setup Simple Versus Displaced 129Open Interest Declining with Volume Decline, and Price Is Corrective 130Open Interest Rising with Volume Increase in

Downtrend Confirms Weak Market 131Open Interest Rising with Volume Increase Is Trend Confirmation 132Oscillator Comparison: RSI Versus MACD 133Oscillator Comparison: RSI Versus Stochastic 134Oscillator Comparison: RSI Versus Ultimate Oscillator 135Oscillator Comparison: RSI with Averages Versus MACD 136Oscillator Comparison: RSI with Averages Versus Stochastic with Averages 137Oscillator Comparison: Stochastic with Averages Versus RSI with Averages 138Oscillator Comparisons Not Normalized (Not Bound within Zero to 100) 139Oscillator Comparisons of Histograms 140Oscillator Reverse Engineering 141Overlay Chronological Comparison: Nikkei Versus Displaced SP500 142Overlay Chronological Comparison: Nikkei Versus SP500 143Overlay Comparative Returns 144Overlay Comparison: DJIA 1929 High Versus Nasdaq 2000 High 145Overlay Comparison: North American Stock Markets 146Overlay Comparison: Relative Performance 147Overlay Comparison: Relative Stock Performance 148Overlay Comparison: World Stock Markets (Daily) 149Overlay Comparison: World Stock Markets (Weekly) 150

Chart Index xiii

Pattern Continuation: Bearish Flag 151Pattern Continuation: Bullish Pennant 152Pattern Continuation: Contracting Triangle 153Pattern Continuation: Expanding Triangle 154Pattern Resolution: Thrust out of a Triangle 155Pattern Reversal: Diamond 156Pattern Reversal: Double Top 157Pattern Reversal: Falling Termination Wedge 158Pattern Reversal: Inside Day 159Pattern Reversal: Inverted Head and Shoulders 160Pattern Reversal: Outside Day 161Pattern Reversal: Rounding Bottom 162Pattern Reversal: Triple Bottom 163Pattern Reversal: Triple Top 164Pattern Reversal: V Bottom 165Point-and-Figure Bearish Broadening Formation 166Point-and-Figure Bearish Trendlines 167Point-and-Figure Bullish Broadening Formation 168Point-and-Figure Bullish Trendlines 169Point-and-Figure Buy Signal 170Point-and-Figure Sell Signal 171Point-and-Figure Trendlines 172Price Action: Bear Trap 173Price Action: Bull Trap 174Price Action: Coiling Sideways Market 175Price Action: Countertrend Rally 176Price Action: Market Accumulation 177Price Action: Market Distribution 178Price Action: Mirror Image 179Price Action: Parabolic Rise (also Developing Market Bubble) 180Price Action: Range-Bound or Sideways Market 181Price Action: Whipsaw Rally 182Price Projection: Equality from a Midpoint 183Price Projection: Exact 360-Degrees or Natural Square Retracement 184Price Projection following Stochastic Flutter 185Price Projection from Head-and-Shoulders Pattern 186Price Projection from the Midpoint of a Gap 187

xiv Chart Index

Price Projection: Market Geometry 188Price Projection: RSI Negative Reversal 189Price Projection: RSI Positive Reversal 190Price Smoothing: Bollinger Bands 191Price Smoothing: Gann Swing Overlay 192Price Smoothing: Keltner Channel 193Price Smoothing: Percentage Change 194Price Smoothing: Percentage Displacement 195Price Smoothing: Regression Line 196Price Smoothing: Simple Moving Average 197Price Smoothing: Simple Moving Average Envelope 198Price Smoothing: Spread between Two Averages Detrended 199Price Smoothing: Starc or Stoller Bands 200Psychological Support 201Relative Strength 202RSI Bear Market Oscillator Range 203RSI Bull Market Oscillator Range 204RSI Hidden Negative Reversal 205RSI Hidden Positive Reversal on Support 206Seasonal Comparison Analysis 207Sentiment Analysis Commitment of Traders

(Commercials Versus Speculators) 208SP500 Stock Sector Weightings within Index 1 209SP500 Stock Sector Weightings within Index 2 210SP500 Stock Sectors Spreadsheet Template1 211SP500 Stock Sectors Spreadsheet Template2 212SP500 Stock Sectors Spreadsheet Template3 213SP500 Stock Sectors Spreadsheet Template4 214SP500 Stock Sectors Spreadsheet Template5 215SP500 Stock Sectors Spreadsheet Template6 216SP500 Stock Sectors Spreadsheet Template7 217Statistical Linear Regression 218Statistical Probability Calculations for a Price Range 219Statistical Smoothed Linear Regression 220Statistical Standard Deviation Oscillator 221Statistical Standard Deviation Plotted as a Step Ladder Oscillator 222Statistical Synodic Square Curve 223

Stochastic Flutter 224Stochastic Knee and Shoulder 225Stochastic Original George Lane Chart 226Stochastic Period Setup 227Support Becomes Resistance in Stochastics 228Support/Resistance: Arc Channel 229Support/Resistance by Subdividing a Range into Eights 230Support/Resistance Defined by RSI 231Support/Resistance: Gann Angles from Zero 232Support/Resistance: Gann Angles Projected from Zero 233Support/Resistance: Gann Dynamic Harmonic Wheel Plotted on Prices 234Support/Resistance: Gann Fan Angles 235Support/Resistance: Gann Planetary Lines (Uranus 90-Degree Harmonics) 236Support/Resistance: Gann Square of Nine, (Dynamic) 237Support/Resistance: Gann Square of Nine, (Static from Zero) 238Support/Resistance in a Downtrend 239Support/Resistance in an Uptrend 240Support/Resistance: Setting Arc in Parabolic Rally 241Support/Resistance: Time and Price 242TED Spread 243Time and Price Gann Analysis Chart 244Time and Price Gann Calculator 245Time Pivot Calendar for Financial Global Markets 246Trend and Countertrend Channels 247Trendline: 45-Degree Rise with Square of Nine Grid 248Trendline: Acceleration 249Trendline: Channel 250Trendline: Internal 251Trendlines: Arc Channel 252Trendlines Converging 253Trendlines Converging (Advanced) 254Trendlines on Fundamental Data 255Trendlines on Indicators 256Trendlines: Parallel Channel Projected from Gaps 257Trendlines: Parallel Projected from Gaps 258Trendlines: Parallel Set by Truncating Key Reversals Downtrend 259Trendlines: Parallel Set by Truncating Key Reversals Uptrend 260

Chart Index xv

Trend Ranges within RSI 261Unconventional Displays: Histogram Comparison with MACD 262Unconventional Displays: Price Histogram with Smoothed RSI Histogram 263Unconventional Displays: RSI Multiple Periods 264Unconventional Displays: RSI Overlay on Price 265Unconventional Displays: Smoothed Regression Bands

with RSI Delta Oscillator 266Unconventional Displays: Smoothed RSI and RSI with Averages 267Underlying Components of CRB Index 268Volatility Bands: Bollinger 269Volatility Bands on RSI 270Volatility Bands: Smoothed Regression and Error Percent Displacement 271Volatility Bands: Smoothed Regression and Percent Deviation 272Volatility Bands: Starc 273Volatility: Historical Price Volatility 274Volatility Index (VIX) and SP500 (Daily Comparison) 275Volatility Index (VIX) Detrended and SP500 276Volatility Index (VIX) and SP500 277Volume Average with Directional Volume 278Volume Detrended 279Volume: Double Bottom Confirmation on Lower Volume 280Volume Increase with Trend Acceleration 281Volume Oscillator: On Balance Volume 282Volume: Rate of Change 283Volume: Warning Trend Weakness 284Yield Curve 285Yield Curve: Global Comparison 286

xvi Chart Index



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A C K N O W L E D G M E N T S

Some of the best charting ideas began as manual calculations, but some of those ideaswere lost due to practicality issues involved in producing the charts. Today, however,nearly all of the concepts that underlie the practice of technical analysis can be illus-trated by the computer-generated charts that are available within various softwarepackages. This book demonstrates some of the best charting tools available to tech-nical analysts. Most of the charts are from Omega Research TradeStation, but someare also from Bloomberg, Commodity Quote Graphics (CQG), and Reuters Athena.

Until now, Gann charting software has been labor intensive, misrepresented,or incorrect, and the charts were displayed in such a manner that aspect cycleswere hard to read and verify. However, that has changed, as readers will see in theGann charts in this book. These Gann charts are in many respects revolutionary. Aspecial thank you to Mathew Verdouw, whose company, Premier Software Groupin Australia, has been proactive and enthusiastic to incorporate the methods ofW.D. Gann into a package that is, for the first time in my opinion, accessible andproductive in an institutional environment. The software can activate our customindicators for you called the Composite Index and the Derivative Oscillator. TheComposite Index is displayed on page 8 in this book, and you can find further dis-cussion in my book Technical Analysis for the Trading Professional, which waspublished by McGraw-Hill in 1998. To learn more about the Gann software usedto create the charts in this book please visit www.aeroinvest.com and explore thesections called Software and the Chart Gallery.

There are so many people involved with publishing a book that there isntenough space to mention more than just a few of them here. The process began forthis book with the sponsoring editor, Stephen Isaacs, who assumed the largest partof the risk when he agreed to publish the book. I explained to Stephen that I waswriting it because I could not find something like it on my shelves with which tocommunicate the concepts. Stephen is the smarts behind the team that designedand named the book and wrote the copy for the cover jacket. Then he ensures thatthe distributors know all about the books arrival. This is our third project together,and with each one, I have learned something new about how to effectively com-municate visual concepts to you, the reader. Then the manuscript goes to PattieAmoroso, a senior editing supervisor, who coordinates a host of graphic designers,layout artists, and wordsmithsall of whom have far more formal titles than thesebut are known to me by the skills they bring to make me appear to be an author.Im not. I am just a hard-working trader like you. So without the McGraw-Hillteam and what they bring to the book, well, it just would not have happened! Mydeep appreciation goes to them for their contribution and hard work.


D I S C L A I M E R

It should not be assumed that the methods, techniques, or indicators presented inthis book will be profitable or that they will not result in losses. Past results are notnecessarily indicative of future results. Examples in this book are for educationalpurposes only. This is not a solicitation of any order to buy or sell.

The NFA requires us to state, HYPOTHETICAL OR SIMULATED PER-FORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS.UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTSDO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADESHAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVEUNDER- OR OVERCOMPENSATED FOR THE IMPACT, IF ANY, OF CER-TAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATEDTRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACTTHAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NOREPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR ISLIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSESHOWN.


Introduction

1

The pendulum swing from boom to bust will not change unless human natureitself should change. But the tools we use to chase these excesses will continue toevolve as the manias themselves play out in repeatable patterns.

When 24 men signed the Buttonwood Agreement May 17, 1792, to meetdaily near a particular buttonwood tree on Wall Street, to Broker for the Purchaseand Sale of Public Stock as they termed it, life was slower but it was not less com-plex in the context of their times. The events that brought about the formation of thisstockbrokers group in 1792 were possible only because of the new government-funding loan of $80 million, the chartering of the First Bank of the United Statesin 1791, and the incorporation of the Bank of New York in 1784. No doubt thesebrokers respected the house of Alexander Hamilton, who lived nearby the button-wood tree and was the person behind these events that had created the opportunityfor these brokers.

By June 21, 1788, the necessary nine states had ratified the U.S. Constitution,and that allowed the country to hold its first election of the new governments officers.Upon his election, President Washington selected Thomas Jefferson to be his secretaryof state and Alexander Hamilton to be his secretary of the new Treasury Department.Both Jefferson and Hamilton had been instrumental in the framing of the articles of theConstitution. As treasury secretary, Hamilton insisted on establishing the governmentscredit, which he persuaded the Congress and President Washington could be accom-plished by means of a funding loan of approximately $80 million. That loan became asignificant impetus to business growth because it was used for redeeming the worth-less paper currency of the day. This in turn planted the seeds of what would becomethe first market mania bubble in government notes and land speculation.


2 The Illustrated Guide to Technical Analysis Signals and Phrases

New York had been a thriving place, but in the early 1790s it was somewhatsubdued socially because the seat of the federal government had been removed toPhiladelphia. It was said this removal from New York was the trade Hamiltonhad made to procure Jeffersons unwilling support to Hamiltons funding loanplan. Although Jefferson had strongly opposed banking and the transactions ofownership through paper shares, he supported Hamiltons plan in exchange forHamiltons support for relocating the nations capital first to Philadelphia and finallyto the shores of the Potomac in Virginia. In consequence, New York concentratedon business and has done so ever since.

In modern times in addition to being fixed on the actions, phrases, and expres-sions of the Federal Reserve Board chairman Alan Greenspan, a trader on the frontlines must also watch the developments in Iraq, the current terrorism threat levelin the country, and a constant stream of news items from which ones nerves canbe rattled at any moment. But how does this differ from the circumstances ofAndrew J. Barclay, the first known speculator within the original group of 24brokers that traded under the buttonwood tree? He had to follow very closely theactions of Hamilton and Jefferson because Jefferson might have squelched the busi-ness opportunities Hamilton had just planted.

We think the events that occurred before our century moved relatively slowly,but that is not an accurate perception. In a book first published in 1936 and nowlong out of print called The Stock Exchange by Humphrey Neill, we learn the cir-culation of bank notes jumped from $11 million to $45 million in 14 years. Landspeculation had run so out of control some people bought land located 30 feet underthe Hudson River!

The first recorded bubble burst was the implosion of land prices in 1798 in theNorth. Meanwhile in the South in a single year in 1792 the plantations produceda total of 6000 bales of cotton (500 pounds to a bale). Then in 1793 the Southrecorded the production of 16,000 bales of cotton, an increase made possible byEli Whitneys invention of the cotton gin the year before. If you traded cotton in1793, you would have thought the world was turning incredibly fast!

So the difference is the speed, volume, and global breadth of information thatwe have to contend with these days. But human nature has not changed. Marketvolatility increases as the public reacts to the latest terrorism threat, policy change,war event, or market excess, and we traders find ourselves confronted with infor-mation overload. The solution is to simplify. Filter out the media stream of verbaland one-line news stories and trade through technical aids alone. The spreadbetween cause and reaction has narrowed to such an extent that we can focus onthe market setup alone without full awareness of the trigger itself. Shutting themedia stream off is in fact an act of self-preservation!

One day I was looking for a book in my library to help my business partnerwho was evolving more toward technicals from his strong fundamental background.To my surprise the book I needed had not yet been written. No book existed tovisually clarify what was a weak divergence signal versus a strong one. No book

The Illustrated Guide to Technical Analysis Signals and Phrases 3

existed to offer a simple illustration of an outside day, a key reversal, and railwaytracks under one jacket cover. Such technical patterns cannot be described easilyin an e-mail. I could have created the charts and sent them as attachments, but ifthe attachments were not saved, the information would be lost. Learning abouttechnical analysis phrases and terms is difficult when a trader is using only the dic-tionary help pages written by the software vendors who do not trade for their living.So I called McGraw-Hill and explained that I needed a book. When we could not findone, I soon found a contract in my e-mail folder to create this visual chart library.

As the collection of charts grew, it became clear that it would be useful topeople with various skill levels. This is a book full of ideas for the experiencedtechnician. For the newer trader and technician, it provides clarification and quickreferences. And for the novice it provides motivation to explore further a method ortechnique that looks promising but requires further knowledge not in these pages toactually implement or set up. This book is without words for good reason; it is notmeant to teach the methods but only to demonstrate them and to show how they havebeen applied in real market conditions. While this book is intended to supplementyour own studies, you can learn a great deal from studying a simple illustration alone.

This book solves a problem you might have when you first set up a technicalanalysis software service if you are very unfamiliar with the methods used or if thesoftware is new to you. For example, vendors such as CQG and TradeStation set uppoint-and-figure parameters differently to produce the same chart results. This bookwill introduce you to point-and-figure charting, and if the patterns illustrated tellyou a clear story, then you may be more motivated to invest in a book specializingin this area.

As another example, suppose you hear a colleague on the phone referring toKagi charts. You can find out what a Kagi chart looks like in this book. The goalis not to teach you Kagi charting. However, if you see that Kagi and Gann swingcharts are very similar, you may find you have more in common with the traderyou overheard on the phone than you first realized.

The most frequent comment I hear when I teach is, Ive never seen that donebefore. Use of trendlines from pivots less academic but more meaningful in ageometric sense can be taught through simple illustration. This book is packed fullwith market geometry applications. Another benefit of an all visual book is in theindicator comparisons that use the same symbols, which offers the new techniciana fast way to absorb a lot of technical experience by discovering his or her ownindicator preferences.

This book offers you a gold mine of trading directional signals that took yearsof experience to collect. We traders are just a growing logic tree of signals, and it ishard to put words around them all. Your observation skills will be put to the test bythis book. Here are a few guidelines on what to study. Focus closely on such thingsas price closes versus opens when arrows are added to the chart. Study charts fromright to left, and see if the signal or level or pattern has been significant for the mar-ket in the past. Any area highlighted in gray is significant. Market geometry is huge


in my view. When making a careful evaluation between methods, study the reactionson both market tops and bottoms. Does an indicator make complex tops and simpleV bottoms? Study the source of a trendline and the minor anchor points selected.When I teach, I find most people look for patterns that are far too wide or large. It isthe attention to detail that makes a great technician, but keep in mind the goal is toanswer what will happen in the next bar, not to detail the squiggles through a chartfor historic prosperity.

Some charts are included simply to set the record straight. As a contributorand grader for the Market Technician Associations Chartered Market Technician(CMT III) certification exam, I am annually discouraged by the number of Americancandidates who cannot read a currency chart. Once I submitted a question, whichwas accepted and used in the exam, showing a monthly Swiss franc, weekly euro,and daily yen chart. The exam question asked candidates for a market opinion onthe U.S. dollar and asked for the reasons behind their conclusion. The number ofpeople who believed this to be a trick question because it did not display the DollarIndex was disheartening. Clearly this is not an overseas issue but a problem in NorthAmerica where candidates believe a stock analyst has no need to understand theglobal financial food chain. Wake up, America! Keep in mind the job applicationpool for market analysts is global. New analysts expecting to enter the industry asprofessionals better do the homework needed because the Forex market dictates allthe other financial markets. Equities are simply a money flow game, and one mustunderstand the flow behind the buying and selling pressures. A spot currency chartwith a label $/yen is read as the U.S. dollar rising and falling in the direction ofthe price action against the currency cross. If the chart is labeled yen/$, the pricerising and falling in correlation with the charts price action reflects yen. The dollarwould be read as the inverse correlation. If you cannot read a currency chart andtake the CMT III exam, you will likely be hard pressed to pass this certification.

There are several Gann charts in this book because this method offers accuratetime and price analysis. But few people in the industry know very much about thismethod. The charts can be difficult to set up if you have no knowledge about Gannanalysis, but they are easy to read and interpret. So the charts are offered as an intro-duction so that some may become more curious to explore this methodology further. Iwill write a comprehensive Gann book some day because most books on the subjectat present follow the work of Ganns son, John, and not that of William Delbert(W.D.) Gann. In terms of returns and probability, there is a huge difference as Gannsson reduced much of his fathers methods to percentages, which are less accurate.

For readers learning the Elliott Wave Principle, all 13 Elliott wave patternsare illustrated as a simple reference guide. Robert Prechter believes he has founda 14th, which will be called an expanding diagonal triangle. I display the mostcommon diagonal triangle; the termination wedge, and I did not go into detailingthe expanding wedge or the difference between a type 1 versus a type 2 diagonaltriangle. The termination wedge is the more common, and it is clearly the marketreversal pattern of greater importance. You will be fairly advanced if you want to


begin to differentiate between type 1 and 2 wedges, and you would likely havebooks on the topic in your own library.

There are 18 market entry signals in the book. These are given in addition to thenumerous reversal and continuation signals demonstrated. They include buy signalsin stochastic oscillators at the 80 level and sell signals at 20. In the words of GeorgeLane, who first created the stochastic study, Dont learn to trade from your quotevendor; youll become a computer programmer. So many quick guides claim thattraders should sell at 80 and buy at 20 when using stochastic signals that I feltcompelled to show you how this is incredibly wrong as a carte blanche statement.

To add fuel for thought, there are a few examples in various sections of thebook of applying technical analysis on fundamental data. But as background, it isbecoming more important to see long historical periods of data to help us gain a senseof where we stand now in context with the larger picture of history. It is becomingharder to acquire these data because quote vendors are reducing their historical dataservices to less than 20 years. This is insufficient for our purposes. Therefore, a fewhistorical charts are offered that include short and long horizon interest rates in theUnited States and Japan, which will become key in the months ahead.

A comment I often hear is that there needs to be a comparison between majoroscillators. So care was taken to keep the same market and time horizon so that acomparison could be made that allows the different oscillator signal formations tobe evaluated.

This brings us to the treasury bills to eurodollars (TED) spread chart. This isthe one chart a reader can learn how to create from the chart in this book but thenrun into difficulties finding material that can explain how the spread is usedbecause most books on technical analysis omit this discussion. So let me take amoment to fill this void for readers who have a need to understand it further.

Some financial spreads are so commonly traded that they have their ownacronym shorthand name, like the TED spread. The TED spread is simply a two-legged position with a leg in T-Bill futures and an opposite leg in eurodollar futures.

Both T-Bill futures and eurodollar futures are based on the interest rate paid on90-day deposits. This interest rate can be calculated by subtracting the futures pricefrom 100. (For example, if T-Bills are trading at 95.00, the yield is 100 minus 95.00,or 5.00 percent. Eurodollars work the exact same way.) T-Bills are 90-day depositswith the U.S. government, while eurodollars are 90-day deposits of U.S. dollars in for-eign banks. T-Bills are U.S. government debt, so they are backed by the full faith andcredit of the U.S. government. Because a government can tax its citizens, the depositsbacked by the government are deemed to be low risk. (Always an interesting heateddebate.) On the other hand, eurodollars are not guaranteed by any government. Theytherefore have historically demanded a higher yield to attract funds. The TED spreadis said to be narrowing when eurodollars gain in value relative to T-Bills. When T-Billsgain in value relative to eurodollars, the TED spread is said to be widening.

Because T-Bills are government guaranteed and eurodollars are not, the TEDspread represents the yield premium associated with eurodollars. For example,


when T-Bills are trading at 96.94 and the same month eurodollars are trading at96.40, foreign banks have to pay 0.54 percent over the T-Bill rate to attractAmerican dollars overseas.

The fiscal policy in the United States is a major factor affecting the TED spread.When interest rates in the United States are rising, the TED spread has historicallywidened, as the more risky eurodollars tend to fall in value more than the safer T-Bills. When interest rates are declining, or steady, the TED spread has historicallynarrowed as the more volatile eurodollars appreciate in value faster relative to T-Bills.

Other factors affecting the TED spread would be world political stability andthe balance of trade. But, you may ask, is this not a fundamental topic? A markettechnician does not live in a vacuum. We understand why a stock should be placedin a certain sector group because its principal business and generated revenue isderived from a common characteristic market service or product for that group.But once this is understood, we technicians do not care what the companys earn-ings report may be in the future as our charts will warn us well in advance of therisks or opportunities. Likewise with the TED spread because we need to have anunderstanding of what it measures. Then we rely upon our charts and technicals toforecast the risk premium measure between T-Bills and eurodollars.

The TED spread is a risk premium between the U.S. governments guaranteedassets and nonguaranteed assets. The political stability of the United States andforeign nations has historically played a key role in the direction of the TED spread.When the world political situation is stable, the TED spread has historically nar-rowed, meaning that eurodollars have gained in value relative to T-Bills. Whenpolitical uncertainty is high, T-Bills have historically gained in value relative toeurodollars as people seek safer assets. If you did not recognize this relationship,it would be easy to overlook that the current political instability and terrorismshould be widening the TED spread. Something is seriously amiss as the normalrelationships are not present. It makes us far more careful as we study our chartsknowing it is an election year and Greenspan has fallen seriously behind the yieldcurve. That means an artificial situation is being created and when the FederalReserve is finally forced to catch up or establish normalcy in the interest rate envi-ronment, it will dramatically impact stocks.

But how does a changing interest rate environment impact stock prices? Notall sectors react in a similar way. A technician will spend countless hours to deter-mine the sectors that will be impacted, but the research will determine only thatstocks have a cyclical reaction to a changing interest rate environment.

Six months before the Fed tightening cycle begins, sectors like Aerospace/Defense, Autos and Parts, Chemicals, Construction and Building Materials, Oil,Engines and Machinery, Transport, and Electrical Equipment outperform the generalmarket. On the other hand, Insurance, Leisure, General Retail, and Pharmaceuticalsmay lag.

But early in the tightening cycle after the first and second rate hike, a changeoccurs. General Retail, Software and Computer Services as well as Gold Mining


stocks begin to outperform sectors negatively impacted by rising rates such asAerospace/Defense, Banks, Construction and Building Materials, DiversifiedIndustries, Oil, Household Goods, and Real Estate.

Late in the tightening cycle interest rate changes often produce a strongerdollar as higher rates offer higher returns for overseas investors holding U.S.deposits. So sectors with strong overseas sales such as Diversified Industries,Engines and Machinery, and U.S. Autos and Parts underperform further. That is whyanalysts with responsibilities in stocks alone must have a broader awareness of thefinancial world about them.

We live in times of increasing market volatility, and you will find numerouscharts showing volatility bands, volatility measurements, and several examples ofthe Volatility Index (VIX). There is not a lot written on this index, and severalcharting vendors do not even offer VIX data. I have six different data vendorsbecause no one vendor can offer all the markets, indexes, or historical data files Ineed to do a decent job in a global arena. Frustrating, but it is reality so be preparedto shop for the symbols your principal vendor may not have.

The VIX is a sentiment gauge of fear in the U.S. stock market. As the VIXsimply quantifies implied options volatility on the S&P 100 Index, a low valuegenerally means complacency and a high value means violent markets plaguedwith breathtaking and chaotic volatility. When studying the attributes of any marketsentiment measurement like the VIX charts, it is important to view the historicalrange in which the VIX has traded. Since 1997 the VIX has generally bouncedbetween 20 on the low side and 50 on the high side. Each time in 1998, 2001, and2002 that an extreme was recorded near 50, the market formed a definable low.

Such sentiment gauges by themselves are difficult to read, and the raw datacan be detrended to make them more useful. Data are detrended simply by addinga moving average and plotting the difference of the index from the average as anoscillator. You will find examples of this in the VIX charts. Another way toincrease the value of a sentiment index is to chart a ratio. The S&P 500 divided bythe VIX will give cleaner signals to work from than will the raw data alone.

When the VIX pierced the 20 level, it marked a period in the markets ofextreme greed and indifference. A short of the S&P 500 at the VIX trough lowswould have been correct directional strategy, but it would also have been poor mar-ket timing without a price projection method in place to use for risk managementpurposes. Price projection methods are without question the weakest componentfor most new analysts. You will find in this book several different price projectiontechniques that you can use as a starting point to obtain additional information.

Most of the charts in this book are actual charts used in a trading environment.I hope as you page through the charts, it leads you to new research or clarifies aconcept misunderstood. We always have something new to learn. Markets areevolving and so too should we be learning new skills. Never stay in one place asthere is always a bigger fish out there looking for its next meal in the financial foodchain. Personally I would rather be predator than prey.


Bearish Divergence between Momentum Indicators


Bearish Divergence Strong


Bearish Divergence Very Strong


Bearish Divergence Very Strong with Lower Volume Confirmation


Bearish Divergence Very Weak (Too Wide)


Bullish Divergence on Internal Momentum Support


Bullish Divergence Very Strong on Momentum Support


Bullish Divergence Very Strong with Volume Confirmation


Bullish Divergence Very Weak (Too Wide)


Bullish Divergence with Confirming Lower Volume


Bullish Divergence with V-Reversal Bottom


Bullish Divergence without Confirming Lower Volume


Chart Scales: Arithmetic and Semilogarithmic


Chart Styles: 3rd-Dimension Harmonic


Chart Styles: Bar Chart



Chart Styles: Candlestick Chart


Chart Styles: Gann Swing Chart


Chart Styles: Kagi Chart


Chart Styles: Line on Close Chart


Chart Styles: Percentage Swing Chart


Chart Styles: Point-and-Figure Chart


Chart Styles: Point Swing Chart


Currency Exchange Rate


Cycles: Fibonacci Time Intervals


Cycles: Fixed Period


Cycles: Gann Aspect Conjunction (0)


Cycles: Gann Aspect Opposition (180)


Cycles: Gann Aspect Sextile (60)


Cycles: Gann Aspect Square (90)


Cycles: Gann Aspect Trine (120)


Cycles: Gann Declination Overlay


Cycles: Gann Ingress Analysis


Cycles: Gann Planetary Degrees (Saturn 15)


Cycles: Harmonic Series


Cycles: Historic Comparison Overlay


Cycles: Multiple Fixed Period


Detrended U.S. Dollar Index Versus Gold


Directional Signal: Bearish RSI Negative Reversal


Directional Signal: Bullish RSI Positive Reversal


Directional Signal: Capitulation


Directional Signal: Close above the High of the Low Day


Directional Signal: Close below the Low of the High Day


Directional Signal: Divergence between Oscillators


Directional Signal: Exhaustion Gap


Directional Signal: Island Reversal (Bar or Candlesticks)


Directional Signal: Key Reversal


Directional Signal: Railway Tracks


Directional Signal: Reversal Day


Elliott Wave Applied to Point-and-Figure


Elliott Wave: Corrective Waves in Five-Wave Rally


Elliott Wave: Expanded Flat Rally within an Expanded Flat Correction


Elliott Wave: Impulsive Waves in Five-Wave Rally


Elliott Wave: Pattern 1


Elliott Wave: Patterns 3 and 4



MMiirrrroorrss::





Elliott Wave: Retracement to the Vicinity of a Previous 4th Wave


Elliott Wave: Strongest Global Stock Index


Elliott Wave: Third-of-Third Wave


Entry Signal: Fibonacci Confluence Zone


Entry Signal: Following Stochastic Flutter


Entry Signal: Head-and-Shoulder Lowest Risk


Entry Signal: Key Reversal Becomes Resistance


Entry Signal: Multiple Confluence Resistances


Entry Signal: Oscillator Confirmation in Different Time Charts 1


Entry Signal: Prior Horizontal Indicator Pivot


Entry Signal: Resistance Becomes Support


Entry Signal: Stochastic Buy at 80


Entry Signal: Stochastic Sell at 20


Entry Signal: Stochastic Low Risk


Entry Signal: Support Becomes Resistance


Entry Signal: Support within Stochastics Confirmed by Lower Volume


Entry Signal: Testing Converging Trendlines


Entry Signal: Testing Market Breakout


Entry Signal with Low Risk after Resistance Becomes Support


Exit Signal: Trailing Stop


Fibonacci 50 Percent Retracement


Fibonacci Price Projection: Bearish Extension Swing


Fibonacci Price Projection: Bullish Extension Swing


Fibonacci Ratios in Nature


Fibonacci Retracement (Beginner)


Fibonacci Retracement Confluence Zone (Intermediate)


Fibonacci Retracement with Gann Confluence Target (Advanced)


Fibonacci Speed Lines


Fibonacci Speed Lines Angle Adjustment


Fibonacci Spiral in Nature


Fibonacci Support Confluence Zone Confirmed by RSI Trendline


Fundamental Data with Gann Aspect Cycle Target Dates


Fundamental Data with Momentum and Gann Analysis


Gann and Elliott Wave Analysis Applied


Gann Angles and Time Analysis


Gap Defining Support


Gaps: Breakaway, Runaway, Exhaustion


History: 1-Month Certificates of Deposit (CDs)


History: 6-Month Certificates of Deposit (CDs)


History: 10-Year Treasury Constant Maturity


History: 10-Year Treasury Constant Maturity Versus Unemployment


History: 30-Year Conventional Mortgages


History: 30-Year Treasury Bond Yield Constant Maturity


History: Bank Prime Loan Rate


History: Inflation in Consumer Prices


History: Japanese Long-Term Prime Lending Rate


History: SP500 Total Return Versus Percent Change


History: SP500 Total Return Versus Smoothed Percent Change


History: The Great Crash


History: Unemployment Rate


History: West Texas Intermediate Crude


Ichimoku Kinko Hyo


Intermarket Comparison: Nikkei 225 Versus Gold


Intramarket Comparison: Toronto TSE 300 Versus Dow Jones Industrials


Leading Economic Index: Baltic Dry Index


Most Active


Moving Averages Compared


Moving Averages Setup Simple with Exponential


Moving Averages Setup Simple Versus Displaced


Open Interest Declining with Volume Decline, and Price Is Corrective


Open Interest Rising with Volume Increase in Downtrend Confirms Weak Market


Open Interest Rising with Volume Increase Is Trend Confirmation


Oscillator Comparison: RSI Versus MACD


Oscillator Comparison: RSI Versus Stochastic


Oscillator Comparison: RSI Versus Ultimate Oscillator


Oscillator Comparison: RSI with Averages Versus MACD


Oscillator Comparison: RSI with Averages Versus Stochastic with Averages


Oscillator Comparison: Stochastic with Averages Versus RSI with Averages


Oscillator Comparisons Not Normalized (Not Bound within Zero to 100)


Oscillator Comparisons of Histograms


Oscillator Reverse Engineering*

*For more information, please refer to Technical Analysis for the Trading Professional by Constance Brown (NewYork: McGraw-Hill), 1999.


Overlay Chronological Comparison: Nikkei Versus Displaced SP500


Overlay Chronological Comparison: Nikkei Versus SP500


Overlay Comparative Returns


Overlay Comparison: DJIA 1929 High Versus Nasdaq 2000 High


Overlay Comparison: North American Stock Markets


Overlay Comparison: Relative Performance


Overlay Comparison: Relative Stock Performance


Overlay Comparison: World Stock Markets (Daily)


Overlay Comparison: World Stock Markets (Weekly)


Pattern Continuation: Bearish Flag


Pattern Continuation: Bullish Pennant


Pattern Continuation: Contracting Triangle


Pattern Continuation: Expanding Triangle


Pattern Resolution: Thrust out of a Triangle


Pattern Reversal: Diamond


Pattern Reversal: Double Top


Pattern Reversal: Falling Termination Wedge


Pattern Reversal: Inside Day


Pattern Reversal: Inverted Head and Shoulders


Pattern Reversal: Outside Day


Pattern Reversal: Rounding Bottom


Pattern Reversal Triple Bottom


Pattern Reversal: Triple Top


Pattern Reversal: V Bottom


Point-and-Figure Bearish Broadening Formation


Point-and-Figure Bearish Trendlines


Point-and-Figure Bullish Broadening Formation


Point-and-Figure Bullish Trendlines


Point-and-Figure Buy Signal


Point-and-Figure Sell Signal


Point-and-Figure Trendlines


Price Action: Bear Trap


Price Action: Bull Trap


Price Action: Coiling Sideways Market


Price Action: Countertrend Rally


Price Action: Market Accumulation


Price Action: Market Distribution


Price Action: Mirror Image


Price Action: Parabolic Rise (also Developing Market Bubble)


Price Action: Range-Bound or Sideways Market


Price Action: Whipsaw Rally


Price Projection: Equality from a Midpoint


Price Projection: Exact 360-Degrees or Natural Square Retracement


Price Projection following Stochastic Flutter


Price Projection from Head-and-Shoulders Pattern


Price Projection from the Midpoint of a Gap


Price Projection: Market Geometry


Price Projection: RSI Negative Reversal


Price Projection: RSI Positive Reversal


Price Smoothing: Bollinger Bands


Price Smoothing: Gann Swing Overlay


Price Smoothing: Keltner Channel


Price Smoothing: Percentage Change


Price Smoothing: Percentage Displacement


Price Smoothing: Regression Line


Price Smoothing: Simple Moving Average


Price Smoothing: Simple Moving Average Envelope


Price Smoothing: Spread between Two Averages Detrended


Price Smoothing: Starc or Stoller Bands


Psychological Support


Relative Strength


RSI Bear Market Oscillator Range*

*For more information, see Technical Analysis for the Trading Professional by Constance Brown (New York:McGraw-Hill, 1999).


RSI Bull Market Oscillator Range*

*For more information, see Technical Analysis for the Trading Professional by Constance Brown (New York:McGraw-Hill, 1999).


RSI Hidden Negative Reversal


RSI Hidden Positive Reversal on Support


Seasonal Comparison Analysis


Sentiment Analysis Commitmentof Traders (Commercials Versus Speculators)


SP500 Stock Sector Weightings within Index 1


SP500 Stock Sector Weightings within Index 2


SP500 Stock Sectors Spreadsheet Template1


Statistical Linear Regression


Statistical Probability Calculations for a Price Range


Statistical Smoothed Linear Regression


Statistical Standard Deviation Oscillator


Statistical Standard DeviationPlotted as a Step Ladder Oscillator


Statistical Synodic Square Curve


Stochastic Flutter


Stochastic Knee and Shoulder


Stochastic Original George Lane Chart


Stochastic Period Setup


Support Becomes Resistance in Stochastics


Support / Resistance: Arc Channel


Support / Resistance by Subdividing a Range into Eights


Support / Resistance Defined by RSI


Support / Resistance: Gann Angles from Zero


Support / Resistance: Gann Angles Projected from Zero


Support / Resistance: Gann Dynamic Harmonic Wheel Plotted on Prices


Support / Resistance: Gann Fan Angles


Support / Resistance: Gann PlanetaryLines (Uranus 90-Degree Harmonics)


Support / Resistance: Gann Square of Nine, (Dynamic)


Support / Resistance: Gann Square of Nine, (Static from Zero)


Support / Resistance in a Downtrend


Support / Resistance in an Uptrend


Support / Resistance: Setting Arc in Parabolic Rally


Support / Resistance: Time and Price


TED Spread


Time and Price Gann Analysis Chart


Time and Price Gann Calculator


Time Pivot Calendar for Financial Global Markets


Trend and Countertrend Channels


Trendline: 45-Degree Rise with Square of Nine Grid


Trendline: Acceleration


Trendline: Channel


Trendline: Internal


Trendlines: Arc Channel


Trendlines Converging


Trendlines Converging (Advanced)


Trendlines on Fundamental Data


Trendlines on Indicators


Trendlines: Parallel Channel Projected from Gaps


Trendlines: Parallel Projected from Gaps


Trendlines: Parallel Set by Truncating Key Reversals Downtrend


Trendlines: Parallel Set by Truncating Key Reversals Uptrend


Trend Ranges within RSI*

*For more information, please refer to Technical Analysis for the Trading Professional by Constance Brown (NewYork: McGraw-Hill), 1999.


Unconventional Displays: Histogram Comparison with MACD


Unconventional Displays: PriceHistogram with Smoothed RSI Histogram


Unconventional Displays: RSI Multiple Periods


Unconventional Displays: RSI Overlay on Price


Unconventional Displays: SmoothedRegression Bands with RSI Delta Oscillator


Unconventional Displays: Smoothed RSI and RSI with Averages


Underlying Components of CRB Index


Volatility Bands: Bollinger


Volatility Bands on RSI


Volatility Bands: SmoothedRegression and Error Percent Displacement


Volatility Bands: Smoothed Regression and Percent Deviation


Volatility Bands: Starc


Volatility: Historical Price Volatility


Volatility Index (VIX) and SP500 (Daily Comparison)


Volatility Index (VIX) Detrended and SP500


Volatility Index (VIX) and SP500


Volume Average with Directional Volume


Volume Detrended


Volume: Double Bottom Confirmation on Lower Volume


Volume Increase with Trend Acceleration


Volume Oscillator: On Balance Volume


Volume: Rate of Change


Volume: Warning Trend Waning


Yield Curve


Yield Curve: Global Comparison

Terms of UseWant to learn more?DedicationContentsChart IndexBearish Divergence between Momentum IndicatorsBearish Divergence StrongBearish Divergence Very StrongBearish Divergence Very Strong with Lower Volume ConfirmationBearish Divergence Very Weak (Too Wide)Bullish Divergence on Internal Momentum SupportBullish Divergence Very Strong on Momentum SupportBullish Divergence Very Strong with Volume ConfirmationBullish Divergence Very Weak (Too Wide)Bullish Divergence with Confirming Lower VolumeBullish Divergence with V-Reversal BottomBullish Divergence without Confirming Lower VolumeChart Scales: Arithmetic and SemilogarithmicChart Styles: 3rd-Dimension HarmonicChart Styles: Bar ChartChart Styles: Candlestick ChartChart Styles: Gann Swing ChartChart Styles: Kagi ChartChart Styles: Line on Close ChartChart Styles: Percentage Swing ChartChart Styles: Point-and-Figure ChartChart Styles: Point Swing ChartCurrency Exchange RateCycles: Fibonacci Time IntervalsCycles: Fixed PeriodCycles: Gann Aspect Conjunction (0)Cycles: Gann Aspect Opposition (180)Cycles: Gann Aspect Sextile (60)Cycles: Gann Aspect Square (90)Cycles: Gann Aspect Trine (120)Cycles: Gann Declination OverlayCycles: Gann Ingress AnalysisCycles: Gann Planetary Degrees (Saturn 15)Cycles: Harmonic SeriesCycles: Historic Comparison OverlayCycles: Multiple Fixed PeriodDetrended U.S. Dollar Index Versus GoldDirectional Signal: Bearish RSI Negative ReversalDirectional Signal: Bullish RSI Positive ReversalDirectional Signal: CapitulationDirectional Signal: Close above the High of the Low DayDirectional Signal: Close below the Low of the High DayDirectional Signal: Divergence between OscillatorsDirectional Signal: Exhaustion GapDirectional Signal: Island Reversal (Bar or Candlesticks)Directional Signal: Key ReversalDirectional Signal: Railway TracksDirectional Signal: Reversal DayElliott Wave Applied to Point-and-FigureElliott Wave: Corrective Waves in Five-Wave RallyElliott Wave: Expanded Flat Rally within an Expanded Flat CorrectionElliott Wave: Impulsive Waves in Five-Wave RallyElliott Wave: Pattern 1Elliott Wave: Pattern 2Elliott Wave: Patterns 3 and 4Elliott Wave: Pattern 5Elliott Wave: Patterns 6 and 7Elliott Wave: Pattern 8Elliott Wave: Pattern 9Elliott Wave: Patterns 10 and 11Elliott Wave: Patterns 12 and 13Elliott Wave: Retracement to the Vicinity of a Previous 4th WaveElliott Wave: Strongest Global Stock IndexElliott Wave: Third-of-Third WaveEntry Signal: Fibonacci Confluence ZoneEntry Signal: Following Stochastic FlutterEntry Signal: Head-and-Shoulder Lowest RiskEntry Signal: Key Reversal Becomes ResistanceEntry Signal: Multiple Confluence ResistancesEntry Signal: Oscillator Confirmation in Different Time Charts 1Entry Signal: Oscillator Confirmation in Different Time Charts 2Entry Signal: Oscillator Confirmation in Different Time Charts 3Entry Signal: Prior Horizontal Indicator PivotEntry Signal: Resistance Becomes SupportEntry Signal: Stochastic Buy at 80Entry Signal: Stochastic Sell at 20Entry Signal: Stochastic Low RiskEntry Signal: Support Becomes ResistanceEntry Signal: Support within Stochastics Confirmed by Lower VolumeEntry Signal: Testing Converging TrendlinesEntry Signal: Testing Market BreakoutEntry Signal with Low Risk after Resistance Becomes SupportExit Signal: Trailing StopFibonacci 50 Percent RetracementFibonacci Price Projection: Bearish Extension SwingFibonacci Price Projection: Bullish Extension SwingFibonacci Ratios in NatureFibonacci Retracement (Beginner)Fibonacci Retracement Confluence Zone (Intermediate)Fibonacci Retracement with Gann Confluence Target (Advanced)Fibonacci Speed LinesFibonacci Speed Lines Angle AdjustmentFibonacci Spiral in NatureFibonacci Support Confluence Zone Confirmed by RSI TrendlineFundamental Data with Gann Aspect Cycle Target DatesFundamental Data with Momentum and Gann AnalysisGann and Elliott Wave Analysis AppliedGann Angles and Time AnalysisGap Defining SupportGaps: Breakaway, Runaway, ExhaustionHistory: 1-Month Certificates of Deposit (CDs)History: 6-Month Certificates of Deposit (CDs)History: 10-Year Treasury Constant MaturityHistory: 10-Year Treasury Constant Maturity Versus UnemploymentHistory: 30-Year Conventional MortgagesHistory: 30-Year Treasury Bond Yield Constant MaturityHistory: Bank Prime Loan RateHistory: Inflation in Consumer PricesHistory: Japanese Long-Term Prime Lending RateHistory: SP500 Total Return Versus Percent ChangeHistory: SP500 Total Return Versus Smoothed Percent ChangeHistory: The Great CrashHistory: Unemployment RateHistory: West Texas Intermediate CrudeIchimoku Kinko HyoIntermarket Comparison: Nikkei 225 Versus GoldIntramarket Comparison: Toronto TSE 300 Versus Dow Jones IndustrialsLeading Economic Index: Baltic Dry IndexMost ActiveMoving Averages ComparedMoving Averages Setup Simple with ExponentialMoving Averages Setup Simple Versus DisplacedOpen Interest Declining with Volume Decline, and Price Is CorrectiveOpen Interest Rising with Volume Increase in Downtrend Confirms Weak MarketOpen Interest Rising with Volume Increase Is Trend ConfirmationOscillator Comparison: RSI Versus MACDOscillator Comparison: RSI Versus StochasticOscillator Comparison: RSI Versus Ultimate OscillatorOscillator Comparison: RSI with Averages Versus MACDOscillator Comparison: RSI with Averages Versus Stochastic with AveragesOscillator Comparison: Stochastic with Averages Versus RSI with AveragesOscillator Comparisons Not Normalized (Not Bound within Zero to 100)Oscillator Comparisons of HistogramsOscillator Reverse EngineeringOverlay Chronological Comparison: Nikkei Versus Displaced SP500Overlay Chronological Comparison: Nikkei Versus SP500Overlay Comparative ReturnsOverlay Comparison: DJIA 1929 High Versus Nasdaq 2000 HighOverlay Comparison: North American Stock MarketsOverlay Comparison: Relative PerformanceOverlay Comparison: Relative Stock PerformanceOverlay Comparison: World Stock Markets (Daily)Overlay Comparison: World Stock Markets (Weekly)Pattern Continuation: Bearish FlagPattern Continuation: Bullish PennantPattern Continuation: Contracting TrianglePattern Continuation: Expanding TrianglePattern Resolution: Thrust out of a TrianglePattern Reversal: DiamondPattern Reversal: Double TopPattern Reversal: Falling Termination WedgePattern Reversal: Inside DayPattern Reversal: Inverted Head and ShouldersPattern Reversal: Outside DayPattern Reversal: Rounding BottomPattern Reversal Triple BottomPattern Reversal: Triple TopPattern Reversal: V BottomPoint-and-Figure Bearish Broadening FormationPoint-and-Figure Bearish TrendlinesPoint-and-Figure Bullish Broadening FormationPoint-and-Figure Bullish TrendlinesPoint-and-Figure Buy SignalPoint-and-Figure Sell SignalPoint-and-Figure TrendlinesPrice Action: Bear TrapPrice Action: Bull TrapPrice Action: Coiling Sideways MarketPrice Action: Countertrend RallyPrice Action: Market AccumulationPrice Action: Market DistributionPrice Action: Mirror ImagePrice Action: Parabolic Rise (also Developing Market Bubble)Price Action: Range-Bound or Sideways MarketPrice Action: Whipsaw RallyPrice Projection: Equality from a MidpointPrice Projection: Exact 360-Degrees or Natural Square RetracementPrice Projection following Stochastic FlutterPrice Projection from Head-and-Shoulders PatternPrice Projection from the Midpoint of a GapPrice Projection: Market GeometryPrice Projection: RSI Negative ReversalPrice Projection: RSI Positive ReversalPrice Smoothing: Bollinger BandsPrice Smoothing: Gann Swing OverlayPrice Smoothing: Keltner ChannelPrice Smoothing: Percentage ChangePrice Smoothing: Percentage DisplacementPrice Smoothing: Regression LinePrice Smoothing: Simple Moving AveragePrice Smoothing: Simple Moving Average EnvelopePrice Smoothing: Spread between Two Averages DetrendedPrice Smoothing: Starc or Stoller BandsPsychological SupportRelative StrengthRSI Bear Market Oscillator RangeRSI Bull Market Oscillator RangeRSI Hidden Negative R

198621197 constance brown the illustrated guide to technical analysis signals phrases

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