The ascending channel pattern on the chart remains intact for the moment. This, in turn, raises the support
points and resistance bars along the way, suggesting that our Malaysian bourse could still plot a series of
higher highs and higher lows going forward.
After a short and shallow intermittent pullback, the bellwether FTSE Bursa Malaysia KLCI (FBM KLCI)
resumed its uptrend with a weekly increase of 27.6-point or 2.3% to settle at 1,233.82 last Friday. Also up
for the week were the FBM 70 Index (+2.0%) and the FBM ACE Index (+0.7%). An added positive was the
notable pick-up in trading activity, as daily average volume and value soared to 717.9m shares and RM1.2b
respectively, heavier than the 584.5m units worth RM844.9m traded the week before.
Even the external backdrop is changing to a bit more optimistic now. Last week, Asian equities mostly
rebounded from their preceding weeks’ losses, paced by China shares listed in Hong Kong (+8.4%), Hong
Kong (+5.5%) and Thailand (+3.1%). In the U.S., major stock barometers were up between 4.0% and 4.5%
through the week. Interestingly, the widely watched Dow Jones Industrial Average is presently standing at
9,865 (its highest close since the rally started in Mar this year), eyeing to surpass 10,000 (the psychological
barrier) soon.
In essence, the bits and pieces of positive data – on economic recovery progress and corporate profit
expectations – held together to stir up buying interest globally. Whether the incoming reports remain
pleasant or turn nasty would be the key in sustaining investors’ appetite for equities ahead. Of interest too is
the future direction of the US$ given its weakness lately, which could distort global money flows between
asset classes and geographical allocations if the greenback depreciates further.
Local news flows, on the other hand, will still be quite slow this week. Just a few items are anticipated to
trickle in. They are: (a) the Sep plantation statistics to be out on Monday (12 Oct); and (b) the Index of
Industrial Production (IPI) for Aug also due on Monday. That’s about all the routine macro stuff in the weekly
schedule, not that their outcomes will matter much anyway, in terms of short-term stock market
implications. On the corporate scene, however, there may be individual share price actions in response to
possible surprises when the likes of Public Bank (likely to be on Thursday, 15 Oct) and Bursa Malaysia (on
Friday, 16 Oct) release their quarterly earnings announcements.
Yet, light news may be good news for share prices back home. This can then pave the way for our domestic
stock market to track its overseas peers, though we may still lag in pace.
As the saying in technical analysis goes “never buck a trend as the trend is your friend”, we are keeping our
stance that the prevailing momentum will push the FBM KLCI – even after surging 47.5% from its mid-Mar
trough – to extend its uptrend inside the rising channel.
After bouncing up from the bottom of the two parallel trend lines last week, the benchmark index will
probably zigzag its way to challenge the resistance target of 1,255 next. On the downside, its immediate
resistance-turned-support level stands at 1,230 at the moment. Should the FBM KLCI break under the
upward sloping trend line in the near term on heavy profit-taking pressures, the second support line is seen
at 1,190.
Tuesday, October 13, 2009
Wednesday, September 23, 2009
6 Ways Elliott Wave Helps You Trade Better
The following is adapted from Jeffrey's popular 2-volume Trader's Classroom collection.
Elliott Wave Benefit #1: It identifies the trend.
Elliott wave analysis is based on two types of wave development: impulsive and corrective. Impulse waves are five-wave moves (labeled 1-2-3-4-5) that identify the direction of the larger trend. In other words, a five-wave advance tells you the trend as up and a five-wave decline tells you it's down. As traders, we always want to trade in the direction of the trend. We want the wind at our backs: That is the path of least resistance. For example, the probability of success is much greater if you are long a stock when all major indexes are also rallying.
Benefit #2: Elliott wave analysis identifies countertrend moves within the trend.
Corrective waves are simply a response to the preceding impulse wave; corrections always move against the trend. They typically subdivide into three waves (A-B-C) and give us, the traders, an opportunity to position our trades in the direction of the market's larger trend.
Benefit #3: Elliott wave analysis identifies upcoming changes in trend.
Elliott waves are fractal -- i.e., self-repeating on all degrees of trend. This enables you to identify the maturity of the trend. For example, if prices are advancing in wave 5 of a larger five-wave advance, and wave 5 is close to completed its smaller 5-wave impulse -- as a trader, you know that this is not the time to be adding to long positions. Instead, it's time to think about money management: maybe take some profit or at least raise your protective stop.
Benefit #4: Elliott wave analysis confirms the resumption of the trend.
Corrections typically unfold in three waves (labeled A-B-C). When wave C exceeds the extreme of wave B, thus confirming the pattern as a three-wave structure, it implies that the larger trend has resumed.
Benefit #5: Elliott wave analysis provides high probability price targets.
When R.N. Elliott wrote Nature’s Law, he specifically stated that the Fibonacci sequence was the mathematical basis for the Wave Principle. And as time has proven, he was right. Elliott waves, both impulses and corrections, adhere to specific Fibonacci proportions.
Benefit #6: Elliott wave analysis provides specific points of ruin.
Where are you wrong? This seems to be the eternal question for traders. And once again, Elliott wave analysis provides us with the answer via the Three Rules of Elliott:
Rule #1: Wave 2 can never retrace more than 100% of wave 1.
Rule #2: Wave 4 may never end in the price territory of wave 1.
Rule #3: Out of the three impulse waves 1, 3 and 5, wave 3 can never be the shortest.
Bottom line, wave analysis is not a crystal ball, but it will help you accomplish three crucial goals: Identify the trend, stay with it, and get out when the trend is likely over.
Benefit #2: Elliott wave analysis identifies countertrend moves within the trend.
Corrective waves are simply a response to the preceding impulse wave; corrections always move against the trend. They typically subdivide into three waves (A-B-C) and give us, the traders, an opportunity to position our trades in the direction of the market's larger trend.
Benefit #3: Elliott wave analysis identifies upcoming changes in trend.
Elliott waves are fractal -- i.e., self-repeating on all degrees of trend. This enables you to identify the maturity of the trend. For example, if prices are advancing in wave 5 of a larger five-wave advance, and wave 5 is close to completed its smaller 5-wave impulse -- as a trader, you know that this is not the time to be adding to long positions. Instead, it's time to think about money management: maybe take some profit or at least raise your protective stop.
Benefit #4: Elliott wave analysis confirms the resumption of the trend.
Corrections typically unfold in three waves (labeled A-B-C). When wave C exceeds the extreme of wave B, thus confirming the pattern as a three-wave structure, it implies that the larger trend has resumed.
Benefit #5: Elliott wave analysis provides high probability price targets.
When R.N. Elliott wrote Nature’s Law, he specifically stated that the Fibonacci sequence was the mathematical basis for the Wave Principle. And as time has proven, he was right. Elliott waves, both impulses and corrections, adhere to specific Fibonacci proportions.
Benefit #6: Elliott wave analysis provides specific points of ruin.
Where are you wrong? This seems to be the eternal question for traders. And once again, Elliott wave analysis provides us with the answer via the Three Rules of Elliott:
Rule #1: Wave 2 can never retrace more than 100% of wave 1.
Rule #2: Wave 4 may never end in the price territory of wave 1.
Rule #3: Out of the three impulse waves 1, 3 and 5, wave 3 can never be the shortest.
Bottom line, wave analysis is not a crystal ball, but it will help you accomplish three crucial goals: Identify the trend, stay with it, and get out when the trend is likely over.
Saturday, June 13, 2009
7 Indicators
Technical analysis have become an increasingly popular tool to succeed in trading and investment as more successful traders and investors claimed to have used technical analysis in one way or another. Fundamental analysis may be a very good tool to identify companies with good financial and management background but technical analysis is the perfect tool to identify the right price and the right time to buy and sell by identifying price patterns on the chart that reflect market sentiments or emotions. Therefore, having knowledge in technical analysis gives investors and traders the added advantage
Different indicators are used to identify various price behavior. One who understands price behavior is able to know future price direction. The more you know how to use these indicators, the more you understand about price behavior. But beware, knowing too many without proper application can cause a lot of confusion. Below are some major indicators that are commonly used. In this workshop we will show you how these indicators are used to understand the various price behavior and most importantly, how it is practically applied in a real market.
Different indicators are used to identify various price behavior. One who understands price behavior is able to know future price direction. The more you know how to use these indicators, the more you understand about price behavior. But beware, knowing too many without proper application can cause a lot of confusion. Below are some major indicators that are commonly used. In this workshop we will show you how these indicators are used to understand the various price behavior and most importantly, how it is practically applied in a real market.
Elliot Wave and Fibonacci
Learn how markets really move. “Elliott Wave” tells it best.
Discover how Elliott Wave and Fibonacci are an unbeatable combination to help you become a consistent market winner.
Elliott Wave and Fibonacci master Don Schellenberg will reveal:
- How and why Elliott Wave works
- The simplest and most powerful parts of Elliott Wave
- The Fibonacci Ratios you really need to know.
Candlesticks
The Japanese Candlesticks is an age-old tool first used by the Japanese in the 17th century and the usage has grown exponentially in the 20th century with every charting program having this methodology. The Candlesticks are great in identifying price behaviors in the very short time frame, therefore making it a leading indicator. The Candlesticks are commonly used to identify price reversals or continuation patterns.
You will learn how candlesticks can be used to identify good trading opportunities.
Moving Averages
This indicator is used to understand the most important price behavior – the price trend. You will learn how to apply moving averages in different time frames to identify short, medium and long term trends, and to understand the relationship between the different trends. You will also learn how moving averages are used to provide trading signals.
Bollinger Bands
Developed by John Bollinger, the indicator aims to identify price volatility. Price tends to strongly move into a direction when the price volatility contracts. By using the Bollinger Bands, the trader can identify when price volatility contracts and get ready for an explosive move. Apart from learning how to identify and understand price volatility, you will also learn how to practically use the Bollinger Bands to identify trading opportunities.
MACD
The Moving Average Convergence Divergence is a very popular indicator because it is a multi-purpose indicator that identifies price trend, price momentum and price reversals. Therefore, you can understand more price behaviors by using just one indicator. You will learn how to use the MACD and practically apply it to make trading decisions.
Stochastic
The Stochastic is an oscillator that identifies whether price is relatively high or low. This is an important indicator to those traders and investors who likes to buy when price is low and sell when it is high. You will learn how to use this indicator to also identify the right time to trade when price is relatively low or high.
Tuesday, May 19, 2009
D'ont be Emotional .. go technical
The way most people invest, it’s a fool’s game.
They buy on a hunch or a hot tip. Stocks get hammered, and the average guy sells at the bottom. Google looks like it’s going up forever, so otherwise-prudent people pile in at the very top.
Investing can make the cleverest people -- folks who are experts in their own fields -- look mighty dumb.
Greed and panic
For most investors, emotion trumps intelligence.
We bounce back and forth between greed and panic, depending on how the market is treating us that day.
And when it comes time to make an important decision, we have as much self-control as a couple of seventeen-year-olds on prom night.
You’re human. I’m human, too. But I hold one huge advantage over most investors.
I learned many years ago that I’m an emotional creature. We all are. It’s what makes us smile at little children at play. It’s what makes us want to pet a puppy.
It’s a wonderful attribute that helps make us human. But that same attribute makes us lousy investors if we let it have its way.
That’s why I only trust the Science of Investing using technical analysis.
They buy on a hunch or a hot tip. Stocks get hammered, and the average guy sells at the bottom. Google looks like it’s going up forever, so otherwise-prudent people pile in at the very top.
Investing can make the cleverest people -- folks who are experts in their own fields -- look mighty dumb.
Greed and panic
For most investors, emotion trumps intelligence.
We bounce back and forth between greed and panic, depending on how the market is treating us that day.
And when it comes time to make an important decision, we have as much self-control as a couple of seventeen-year-olds on prom night.
You’re human. I’m human, too. But I hold one huge advantage over most investors.
I learned many years ago that I’m an emotional creature. We all are. It’s what makes us smile at little children at play. It’s what makes us want to pet a puppy.
It’s a wonderful attribute that helps make us human. But that same attribute makes us lousy investors if we let it have its way.
That’s why I only trust the Science of Investing using technical analysis.
Thursday, April 30, 2009
Double top or M top
Double top or M top is a chart pattern formed after an uptrend or a rally.The profitable action to take is to sell when price breaks below the neck line.
After selling, the objective is to buy back when the price dropped as much as the amount from double top to the neck line.
If you are interested in trading forex click here for help.
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