FuturesTechs Blog

Event: 4 Practical workshops on Technical Analysis, delivered over 2 days by our chief Technical Analyst, Clive Lambert

Date: March 17^th and 18^th 2010

Place: MWB Business Exchange, Houndsditch (City of London).

Details: Join Clive Lambert for a 2 day seminar introducing the basics of Technical Analysis, then delving deeper into three key methodologies used by traders every day.

This course is suitable for anyone from a new trader to an experienced market professional wishing to expand their knowledge on essential technical tools for short and medium term trading.

These practical modules on key trading methodologies may count towards 12 hours of your FSA CPD, based on them satisfying you training requirements*.

Clive Lambert has been a central figure in the UK Futures day trading arena for 10 years now, and has taught thousands of traders how to incorporate Technical Analysis into their daily routine. He is the Author of “Candlestick Charts” and is an accomplished and interesting speaker, who delivers seminars for many organisations including the UK Society of Technical Analysts.

March 17^th - 10am to 1pm - Module 1 - Introduction to Technical Analysis/Support and Resistance - £300 (+VAT)

• Clive will explain the basic principles and the main chart types before looking into the creation of support and resistance levels, and how to spot potential turning points using methods like trendlines and chart pattern recognition.

March 17^th - 2pm to 5pm - Module 2 - Candlestick Analysis - £300 (+VAT)

• After a run through of the history and construction of candlesticks Clive will go through the 7 most powerful patterns in candlestick analysis, sharing his unique insight into the “psychology” of each pattern, and their application on whatever timeframe chart you’re viewing. Clive is one of the UK’s leading proponents of Candlestick Analysis.

March 18^th - 10am to 1pm - Module 3 - Moving Averages and Momentum Indicators - £300 (+VAT)

• These studies are sometimes overused and often misunderstood. Clive will run through the common Indicators used in by different types of traders, the mistakes that are often made in their interpretation, and the correct way to utilise these studies to enhance your trading and understanding of price movement.

March 18^th - 2pm to 5pm - Module 4 - Market Profile - £300 (+VAT)

• Originally from the Futures Pits in Chicago this methodology is extremely tough to convey, as evidenced by the pile of difficult to read books on the subject. Clive breaks down the ideas behind Market Profile and tells first hand, in a practical way, how traders in London and Chicago use this in their daily trading. He has “grown up” around traders using Profile, so understands not only the complexities of this methodology, but its benefits to day traders.

Class sizes will be limited to 12 people, so you are guaranteed training that is both relevant and “personal”. All methodologies will be discussed using live charts of markets familiar to you.

Top notch Refreshments and Lunch will be provided, as well as course notes, either in bound, full colour “paper” format or on Memory Stick.

Delegates will also get a free signed copy of Clive’s book “Candlestick Charts”.
The course will take place at the MWB Business Exchange in Houndsditch (EC3, 5 minute walk from Liverpool Street); a fantastic modern space where delegates will enjoy excellent facilities.

Book now by clicking here or call us on +44 (0) 1702 333461.

Remember, places are limited.

Or take advantage of our generous discounts:

All four modules - £1000 (+VAT), or £800 (+VAT) for FuturesTechs customers**

FuturesTechs customers** can chose individual modules for £250 (+VAT).

If you wish to discuss block bookings for any of these Modules please let us know. I’m sure we can sort something out!!

Yours,

Clive

* Check with your compliance officer prior to booking

**Discount does not apply to FuturesTechs Website customers on month-to-month contracts.

In Brief: All I keep hearing at the moment is how we will have a 10% correction, so, let’s have a look:

The “funnymentalist” community, particularly Stateside, seem pretty happy with the idea that this pullback will be a “normal” affair and will pull back 10% from the January highs, at which point you can happily pile in, buy the dip, and carry on where we left off…

I thought it would be useful to know where this level is on the markets we watch. So here goes, and we’re looking at the Cash Indexes here, NOT the Futures:

Dow: High was 10730. 10% pullback level is 9657 (currently 10023)

S&P 500: High was 1150, pullback level is 1035 (at 1065 right now)

NASDAQ: High was 1897, pullback level is 1707 (1743 now)

DAX: 6094 was the January high, 10% off that is 5485.  BROKEN

FTSE: 5600 high, 5040 is 10% pullback. 5033 was last week’s low, so holding…

Eurostoxx: Pulled back from 3044. 10% back from here is 2740. BROKEN

CAC: high was 4088, so 10% back from there is 3680, BROKEN.

So to summarise,  if anyone stateside says to you about 10% pullbacks the simple thing to say is “thanks, but we’re already beyond that!”… especially if/when the FTSE breaks 5030-40.

Keep safe in these markets.

Let’s go back to basics: technical analysis is the study of market action, i.e. the interactions of buyers and sellers. Rather than the merits of what is being bought and sold, we analyse these interactions in search of patterns and trends that will identify profitable opportunities.

But the information available to the technical analyst does not need to consist merely of price movements; technical data is anything related to market action. The level of participation in the market, then, is also an important component of this data. We measure it by the number of stocks or futures contracts which are traded over any given period, and call it volume. The reason for the name is fairly simple: in a trading pit, it would be directly proportional to the noise!

Volume is available for nearly any market, except for Forex, whose decentralised structure makes a measurement impossible!

So what’s useful about volume?

Volume tells us where the majority of people are taking and covering their positions, so has big implications in terms of market memory.

For example, suppose that during a rally in a stock we notice that there is a price range where volume is particularly high. What does this mean? It means that there are particularly many positions originating and closing here. Going foward, then, there are lots of participants who have a “stake” in this particular price region.

If the price gets back here, people who bought in the first time might use this as an opportunity to pick up more of the stock at what they still consider to be good value. This is manifested in the price finding support here instead of falling back down.

On the other hand, what happens if sellers do come out in enough force to take us through this region? In that case, anybody who went long there is now offside and may be tempted to exit their positions. Lots of stops can get triggered, resulting in an acceleration of the decline.

So that’s the significance of volume: it tells us where most people are taking their positions. You could almost say that the market “remembers” levels in direct proportion with the level of volume seen when it trades around those levels.

Volume has long been a key component of technical analysis. One of the tenets of Dow Theory is that “Volume must confirm the trend”. High volume demonstrates mass participation in a move, and hence widespread acceptance of the new price levels. Price moves without volume were subject to suspicion, since it was possible that only a small number of rogue traders were moving the price. In that case the price  would revert back to where it came from as soon as they stopped participating.

It should be noted that sometimes, volume will be so light that the relevance of the price levels becomes negligible. This is true, for example, in the overnight session for the Agricultural commodities. Here’s a sample:

While the overnight price action will be visible to traders, some of whom may give it some small consideration, the volumes are so small that the levels can generally be ignored.

One common way in which volume is used is in the confirmation of price patterns. This is in the same spirit as Dow Theory: just as volume should confirm a trend, it should equally confirm a reversal or continuation pattern.

For example, consider the famous Head and Shoulders pattern. This begins with a series of higher highs and higher lows, a classic Dow Theory uptrend. But then we get a high below the prior high, and then a fall through the “Neckline” connecting the previous two lows.

There are definite patterns in volume which we may seek to accompany the Head and Shoulders. These may not always appear, but that’s ok: volume is only an additional piece of the jigsaw, and not the most important piece of evidence we look at when analysing the markets. Volume is always secondary to price. That said, we are encouraged when we see volume acting in a way that confirms the price action: for a Head and Shoulders pattern, that means cooling off as the market runs into resistance, and then expanding as the market decisively changes direction.

The above Head and Shoulders pattern for Silver shows volume declining on each successive peak, and then expanding as it completes the pattern with a severe breakdown.

Volume can also be incorporated into momentum indicators, usually in combination with some price information.

For example, “On Balance Volume” (OBV, see below) is a type of running sum of the volume. The trick is that we add the volume when the market has gone up, but subtract it when it goes down.

We can treat the OBV like any other indicator: adding moving averages, trendlines, etc. The trendline added to OBV above illustrated how the market was struggling.

So that’s an overview of Volume: as a core componenent of technical analysis, it confirms trends and price patterns, and can be incorporated into momentum indicators. An essential tool of the technician and trader!

Graham Neary, MSTA (graham@futurestechs.co.uk)