| ATAA Blast! Newsletter #180 – June 2025
| Dear ~~first_name~~
Welcome to the latest edition of the ATAA Blast! Newsletter, with lots of informative news. I normally like to get this newsletter out in the first week of the month, but I have failed on this occasion - my apologies if that has impacted on anyone.
| In this Blast! edition you can see the following, with links for an easy and speedy go-to to the relevant section below:
- ATAA National President's Update for this month, and an Executive Summary from the recent board meeting, to help keep members informed of what the board has been doing.
- The latest ATAA Website Resource Library updates for the latest month - With an update on the immensely useful and growing ATAA Resource Library, including the now hundreds of video session recordings from the SIGs and network groups and chapter meetings.
- Online Discussion Forums - This resource is now growing in popularity in the ATAA website (for ATAA members only - login is required).
- ATAA National Board Update - News from the national board of directors. This includes advance notification of a Technical Indicator Innovation Competition - read more below.
- List of all of the ATAA Chapters, SIGs and Network Groups - More opportunities for the ATAA members for networking and learning.
- An update on the National Speaker Series of online presentations - the first one back in April with Brent Penfold was very successful, and the next one will feature Gary Stone on 12 July.
- The ATAA 2025 In-Person Conference update - An update on the upcoming 2025 in-person ATAA Conference in Melbourne in October.
- Updates from the ATAA Chapters and SIGs: The next Forex Network online meeting is happening tonight - Thursday 9 April. Included below are updates for some chapters: Canberra, Melbourne - those that have submitted content. Thank you to: Mark (Canberra) for your ongoing contributions.
- IFTA information update: Latest information from IFTA - the free IFTA Update Newsletter is available.
- TECHNICAL ANALYSIS article - In the article this month we tackle the question: "What is Technical Analysis really?"
- Detailed benefits for ATAA members.
|
As the national Marketing Director, I am still including key marketing phrases in this Blast!:- the ATAA Tag line in blue below, and the ATAA Elevator Pitch also in blue at the bottom of this email. Feel free to use these in your own correspondence to help encourage new members, and of course to remind existing members of why they are ATAA members.
I do hope you find this Blast! newsletter useful and interesting reading; but do feel free to tell us what you really think, and how we can improve it.
NOTES about this newsletter: The appearance of this email newsletter can be a little different depending on how you view it. In Google's Gmail the Gmail Inbox might show just a portion of this edition. At this stage I am not sure of the best way to work around this issue.
ps: Apologies continue for any odd formatting that you might find which I cannot resolve - font size or line spacing etc - as these seem to be oddities in our CE email editor tool (there are probably odd HTML codes hidden behind the text, which we have not found yet).
Robert B Brain
Blast! Newsletter Editor
ATAA Marketing Director
(and ATAA Life Member)
| The ATAA is the knowledge network
for successful financial market
trading and investing
|
From the President's Desk – June 2025
There is a renewed sense of progress at the ATAA, and I’m pleased to share some encouraging developments.
The Digital Marketing Strategy proposal was presented to the Board and formally approved - and implementation began immediately. This marks a significant step forward in modernising our promotional efforts and strengthening the ATAA’s presence in the digital space.
In recent months, our digital marketing efforts have intensified, particularly around the National Speaker Series - now renamed the “Trading Expert Series” - and through the rollout of our broader strategy. These efforts are already bearing fruit: the ATAA is enjoying greater visibility online, and we’ve recorded a net increase in membership for three consecutive months - something we haven’t seen in several years.
Registration is now open for our National Conference, taking place in October. This is a flagship event on our calendar, and I encourage you to visit our website for full details. Meanwhile, the next event in our Trading Expert Series has also been announced - don’t miss it!
In response to feedback from the recent Office Bearers’ meeting, we will now include an Executive Summary of each ATAA Board Meeting in the monthly newsletter. These brief summaries will highlight key matters under discussion and keep members informed of board-level activity. You’ll find the first of these below.
Finally, a quick reminder: in May, I reached out to all members with a call for nominations to the ATAA Board. As a member-run organisation, we depend on volunteers to help shape our direction and deliver value to our community. If you would like to contribute your skills and trading experience, and are invested in the future of independent trading in Australia, I encourage you to nominate for one of the vacant Board positions. Your involvement can make a real difference as we continue to build a stronger, more relevant ATAA.
Jim Haralambidis
ATAA National President
| Executive Summary – ATAA Board Meeting (3 June 2025)
- The Board confirmed the 2022 Constitution as the current official version, reflecting the changes approved at the AGM on 12 December 2022.
- Conference planning continues to progress well, with most speakers now confirmed.
- A key focus of discussion was expanding the ATAA’s operational capacity. While volunteer involvement remains central, the Board is also considering modest incentives for members with relevant skills who can assist with high-priority activities such as policy updates, member engagement, and promotional efforts. Options for virtual or external support are also being explored. Members are encouraged to contribute where possible, including by nominating for Board positions.
- Suggestions for a potential ATAA name change are welcome, particularly if it may help refresh and modernise the organisation’s brand.
| ATAA Website Latest Resource Library Updates - recordings from May 2025
Our ATAA Resource Library now has many presentations and recordings going back to 2008. You can drill down on these using the website menu: Resources > Presentations by Date. An alternative way to find something specific on a particular topic is to search the library using the menu option: Resources > Search Resource Library.
The materials recently added to the Resource Library include:
- Saturday 12 April - Online "National Speaker Series" (since renamed to: "Trading Expert Series"):
- Brent Penfold - Analysis is Good. Making Money is Better.
- Thursday 8 May - Melbourne Chapter Hybrid meeting:
- Robert Brain- Hands-on Chart Reading Interpretation - a real demonstration with interactive audience participation.
- Mark Bennell - The ABC Pullback Trading Setup
All of these items can be found from the ATAA website menu: Resources > Presentations by Date. Make sure to browse the earlier recordings in the Resource Library, because you might never know what you've been missing. And you can also search the Resource Library by keyword. If your local chapter or SIG has a video recording, or a (PowerPoint) slide deck of a recent session, then it can also be added to our library collection.
| |
ATAA Website Resource Library - Invaluable JOURNALS from 1990 to 2007
One of the invaluable resources that that ATAA has been holding for many years is a digital (electronic) copy of the official ATAA Journals that were published on a quarterly basis from 1990 to 2007. There are 720 articles in more than 100 Journal documents.
The screenshot below shows how to find the Journals. Firstly, login to the website using your username and password, then use the menu item: Resources > Resource Library Folders, to see the hierarchical folder structure. Then expand the folders: Member Resource Library > ATAA Publications > Journals 1990 to 2007.
Once you've done that you will see the list of available documents, including an MS Excel list of the 720 subjects/articles, and also three PDF versions of the subject index, the index by classification, and the index by author. You can download any of the items by clicking on the small green-backed downward triangle located to the right of each entry. |  | ATAA Online Discussion Forums
Important Note:- Many of our SIG groups and Network Groups, as well as the chapters, have discussion topics in the Online Discussion Forum. Please note that if you post into a Chapter or SIG forum, then only some people will be able to "Reply to" or "Like" your post - other members of your own Chapter or SIG. if you are going to post, and you want any ATAA member to be able to "Like" or "Reply to" your post, then you should post into a forum that is not a Chapter or SIG forum.
The most active forums currently include: MEL Quant Trader SIG (30 threads with 86 posts); Bigalow Network SIG (35 discussion threads with 45 posts). Other active forums include: RealTest Coders Workshop (17 threads with 56 posts), Adelaide Chapter (17 threads, 28 posts), Trading Strategies and Systems (13 threads and 60 posts), "Indicators and Charting" (8 threads, 36 posts), Brisbane Chapter (6 threads, 7 posts), "Trading Software and Tools" (5 threads) - just to name a few.
Check out the growing list of online discussion forums on the ATAA website on a range of T.A. and trading topics. And feel free to start a new discussion topic. The link to access the forum (in the website menu) is enabled after you login to the ATAA website.
You can sign-up to receive update emails on specific topics as they are posted. Login and visit the ATAA Forum to see more details.
Robert Brain
(Marketing Director) | |
ATAA National Board updates
| | |
ATAA Technical Indicator Innovation Competition
Bored using the same old indicators?
Concerned that indicators and TA strategies developed in the 1970s
are not producing good enough results?
Wondering whether your strategies are competing with Institutions and
automated traders well enough
Do you enjoy an intellectual trading and research challenge?
Then enter the ATAA Technical Indicator Innovation Competition!
The ATAA Board invites entries for our Competition in three categories:
- Enhancement of Existing Technical Indicators
- Development of a New Technical Indicator
- Integration of Technical Indicators with Emerging Technologies
Submission Requirements and Judging Criteria for each category will be published on the ATAA website very soon.
Prizes - Final prizes to be confirmed and will likely include:
-
A 12-month data subscription
-
A cash prize or software subscription
-
A whole 12 months ATAA membership
Judging - A panel of three judges will decide winners in each category.
Winners to be announced at the ATAA Annual Conference in Melbourne on October 18-19, 2025.
STAY TUNED FOR MORE INFORMATION SOON, AND IN THE NEXT EDITION OF THE ATAA BLAST! NEWS | Trading Expert Series (formerly: National Speaker Working Group) | July: Featuring Gary Stone
Join us for the next instalment of The Trading Expert Series on Saturday, 12 July 2025, with renowned trading coach Gary Stone. This exclusive event is designed to equip both aspiring and experienced traders with the tools and insights needed to achieve consistent success in the markets.
Why You Can’t Miss This Event:
- Expert Insights: Gain valuable knowledge from a seasoned professional with a proven track record.
- Practical Strategies: Learn actionable steps to develop trading habits that lead to consistent success.
- Interactive Q&A: Engage directly with Gary Stone to address your specific trading challenges.
- Inspiration and Motivation: Gain renewed enthusiasm and fresh ideas to invigorate your trading approach, inspired by Gary's insights and success stories.
-
Date: Saturday, 12 July 2025
-
Time: 12:00 PM AEST
-
Location: Online webinar - Join from the comfort of your own home
-
Speaker: Gary Stone, Managing Director of Share Wealth Systems
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Topic: "Building Habits to Achieve Trading Excellence & Life-long Profitability"
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Cost: Free Registration
| | With over three decades of experience in the stock market, Gary Stone has dedicated more than 8,000 research hours to developing mechanical trading systems that have empowered countless traders. As the founder of Share Wealth Systems, he has been instrumental in coaching traders to instil highly functional habits, enabling them to outperform market indices over the long term. He is also the author of "Blueprint to Wealth: Financial Freedom in 15 Minutes a Week," a testament to his commitment to making trading accessible and profitable for all.
What You'll Learn
In his presentation, Gary will outline a step-by-step path to building specific, highly functional trading habits proven to work. This pathway is lined with definitive knowledge and specialised skills that, when attained and ingrained as habits, lead to trading excellence and lifelong profitability.
"The defining characteristic that separates the consistent winners from everyone else is this: The winners have attained a mind-set—a unique set of attitudes—that allows them to remain disciplined, focused, and, above all, confident in spite of the adverse conditions."
— Mark Douglas, Trading in the Zone
We look forward to welcoming you to this transformative event.
|  | | | ATAA Marketing Working Group Update
| | The official ATAA email signature block. Are you using this email signature block yet? if not, why not? It's easy to download it and set it up as the footer in each of your new email messages, and in your replies to emails. This jpeg file (shown herewith) is available for ATAA members to download from the "Resource Library", and then include it in your own email signature block at the bottom of your emails. To find this file and download it, login to the ATAA website and use the menu option: Resources > Resource Library Folders > Association Documents > Marketing. | | | ATAA 2025 In-Person and Hybrid Conference
October 18 and 19 |
“The Future of Trading – Blending Classic Tactics with Smart Technology”
Saturday 18 - Sunday 19, October 2025
Melbourne
The Future of Trading:
Blending Classic Tactics with Smart Technology
We’re thrilled to announce this year’s highly anticipated ATAA National Conference, where trading meets innovation!
Whether you're an experienced trader or investor, or simply looking to sharpen your edge, this event is your opportunity to stay ahead of the curve in a rapidly evolving industry.
Why You Can’t Miss This Event:
- Expert Sessions: Gain invaluable insights from industry-leading trading specialists from both Australia and overseas over two packed days of learning.
- Actionable Strategies: Discover practical trading ideas, risk management tips, and how to leverage cutting-edge AI tools to boost your performance and profits.
- Unparalleled Networking: Connect with like-minded independent traders and industry professionals to expand your network and open new doors.
- Market Mastery: Learn strategies to navigate all market phases, especially during these uncertain times.
- Exclusive Gala Dinner: Socialise with speakers and fellow attendees in a relaxed, elegant setting.
- Premier Venue: Enjoy Melbourne’s vibrant central location, with discounted room rates available exclusively through conference registration.
The conference brings together industry experts, traders, and investors from across the country and around the globe to discuss the latest developments in the financial markets and share insights on trading strategies.
Join like-minded local and international technical professionals, traders, and investors for two days of learning, networking, and inspiration.
Don't miss our lineup of industry-leading speakers, including Michael McCarthy, Michael Berman, Richard Brennan, David Bird, Phil Anderson, Laurent Bernut, and Kyle Potter. They'll share their expertise on trading strategies, financial markets, trading psychology, and the latest developments in asset protection and estate planning.
Devote two uninterrupted days to your trading and investing goals. Immerse yourself in an environment free from distractions - allowing you to enhance your skills, expand your knowledge, and refine your strategies.
Join us in person or online
Members and non-members of ATAA equally welcome at this event
Includes up to 12-months complimentary ATAA membership for non-members
Two incredible days of learning, networking and inspiration. Let's shape the future of trading together!
Location: Mantra on Russell Hotel 222 Russell Street, Melbourne
Located in the Melbourne CBD between Little Bourke and Lonsdale Streets.
Sponsorship:
Interested in sponsoring this event? Please see the conference sponsorship page for details.
Click here for more information and registration details
| CHAPTER and Special Interest Group (SIG) news and updates
| ATAA Chapters, SIGs and Network groups
For the benefit of ATAA members everywhere, the ATAA has a number of: Chapters, and Special Interest Groups, and Network Groups. Current financial members are free and welcome to participate in any of these. We are hopeful that all of these groups will submit some information for publication in the Blast! News from time to time, to help our hundreds of readers understand more about the opportunities and benefits for ATAA members.
For the latest meeting information, check the ATAA website for details, and also scroll down the website home page to see the latest announcements, presentations and updates to the resource library.
| | ATAA Chapters (alpha order) meeting monthly
- Adelaide
- Brisbane
- Canberra
- Melbourne
- Newcastle
- Perth
- Sydney
| | SIGs and Networks (and contact names)
- Melbourne Quant SIG (Jim Haralambidis)
- RealTest Coders (online) Workshop (Chris Meakin, Robert Grigg)
- Bigalow Network (Romy Baker)
- Forex Network - FN (Romy Baker)
- MetaStock Users SIG (Jerry Bongard)
- FX SIG (Mike Smith)
- TA Practice SIG
See the ATAA website for latest information.
| | | A screenshot from the ATAA website Document Library showing where presentations are accessible
| After more than 12 years of the Perth Chapter monthly meetings being held at St Catherine’s College, the venue is now changing. In an effort to reduce costs the monthly meeting will now be held at the State Library of Western Australia, 25 Francis St, Perth.
The State Library is a short walk from the Perth Station so hopefully meeting attendees will find this an easy method of transport. There are a lot of restaurants in Northbridge so the practice of having a meal after the meeting can be easily continued.
The first meeting will be held on Thursday 19th June.
At the May meeting, a presentation was delivered by Stacey Burke via Zoom. Stacey resided in Perth for 23 years but now lives in Canada which is nearly 15,000 km from Perth and 12 hours behind. Apart from an initial connection issue, the presentation went extremely well, which only shows it doesn’t matter what part of the world you live in, you only need a good bandwidth internet connection to be able to give a successful Zoom presentation.
In Perth unfortunately several of the local speakers have moved away, which makes Zoom presentations essential for future meetings.
Derek Locke
Perth Chapter President | The Canberra Chapter enjoyed our fourth meeting of 2025 in May in the Board Room of Eastlake Football Club. Gabriel showed recent moves in the portfolio competition with many entrants now recovering from the recent volatility in the markets. Chris continued with his excellent series on rules-based trading including the two main strategy types used in technical trading of equities. Chris also touched on the differences and similarities between the AU and US markets and how this related to the two strategy types. Gabriel gave our main presentation on the application of Fibonacci Ratios to price, the relationship between Fibonacci numbers and ratios and the use of Fibonacci values in indicator settings and different time frames.
Our next meeting (hybrid) will be held on Tuesday, June 17 in the Boardroom at Eastlake FC in Griffith at 6.00pm [Editor: Due to my delays with this Blast, this meeting was last night and well attended with 25 people attending.] In addition to our regular ASX review and portfolio competition, Chris Meakin will continue his series on Rules Based Trading. Our online speaker, Cameron Buchanan, founder and principal, International Day Trading Academy, will present on a Market Analysis Framework for managing Institutional order flow dynamics at 7.00pm. Full details of Cameron’s presentation will be sent to all ATAA members.
Remember to bring your portfolio selection to our next meeting. If you would like to enter the portfolio competition and cannot make it to the meeting, send your selection to gabriel.spacca@ataa.asn.au
If any ATAA member or guest would like to present at one of our meetings either online or in person, please send me an email me in the first instance and we can discuss your topic.
Finally, I will be stepping down as President of the Canberra Chapter over the next few months as I relocate to the South Coast of NSW. If anyone has an interest in becoming President, do raise a hand. In my experience, the rewards far outweigh the any effort required.
Good trading and good health.
Mark Gleeson
ATAA Canberra Chapter President
[The Canberra Chapter generally meets on the third Tuesday each month.]
| | RealTest Coders online Workshop
| | | Last month’s RealTest Coders workshop (operating under the Melb. Quant SIG) saw participants discussing: 1) a paper - Vince and Williams (2024) ‘The Ripple Effect of Daily New Lows’; 2) an adaptive position sizing strategy; and 3) an AI-generated report about whether the Australian and US stock markets are Trend Following or Mean Reverting.
This month’s meeting (to be held on Monday the 9th of June) will include discussion on Capitulation Indices, reverse engineering a strategy posted by Nick Radge to the RT Forum, and if time permits, pairs trading.
The meetings are aimed at competent users of RealTest, but new users and intending users are more than welcome to join. A number of participants have also formed small ‘coding buddy’ groups (2-4 users) to develop and code up strategies collaboratively.
Recordings of the meetings along with any associated material can be found in the RT Coders SIG forum here.
| LATEST NEWS: The June Melbourne chapter meeting was very successful with more people than usual attending to see the member speaker presentation and also the guest speaker.
The Melbourne Chapter continues to host monthly hybrid meetings and we are still broadcasting the 2-hour segment of 6pm to 8pm by Zoom, and the recordings go into the ATAA website Resource Library - use the website menu: Resources > Presentations by Date. For those of you who are not able to be in the meeting room, you are missing: the invaluable networking (or "common gossip") from 5.15pm to 6pm (including free finger food), the interactions in the room during the broadcast session 6-8pm, and then further networking and guest speaker mingling over dinner after 8pm.
The one thing about networking at an in-person ATAA meeting is that you can "talk shop". That is, you can have an intelligent discussion with fellow ATAA members about the financial markets - and that's something that most of our members can't do at home, or in their regular circle of friends, because most of those people are simply not interested, or don't understand the nuances of the markets and of technical analysis.
All ATAA members who attend our meetings are given a "Door Prize" raffle ticket, with the winning tickets drawn during the mid-session break (when we change-over the speakers). You see, we still have a truck-load of pre-loved trading and technical analysis books to give away at our meetings with more coming, and these are used as the Door Prizes in the Member give-away. And some of these books are absolute gems - for free!
Don’t forget that public transport (tram) runs past the hotel front door, and there is ample car parking around the corner.
Robert Brain
ATAA Melb Chapter President and interim Secretary
(for the Council team: Paul Ash, Jim Haralambidis, Keith Mundy, Tony Hambling, Tony Leonard, Robert Grigg). | Sydney Chapter and
Bigalow Network and Forex Network (FN)
| Sydney Chapter - The Sydney Chapter meets monthly with the next one on Tuesday 15 July. See the event details on the ATAA website.
Looking forward to hearing from you.
Romy Baker
0414 554 967 | Don't forget, we have a total of seven chapters around Australia, including: Brisbane, Perth and Newcastle as well as several Special Interest Groups (SIGs) in which members can participate. You can see a list of the seven chapters and their office-bearers on the website - use the menu option: ATAA Overview > Current Office-Bearers > Chapter Councillors > Subcommittees. See the ATAA website for latest meeting and event details.
- Adelaide Chapter generally meets in-person on the third Wednesday of the month.
- Perth Chapter generally meets on the third Thursday of the month.
- Brisbane Chapter generally meets... second Saturday of the month.
- MetaStock Users SIG - Contact Jerry Bongard, jerry.bongard@ataa.asn.au
- RealTest Coders Workshop (sub-group of the Quant SIG) - Meets online, generally on the second Monday of each month at 8:00 pm. EST (to give members in western states a better chance of attending). SIG Coordinators: Chris Meakin and Robert Grigg.
| About IFTA (International Federation of Technical Analysis) - It is the umbrella organisation for Technical Analyst societies around the world.
IFTA webinars: See the latest information about up-coming and past webinars on the IFTA website. | IFTA Update (Newsletter) - The June 2025 issue is now available.
The June 2025 issue of the IFTA Update is now available for you to download from here. (It's 18 pages and 6 megabytes - not large). In this issue:
- President's Report to Colleagues
- Member News
- 38th Annual IFTA Conference
- Congratulations New CFTes!
- Congratulations New MFTAs!
- New IFTA Website
- Thoughts About Elliott Wave
- NAAIM Founders Award
- IFTA Board of Director's Nomination Form
- and more
| IFTA and ATAA members - ATAA members are automatically affiliate members of the International Federation of Technical Analysts. ATAA membership gives you access to IFTA resources including: certification programs, educational events and networking opportunities, including participation in the IFTA Conferences. The information below is the latest update from IFTA.
IFTA Update (quarterly newsletter) - The IFTA Update is a quarterly newsletter that is available to members of the ATAA.
| Join the ATAA to improve your understanding of how to
invest or trade successfully in the financial markets
focusing on the correct use and application of Technical Analysis
| |
TECHNICAL ANALYSIS
and Trading Tips
| | | Technical Analysis – What is it really? – PART 1 | I was reminded at our recent Melbourne Chapter meeting that the total subject of technical analysis is a very broad field. It includes some topics that some analysts believe do not belong. And there are topics that some people struggle to comprehend, or which they think are too complex. And any newcomer to technical analysis might be somewhat frightened by some of the things that they learn about.
I first learnt about technical analysis at the Melbourne Trading and Investing Expo way back in 2005. I stumbled across the ATAA stand and a friendly bunch of keen technical analysts, and they gave me a Free Ticket to attend the next monthly ATAA chapter meeting in Melbourne. I went along to the meeting in the huge tiered 200-seat auditorium in the Shell building, and the things that the guest speaker talked about made me think that this sort of analysis of the share market is like black magic! It seemed like an easy way to make money.
The presentation that night piqued my interest and I went to the next meeting, and the next one, and then many many more. And every month I was learning something new about technical analysis, and tweaking the things I had learnt a few months prior. In the end it took me a whole four years of monthly ATAA chapter meetings to just have a broad grasp of what technical analysis is all about.
I continued my learning, and started running seminars to help other people understand more about it, and my “Share Market Price Charts – Unlocking the Secrets” seminar handbook grew to 132 pages in length in edition 8.
The following material is just a brief overview of technical analysis, to help you understand the breadth of the topic. Any beginners reading this material will have an overview of what’s involved, and can seek out further details, while the experienced technical analysts might pick up some extra snippets of useful information. And a word of warning:- there are many text books, and lots of reference works on this subject, and the following material is only a glimpse into the subject.
Technical Analysis – Overview
At this point, to help offer an overview of the subject, it is best if I share the diagram below, which tries to explain that technical analysis includes many different topics, some of which could be argued should not be included. |  |
The subject of technical analysis is akin to a jigsaw puzzle.
Technical Analysis
Leon Wilson, in his book “The Business of Share Trading”, talks about primary analysis versus secondary analysis, and this fits in with the views of many experienced analysts. Primary analysis is based on the study of the price charts (and volume) without including any chart indicators, while secondary analysis utilises any of the many available indicator tools. I like this approach because it helps to compartmentalise the material for newcomers, and so the following material is structured the same.
One of the things that dawned on me after many years is the following statement:
Price charts summarise the underlying
opinions and emotions of the real market participants.
Every chart tells a story.
It pays to understand the stories in the price charts.
This statement underpins my thoughts and analyses.
| Technical analysis – the Holy Grail??
Many newcomers to technical analysis think that they will find the Holy Grail, and that it can lead to 100% accuracy in anticipating market movements. But this is flawed. There is no such thing. It is vitally important to remember that technical analysis only gives us a lead to help us play the odds in the markets. Don’t forget that the share price on the price chart summarises the opinions of the real market participants, and it helps us to understand the likelihood of what could happen next.
Dow Theory
We have to mention that the editorial writings of Charles H Dow, which were later written into text books, form the basis of much of technical analysis. The six tenets of Dow Theory simply state the following:
- The averages discount everything.
- The market has three main movements.
- Trends (Primary Movements) have three phases.
- Stock market averages must confirm each other.
- Trends are confirmed in Volume.
- Trends exist until definitive signals prove that they have ended.
Unfortunately, we don’t have the space to elaborate on these here, so the reader is encouraged to seek out further details. | Primary Analysis considers the following:
• price charts and chart types, including periodicity
• trends and trendlines
• support and resistance
• volume
• chart patterns
• candle patterns
Chart types – The simplest analysis includes the visual study of the price chart. Many analysts prefer candle charts, while many others prefer the Open-High-Low-Close (OHLC) bar chart. Some people say that candle charts are easier to interpret, while the bar chart advocates say that these are easier to interpret. This is purely up to the individual. And then the simple line chart can sometimes be the most useful.
The graphic below shows an OHLC bar chart and a candlestick chart for the same stock over the same few days in August. Can you easily see how they show the same information?
|  | It’s worth mentioning that for each period on the candlestick chart (eg. each day), the candle indicates the actual open price at the start of the day’s session, and the high for the day, and the low, and the close price for the session. It can be worth observing each of these.
Without wanting to confuse things, there are several other chart types which can be used, including: Point & Figure, Gann Swing, Kagi, Renko, EquiVolume and Pretzel just to name a few.
Chart periodicity – Then, we need to decide whether to study weekly charts – where every candle or bar summarises the price action in one week – or daily charts, or perhaps monthly charts. And some analysts will want to trade intraday and view hourly or half-hourly charts, or other different intraday periods.
Trends – When studying the price chart, the first things to look for are any uptrends or downtrends. It is said that “The trend is your friend”. An uptrend, for instance, is simply a sequence of higher peaks and higher troughs, and until you have a higher peak and a higher trough, the uptrend is not confirmed. And don’t forget that one of the six tenets of Dow Theory basically says that once a trend is in place, and confirmed, then it is likely to remain in place (because of the opinions of the market participants), and is in place until it is confirmed to have finished.
Support, Resistance – Then look for levels of price support or resistance. The weekly price chart of CBA below is a good example of support and resistance. The red lines indicate resistance and the green indicates support. The opinions of the market participants are clearly shown in this chart. In the early stages (October) the participants had an opinion that CBA was not worth any more than $80, so when trading reach up to this level there was a sell-off – profit takers. With enough sellers causing the price to fall over the ensuing weeks until it reach around $73, at which point the majority of market participants thought it was worth more than this, so the buyers stepped in, and there were enough of them to bid against each other and cause the price to reach about $78. At this level, the sellers stepped in because they thought that CBA was not worth any more. And so, the interpretation continues. Until on this example, something had changed – perhaps some news – and the rally through April and onwards cause the price to mover above past resistance to at least the $80 level and beyond. |  |
Also, chart patterns, and candle patterns, can tell a lot about the opinions of the market participants. And don’t forget about volume – this is very important.
Chart patterns – These can be found on many price charts. One way to identify them is to look at the price action on the chart, and draw a couple of straight lines that “contain” the price action. The diagram below is a good example to demonstrate this.
On this weekly chart of TLS, the price action over at least 7 months in the first half of this chart shows that the market participants believed that TLS was not worth any more than $4. Every time the trading reached up toward that level, enough sellers stepped in to sell their shares, and take profits. The weekly lows are indicated by the bottom of the lower tails on these candles, and this chart shows those weekly lows rising through September to November. These observations allow us to draw the two green straight lines on this chart – an Ascending Triangle chart pattern, which is just one of many possible patterns.
Then in early December something happened to change the thinking, and the majority of the market participants started to think that TLS was worth more than $4. This allowed the price to rise over the subsequent weeks.
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Candle patterns – There are many possible shapes of the candles on the candle charts, depending on the height of the candle body, and the height (or length) of the upper and the lower shadows. Some particular combinations have a name, and are significant when observed. And then there are names for the multi-candle patterns where two or more candles together have a particular shape. Unfortunately, there is not enough space to delve into further detail here.
Summary – The material above is only a brief introduction to a part of the broad field of technical analysis. There is a lot more detail on each of the topics that are mentioned above. And there are more topics to be covered in Part 2 of this series next month. This will touch in the range of indicators, and the additional topics that don’t fit easily under any of the other headings.
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Happy, and safe, investing / trading
Robert Brain | ATAA Member Perks and Benefits
| If you're not an ATAA member, and you are considering joining, you might be interested to know there are many good reasons to sign-up, including:
- Learn how to protect your hard-earned capital - using wise stock selection, and money and risk management ideas;
- Invaluable education opportunities (with discounts for members);
- Huge and extensive Resource Library (access for members);
- Networking opportunities - meet with like-minded peers for trading and investing discussions;
- Special Interest Groups (SIGs) (only for members) - there are several;
- News and information;
- Online Forums;
- Annual ATAA Conference (discounted for members).
| In Closing
As I said at the top, my apologies continue for any odd formatting that you might find herein - font size or line spacing, etc - but these seem to be oddities in our CE email editor which are very elusive.
I do hope you have found this edition of the Blast! Monthly News both interesting and useful. Feel free to send my any feedback - good or bad.
Robert B. Brain
Blast! Newsletter Editor
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