{"id":38528,"date":"2011-11-30T16:25:40","date_gmt":"2011-11-30T10:55:40","guid":{"rendered":"index.php\/2011\/11\/30\/technical-analysis-of-the-financial-markets-ch-6\/"},"modified":"2011-11-30T16:26:27","modified_gmt":"2011-11-30T10:56:27","slug":"technical-analysis-of-the-financial-markets-ch-6","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2011\/11\/30\/technical-analysis-of-the-financial-markets-ch-6\/","title":{"rendered":"Technical Analysis of the Financial Markets: Ch 6"},"content":{"rendered":"
\"Cover<\/a> <\/p>\n

Cover via Amazon<\/a><\/p>\n<\/div>\n

This is a review of the 6th chapter of John J. Murphy\u2019s Technical Analysis of the Financial Markets.<\/em><\/p>\n

Continuation Patterns<\/h3>\n

Continuation patterns are shorter terms patterns that indicate that a current price action is nothing more than a pause in an existing trend and that the previous trend will resume later.<\/p>\n

Triangle<\/h4>\n

There are three types of triangles:<\/p>\n

    \n
  1. Symmetrical (coil):<\/strong> Formed out of two trendlines where the upper one descending and the lower line ascending.\n
  2. Ascending: <\/strong>Formed out of a rising lower line and a flat upper line.\n
  3. Descending: <\/strong>Formed out of a flat lower line and a descending upper line<\/li>\n<\/ol>\n

    \"image\"<\/a><\/p>\n

    \"image\"<\/a><\/p>\n

    \"image\"<\/a><\/p>\n

     <\/h4>\n

    The Broadening Formation (Megaphone Top)<\/h4>\n

    \"image\"<\/a>It looks like a triangle turned backwards and represents an out-of-control market. Volume tends to increase along with the wider price swings.<\/p>\n

     <\/p>\n

     <\/p>\n

     <\/p>\n

     <\/h4>\n

    Flags and Pennants<\/h4>\n

    Flags and Pennants represent brief pauses in a one-directional market and they need to be preceded by sharp, straight line moves.<\/p>\n

    \"image\"<\/a><\/p>\n

    A flag should slope against the trend and volume should dry up during the formation and build again during the breakout. The flag usually forms during the mid-point of the move.<\/p>\n

    A Pennant represents a small symmetrical triangle. \"image\"<\/a>Volume should be light during its formation. The move after the pennant should duplicate the move before its formation.<\/p>\n

    Both patterns are short-term and should be completed within 1-3 weeks with volumes drying up during their formation.<\/p>\n

    The Wedge<\/h4>\n

    The wedge formation is very similar to a symmetrical triangle, except that it has a prominent slant<\/em>. A falling wedge is considered bullish whereas a rising wedge is considered bearish.<\/p>\n

    \"image\"<\/a><\/p>\n

    \"image\"<\/a><\/p>\n

    The Rectangle (Trading Range)<\/h4>\n

    It usually just represents a consolidation area after which the previous trend resumes. A decisive close outside the upper\/lower boundary signals a completion.<\/p>\n

    The Measured Move (Swing)\"image\"<\/a><\/h4>\n

    It describes the movement of a stock when a major advance or decline is divided into two equal and parallel moves. The moves should be fairly orderly and well defined.<\/p>\n

     <\/p>\n

     <\/p>\n

    The Continuation Head & Shoulders<\/h4>\n

    The price action looks similar to a Rectangular pattern except that the middle trough, in an uptrend, tends to be lower<\/em> than the other two shoulders. In a downtrend, the middle peak exceeds the other two peaks.<\/p>\n

    \"image\"<\/a><\/p>\n

    \"image\"<\/a><\/p>\n

     <\/p>\n

     <\/p>\n

    Next: Chapter 7 \u2013 Volume & Open Interest<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    Cover via Amazon This is a review of the 6th chapter of John J. Murphy\u2019s Technical Analysis of the Financial Markets. Continuation Patterns Continuation patterns are shorter terms patterns that indicate that a current price action is nothing more than a pause in an existing trend and that the previous trend will resume later. Triangle … <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[815],"class_list":["post-38528","post","type-post","status-publish","format-standard","hentry","category-your-money","tag-technical-analysis","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/38528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=38528"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/38528\/revisions"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=38528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=38528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=38528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}