Market Discussions

I apologize for the delay on the Isogen analysis.
I have commented graphs about Trit analysis made 2 days ago and Isogen made yesterday both just to type down but I did not have the physical time to write them.

I will post the Isogen one later today, in the late morning (2.37am here, yes I am that busy).

Daily graph

Here's a first daily chart.

It's not immediately related to this analysis but I find it's didactical enough in explaining a concept used later in the analysis.

All to the left there's a large "W" shaped range market (RM) called double bottom. It is the flipped mirror of the "M" shaped double top. Double bottoms are usually a strong bullish pattern, while double (and triple) tops are a strong bearish pattern.
The zoomed out rectangle shows that double bottom in detail, including the main swings that compose it.

If you look at the past years prices of many markets, you'll notice these double bottoms forming in the summer. These are the liquidity "generators", that is a number of large buyers grab stock at the minimum price to resell it in winter. The most typical examples of this are summer PLEX and POS fuels purchases for the whole rest of the year.

To the right (Apr 2012) there is another quite tight double bottom, which will be reviewed in the next chart. Both of these double bottoms are confirmed. A confirmed pattern is the only kind of pattern that may actually work and do what it's meant to do. Trading before patterns are confirmed is highly dangerous since many times they get invalidated and act randomly.

The confirmation happens when price exits the pattern bounding box in the proper direction (i.e. a double bottom wants P to close above its "box" resistance), closes the current candle (in the same time frame where we are analyzing the pattern) and then retraces on such resistance / support and make them respectively a new support / resistance.

I have created a quite clear example picture of a confirmed double bottom (the rule works for all patterns).
As you can see the W is enclosed by its own support and resistance. If price closes up, then retraces down to the former resistance (dip) and rebounces, then the pattern is considered confirmed.

Now, if we look at the first daily graph again, we can see a pin bar (T shaped bar) closing above the purple line acting as former resistance and now turned into support. Likewise, on the rightmost small double bottom, another pin bar (the red candle just above the pattern) closes above the 88.76 orange daily line and confirms it.

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Where Price is Going (WPG)

Lets now look at the second daily price graph.

Here we can clearly see the double bottom we talked about in the above paragraphs (the smaller one to the right).
And here all the theory explained above comes together.
As I said above, the double bottom is a RM and RMs often are cut by a line. This one is cut by the cyan weekly line, that is the price levels the buyers and sellers fought to conquer (the fight result is the RM itself, a price "oscillation" around the level).
As I said above, the RM is a double bottom whose last bar closed above the encasing blue box and retraced back and formed a pin bar (red bar indicated by arrow).

The double bottom is also dynamic, that is its W "corners" are at a different price. A red trend line may be drawn and that red line may be used as money management tool. Until price will not close below that red line, it will be safe to keep the buy operation open. If a bar closes below it (not a double bar PB, they need further explanation) then the position should seriously be reviewed and eventually partially or completely closed.

Furthermore, P in the last days formed another RM, the blue box all to the upper right. Not randomly, there is another weekly cyan price level right in its middle. Buyers and sellers are once again figthing for territory right below BRN 100.

While P at the moment does not suggest anything "special", the RM could in theory be traded from its 92.50 bottom (see the little pin bar indicated by the arrow, bullish pattern sitting on support = buy) to the 97.66 top.
I say in theory, because the RM is so small that it's just 4 ISK "tall", which is way too little.

This also happens in RL trading. Most daily chart located RMs are too small to be traded. RL traders look for weekly chart RMs instead, which on the daily chart (basically a zoom in) will look nicely tall and easily traded.


Conclusions

If your risk profile is low and prudent:

If you were RL trading you should sell when P goes again to the top of the upper RM (97.66). You would then buy again once P is above 100 and retraces back to it (same mechanism shown in the hand made double bottom picture) for maximum safety.


If your risk profile is medium:

If you were holding stock since say 70-ish you may choose to risk and see if P goes above 100. If P falls below the red line you should sell.


If you still don't have stock, do not buy now. Wait for BRN100 to be broken first, or for P to crash. Price often crashes to the previous important support, which in our case is the top of the double bottom. That is P would first crash to 88.76.


I recognize this was a BIG analysis with a lot of concepts to learn.

If you have any questions please feel free to ask.

About 1 year ago I created an hedge fund, MRVAHFTHF012.

This fund has exactly the purpose of gathering ISK to invest it into a variety of activities including trading.
Till now it's pretty much dormant, but if I saw interest I could reactivate it.

Right now with about 1bil invested in some reproccessing markets I make about 75-100mil a week with low effort. I guess that's about 5-10% return on investment per week. Can you beat that?

yk

VV, I walked into work today and saw one of my co-workers had a candlestick chart up on his Ipad, and my first thought was "oh, guess he plays EvE too. Then I realized he's just another member of the TA cult in the "real" world. Made me laugh.

Vera Algaert, your question is actually fantastic!
Because it gives the opportunity to talk about the nature and structure of the markets.

Markets are fractal in nature. Each time frame shows swings, patterns and features that seen in an higher time frame they will show as smaller swings / patterns or even single bars.
Seen in a lower time frame, those swings and patterns reveal to be composed by their own little universe made of smaller swings and patterns, ad infinitum.

So, how to not get lost in all of this grand fractal system?

High time frame swings are much, much stronger than lower time frame swings, in fact they "encase" them.
To make an example, imagine big waves having smaller waves composing them. The big wave "drives" the market, the smaller ones are refractions that can bounce and add or subtract from the big wave.

So, you may have a monthly swing (a "zig zag") that in turn is composed by small weekly zig zags that in turn are composed by smaller daily zig zags, that in turn are composed by 4 hours smaller zig zags...

Swings tend to trend up or down. That is the buyers vs sellers balance is skewed. Since swings are zig zag-alike, they will describe a motion (zig) and a counter motion (zag).

The prevalent of those two motions is the trend, the minor is the "counter trend". You'll see more and shorter candles forming the prevalent direction and sharp, less and steep candles forming the counter trend direction. This detail is quite useful, since in case the "scenario" is not very clear, you can know which direction is prevalent just by looking at number and size of bars of each color.

When you buy / sell with the trend, you are greatly pushed and helped by it. When you go counter trend you easily lose. Hence the very old trader motto: "the trend is your friend".


Now some nice pictures for you.

This graph shows a RL market (Euro vs US Dollar), on the monthly time frame.
I marked the major swings.
Most of the first half is a strong uptrend. You can see it has got many green ("bullish", price goes up) forming long zigs.
You can see it has got few, steep red ("bearish", price goes down) forming short, steep and dangerous zags.

Each zig + zag forms a swing. Swings trend up when they do like in the first half, forming new price highs. When they dip they form higher lows.
Once the trend inverts, swings begin forming lower highs and lower lows. During range markets, swings run "randomly" and form random higher highs and lows.

This graph shows the same RL market with the swings marked.

The next graphs show the fractal nature of the markets.

Here is a monthly chart showing a rectangle around just two bars (one month each, two months in total), which are just a part of a swing.

We open the next lower time frame: weekly chart. The rectangle covers just the first of month of the two above. Now you can see how those monthly bars were composed by multiple smaller bars.
A "M" shaped double top formation becomes "barely" visible as well. Patterns too are fractal and "flourish" when switching to lower time frames.

Finally we open the next lower time frame: daily chart. The rectangle covers the same period. Now it's well possible to see the double bottom, to see how there are little swings that were not visible before.

A consequence of this fractal nature is that the cumulative force applied by higher time frame swings (the bars composing them are just the human comprehensible representation) stacks across time frames.

That is, if you have the monthly swing / bars going up and also the weekly and the daily, their strength greatly pressures price up.
Buying when all the swings agree going up is the safest possible buy operation.

Likewise, if you have the monthly swing / bars going down and also the weekly and the daily, their strength greatly pressures price down.
Selling when all the swing agree going down is the safest possible sell operation.

When some swings in some time frames do not agree with each other, then buy or sell operations are risky and you WILL take losses.
When swings agree or partially agree and you buy against their direction, you WILL take losses.

The so called counter trend trades are very risky and require specific knowledge that I won't probably cover in this thread.

Said all of this, it should now be clearer why swing traders look at 2-3 different time frames (usually month => week => day).
They make sure those time frames swings all agree in the same direction and only then they proceed with a trade.

Tritanium

I really wished I could post this analysis the last week, when I prepared it.
But time is always so short, so I will just post it now plus an update to today.
I will skip the monthly chart since it does not say anything except about a big bullish candle.


Weekly chart

WPD

The weekly chart shows a regular trending up market. So regular that a trend line supporting it may be drawn from Jan 2012 and it held perfectly.
Past BRN 5, price (P) went hyperbolic, which is not really a good news, since P needs swings to breath and renew its strength. Without swings (see previous posts) P may easily exhaust its strength and crash.
The doji (indecision candle bar), over BRN 6 of 2 weeks ago, is a testament to how buyers and sellers are now fiercely battling up there.
If buyers win, the first target is the liquidity of said bar, that is the upper shadow or maximum, that is 6.28 ISK pu.
If sellers win and manage to close a bar (i.e. Sunday or next Sunday etc.) below BRN 6 it's very possible to get what's called diamond pattern, an extremely bearish situation. In this case the diamond is so small that is one candle wide (the doji). The compound of 3 bars (big bullish + doji + big bearish) form a 3 bars pin bar. It'd have the potential of quickly bringing P back down to the red trend line, somewhere around 5.30-5.50.

But remember, this is only a potential scenario (traders don't know the future, they know just how to deal with it), P held upside BRN 6 for now, so all the outcomes are open. If P crashes, there will be a very strong reaction down to 5.30-5.50 that would probably cause P to rise back up again, forming a proper swing.

If it does not crash, ATM it seems stuck up there, in a tight Range Market (RM) that we'll see better on the daily time frame.
Remember, before taking a buy or sell decision you HAVE to wait for the next weekly bar to be closed. This happens every Monday right after downtime (the Sunday bar gets calculated by EvE at that hour). Notice how "buy / sell opportunity" is not the same of "close / don't close your trade". If you are already in the trade, you are meant to have planned where you wanted to go since the beginning. You have to plan the trade and then trade the plan. This means that if you set your stop loss right below BRN 6 + some room, then it's there that you would dump your stuff if price closes below BRN 6 + some room.
This utmost important trade management is called "Money Management" or MM.
I'll show an easy possible MM in the daily chart.

Anyway as of now the monthly bar is strong bullish, the W trend is still bullish so buying opportunities are more possible to happen than selling ones.

Conclusion: WPD = bullish momentum ending in a RM.


Daily chart

Before proceeding with the analysis. let's see one of the several MM options a trader got the last week.

This first picture shows the daily price chart. I easily spotted the red trend line (it's not the same shown on the weekly chart) joining the lows of the affected bars.

One of the easiest MM methods is just to keep the trade open until said trend line gets broken. You may see how the last week it got broken indeed. A RL trader would now look at the situation and do one of:

- moving the stop loss right under the swing. Since the swing is supported by BRN 6, the stop loss would be placed at 6 - the longest bar tail off those sitting at BRN 6. In EvE this translates into: "sell if P falls below the tail that goes slightly below 6".
Notice how this is last week's graph so now it's too late for this management. I just posted about it so you may learn for the next time.

- close part of the trade right at the break so you cannot lose whatever happens next. Traders often close 60-70 percent of the trade ("partial take profit").


Now let's go to the real analysis.

WPD

We will study WPD even if daily is usually used for WPG (see previous posts for full definitions of what WPD and WPG mean).

In this daily chart, we may easily enough notice two trend (TLs) lines affecting the price.

The one I marked as "Very strong medium term TL" has arrows where P tests such trend line. It acted both as support and resistance, it's solid enough to hold the market for months and still hold it today.

There is another TL, all to the top right, over the last days. It acted as resistance.

TLs are diagonal lines. While horizontal lines provide for support and resistance and are drawn touching the bars' "bodies", the TLs are called "dynamic support and resistance" and are drawn touching the bars minimum / maximums.

Like static (horizontal) S and R delimit static (horizontal) range markets, TLs' dynamic (diagonal) S and R delimit dynamic (diagonal) range markets (RMs).
Dynamic RMs are hard to trade, because very often they cut and interact with horizontal lines as well, so their bars tend to stretch and have long tails hitting the closest diagonal or horizontal line at will.

Nice post VV :-)

if I had to place a bet, I'd place it on tritanium still raising in price in the short run.

My line of reasoning is that the actual pattern we are seeing is mostly due to speculators cashing their profits.

I believe tritanium's upward trend is fueled by pyroxers mining, as pyr is the only highsec ore that lands you some nocxium (and nocxium has been following an upward trend for a while).

Pyroxers also contains about one third tritanium compared to veldspar, hence the price rise.

I guess your graph + this reasoning makes a strong case for tritanium going up.

If i am wrong, well, at least i had the guts to put my face where my thougs are.

Nocxium

To show off how every market got its own personality, Nocxium moves quite unlike Isogen (last analysis link).
Isogen often bumps into BRNs, Nocxium mostly ignores them.

Useful and thus marked BRNs are just price levels (the support / resistance lines) that happen to sit at round numbers. If price won't sit on BRNs then those BRNs are not marked, as they are ignored and useless.


Monthly graph

This is the monthly graph.

As you can see, Nocxium only got influenced by BRN 100, 400 and 1000.
It's immediately evident how price (P) performed an almost 2 year long swing retracing (RET) on 400 in Aug 2011 (Summer is usually EvE's lowest of the year prices period). Retracing means that P went up, then dipped back down to 400, formed a pin bar (PB) and restarted its run upwards. The dip and restart is called "retracement" or RET. The safest trades ALWAYS come after a RET. We'll see possible trade entries on the daily chart and both have a RET.


WPD (What Price is Doing)

P retraced on BRN 400 and went up. Now it's in hyperbolic growth, that is an huge increase without breather swings. The outcome of hyperbolic P (usually due to speculation) is the famous "speculative bubble" that sooner or later bursts and then P crashes. P got abruptly halted by BRN 1000, which means the market - without breather swings - is short on liquidity and thus it's fragile. This does not necessarily mean there WILL be a crash (the expansion shortage may easily avoid that) but that if there has to be a crash, the hyperbolic market + failure at closing above 1000 is an ideal place for a crash to happen.

Anyway, as of now the P is rising and the previous swing is bullish. Notice how the WPD + WPD method (this one) DEMANDS to consider closed candles. The current huge candle bar, while being worth talking about above, is not closed till the end of the month, therefore the bullish hints must come from the previous price motions till the previous bar.

Last, but certainly not least, an hugely important rule that applies all the time. As shown on the graph, price levels very, very often get hit by bar "bodies" one day and then by their tails in other days. This is one of the main proofs that the price level you marked on the graph is actually strong and important. Since the bar bodies price levels are also called "effective levels" and the bar tails price levels are also called liquidity levels, the proper rule is:

Effective levels may turn into liquidity levels and vice versa.

The graph shows an example of the rule in action: the price level 570 gets hit by the Jan 2011 bar body and later it's hit again by the Feb 2012 bar shadow (upper "wick").


Weekly chart

WPD

The weekly chart shows the same situation the M chart does. Price greatly rose in the first week of April. It hit BRN 1000 and sellers dumped a lot of stock. Basically in our Risk board we know that the sellers tanks are parked at 1000. The next bar is a doji (indecision bar, long tails and small body). Sellers attacked again but buyers held and gained a tiny territory (hence the doji is green or bullish).
This week buyers went to attack again but:

1) The bar has not closed yet (it will on Monday after down time) so we cannot tell it's the final bar yet.
2) They failed to close above the previous 2 bars highs. This tells us that the sellers are still there at 1000. Only if the bar will close above those candles then buyers have safely won.
3) In addition to 2), buyers once again failed to close above 1000. The fight to conquer BRN 1000 has not begun yet. Very though fights like this usually create a range market around the contested price level.

An element we can see already is that the last 3 weeks bar highs are declining. A descending trend line may be drawn on their top. Since this trend line is formed on the W time frame, it will be quite strong when seen on the daily time frame (where everything is weaker).

Conclusion: the P is bullish / ranging, possibly a dynamic range delimited by the trend line.

that's a lot of words to say "nocxium is being heavily speculated on and lots of people see ~1000 as a cashout point"