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Hughes

Technical Analysis Chat Session for Tuesday July 27th, 2010

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Will there be another chat session this week?

Yes, Tuesday at 10 PM Eastern Time. Ill post a new thread on it later.

We will discuss elliot waves (per GG), Rate of Change indicator (per sheree), and well talk about market sentiment indicators, and common chart patterns. Like to touch on candles too.

THere actually is a lot more Sheree on that indicator, I would need a chat session to go over it all. Hope you can make it.

Any other suggested topics post here, ill move them into the new thread later.

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*snicker* I write my last exam that night at 5PM. You might get a guest appearance from a really drunk Tril!

That should be interesting. :D

Nice Tril.

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Thats tonight at 10 PM eastern Time.

Thanks.

Have freestockcharts.com loaded and ready.

All welcome.

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Rate of Change Indicator.

Fire up your freestockcharts.com program.

Go to Indicators.

Find in the scroll down bar in alphabetically order the Rate Of Change Indicator(ROC). Bring up the default 50 day period study.

ROC is a study in momentum. It compares basically 2 prices. Using the 50 setting, it would take a price 50 days ago, and compare it to today. It will track its rate of change from those two points.

(Price Today - Price Whatever Days Ago)/ Number of periods x 100 = ROC.

Lets calculate Sirius XM's 10 day ROC from today. Lets now edit your settings to 10 days.

So Price Today (1.02) - (Price 10 days ago(.97)) / (Divided by) 10 (number of the setting) x (times) 100.

So 1.02 minus .97 divided by 10 times 100 equals .5

So if we check we do see that todays setting is .5.

This is a good indicator to identify momentum in a move. It wont tell you a target price, but it can tell you when the price has topped out too.

There are many ways of looking at this indicator.

This indicator is typical used in 4 ways.

1. Its position relative to zero.(High high or low it is from zero).

2. As a divergence oscillator comparing strength of indicator to price trend.

3. As an overbought/oversold indicator.

4. Generate a buy signal from its crosses on the zero line.

In the next posts I will discuss each of these uses now that we know how to see it, how to pull it up, and what it is actually studying.

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As you can see in the above example, the ROC is trading below the zero line.

In example 4, you could buy on that break. Its had decent success.

In example 2 you can see where the ROC indicator has gone down and the price has gone up, a divergence. Or if the ROC indicator is going up and the price is flat or down. This may mean a change in price direction is coming.

In example 1 you can gauge by how far removed from zero is as a sign of the strength of the trend.

Example 3 is overbought/oversold theory.

In the chart below I have shown an example of Sirius XM showing Divergence on the ROC indicator, signalling and then getting a trend change.

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Study of the MACD.

MACD is calculated by studying the difference between two exponential moving averages. Traditionally a 26 and 12 EMA is used.

Certain conditions on the stock can be seen in this relationship. It can be used to generate buy and sell signals.

It is more useful in a trending market, vs. range bound.

If the MACD is above zero it suggests an upward trend. It also means the faster moving average is above the slower moving average.

Keep in mind the MACD line is only one line. The second line you see is a moving average. This can be used to signal smaller changes in the pattern and give buy and sell signals as well.

There is the MACD line and the MACD signal line.

Also the spread between these lines can be useful as well.

Shown here without the moving average line as well. So its just the MACD line itself.

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Here is the MACD line and signal. Here I am using a 9 Day exponential Moving average.

If the Moving average line is under the MACD line, that is signaling a possible trend chance in the MACD line.

Might not be over zero or under zero yet, but it could be heading there. Also a buy signal

If the MACD line crosses UNDER the moving average line, it can be used as a sell signal. The longer term trend would have different views. You could for instance cycle trade using these lines within a dominant trend.

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Elliot wave chart for sirius.

We have completed 5 waves down. Breaking and holding over 40 cents confirmed that.

New superwave 1 up started at .05 cents.

Super Wave 1 has not ended.

Superwaves last months to years.

This wave is still only 1.5 years old.

I believe we are in subwave 3 of these 5 waves up.

So lets start from the beginning.

Sirius is about to experience 5 waves up.

This is the first wave 1 up.

This wave has 5 waves. In these 5 waves 2 of them are corrective waves. 3 of them are impulse waves(with the dominant trend).

In each of these 3 impulse up waves, there are also 5 waves in them.

So we are in

Super Wave 1

Wave 3 of that wave.

Wave 2(corrective) of that wave.

It can be broken down even further.

Where that e is is the end hopefully of wave ii of of the 5 wave pattern of wave 3, which we are currently in. If we are in this wave 3 still, 2 more peaks (or the wave 5 can be a near miss of the wave 3 peak (called a truncated wave 5).

So wave 3 of this wave (1.25 was the wave 1 top) should clear 1.25. Then this wave 5 should clear that or come close. Then would be a long retrace (wave 4 of supercycle wave 1).

Correction waves usually have 3 waves in them. An ABC wave. Is some cases they can be zig zags. Sirius just had one.

ABCED pattern. Zig zag occured on its way to their points. As you can see normally A would have retaced to 78.

So A (78) B(1.10) and C (91). But there were waves within that that prevented a direct line. Its a very long and bumpy correction wave basically.

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close up of the current pattern.

Here is the correction wave in the double zig zag pattern. A wave had a zig and the C wave had a zag, LOL>. :D

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Quick question Rel, which parameter do you like better for Money Flow, 14 or 20? I've see these two different defaults on two sites.

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Quick question Rel, which parameter do you like better for Money Flow, 14 or 20? I've see these two different defaults on two sites.

It really depends on what your trying to look at and if your short term trading or longer term trading, but 10, 20, 50 are good ones. I like 20 on MF minimum.

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Quick question Rel, which parameter do you like better for Money Flow, 14 or 20? I've see these two different defaults on two sites.

It really depends on what your trying to look at and if your short term trading or longer term trading, but 10, 20, 50 are good ones. I like 20 on MF minimum.

Thanks

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