How to trade with an oscillator

[4xpipcounter]

Try http://postimage.org/

I like it because there is no advertising, and it is even easier. Just lay your cursor on the URL for the forum image, press "ctrl>C, and then paste in the forum. So far this site has never been down or gave me any problems.

Dear Smart,
I am posting copper chart today(MCX),5minTF& one HR,Stoch 8,3,4.
Due to the +ve Diver in 5TF as marked ,it was a Buy.
However,in one hr,it was negative trend as PH was formed.
Pl discuss whether one could go long in 5TF & it did give good profit & the lot size 1000.
But it is just opposite of NF posted above where no profit.
Similar situation to my knowledge.

Thanks to murthy for giving me exposure to imgur.com & chart posting has become a child's play:thumb::clapping:

 

[rangarajan]

Dear Smart/4xpip,
Pl do not forget to discuss post 1104 of balasoft reg trading TFs as many with whom i had discussed are nor clear in their replies nor i am,though it is said easily than done.

 

[timepass]

Ranga

1) When the stochs are above 90, there's not much room for them to go up, is there ? It doesn't mean that the price won't go much higher, but it means that a downside is near.

2) You can google for tweezer tops / bottoms. There's a wealth of material on the net about it. Basically a Tweezer Top is formed when a green candle and the following red candle have the same top (of body), and a tweezer bottom is formed when a red candle and the following green candle have the same bottom (of body, I am not sure about the wicks/tails).

Click here.

 

[Smart_trade]

Please, ST Sir, I don't have the ability to obtain time frames minor then daily on NIFTY. The images below are about Dax German index. Could you please provide stoch oscillator analysis about them?

Indicator is set as following:


Below, I propose my analysis, to see if I understand your methods

=================================================

Here is Dax Index 5-min tf:

In the 5-min chart I realize that at the end of last trading session, stoch went OB (I am focused mostly on the slow yellow line, less whipsaws, as you claimed) and stayed there for more the 5 bars. Amanzigly, today the index did gap-up So, yesterday, the indicator showed the the market was in -blastoff- mode.

Today, in the 10:00 - 11:00 range, the market did a new top and tried to went even higher but did not manage, finally. During the first top the indicator stayed OB for less the 5 bars; in the second up spike (less minor the the first one) the indicator was coming off from the OB zone. Was that clear sign to sell short?

Are there any other signals I may lack the ability to see in the above chart?



Below is Dax Index 1-hour tf:

In the 1-hour chart I have drawn a vertical red line where I believe a new short term cycle began (25th nov). %R and MACD were giving confirming it at that time. Also, as will you see the index took 5 days to go from 5400 to 6100

I see that the stoch went in OB zone quite quickly and stayed there for more the 5 bars (28 nov/29 nov). As I understand, that is a huge bullish signal :thumb: A couple of days later, the indicator went in OB again and stayed there 5 bars. Is that still a bullish signal? From december the 2nd the indicator failed to go to OB zone and a clear divergnecy is quite discernible. Yet, it took price a while to slide.

I am really interested in how to use stoch indicator in cyclic analysis to assess cycles and determine if the market is in the beginning/middle/end of a cycle. I feel really confortable with 1 hour time frame. Having said that, do you think I should try different time frames to assess cycles?

Thanks evere so much :clap:

Kindly fergive my poor abilities to answer such long posts. By the time I come to the last few lines, I tend to ferget what was asked in first few lines.

Though your 1 hour charts are not very clear on candles formation, I see that the 1 hour timeframe is in sideways trend as it is trading in between the top and bottom made on 22/12/2011. In such sideways trend on longer timeframe and its failure to take out the tops, I will take all sell signals on 5 min charts provided they satisfy the other qualifier conditions.

As regards cycles, hourly timeframe seems ok .

Smart_trade

 

[theartofweb]

Posting 10 min Nifty Futures chart....

Note how the stochastics indicator was staying over 80 area yesterday and today for much more than 5 bars...indicating markets will go much higher ,this was a very strong buy in every dip yesterday and today...and NF eventually blasted ....it pays to listen to what mkt is telling us...

Best Wishes,

Smart_trade

I would like to point out a divergency which did not work on the chart above.

Jun 14, 2009 the market did gap-up and the oscillator went OB for more then 5 bars. Then, it went to neutral region and went OB again this time for 1/2 bars before coming down from OB region. By that time, a divergency was discernible and then you can see a red candlestick. Yet, the market is going up again

 

[Smart_trade]

Dear Smart,
I am posting today's chart of NF,both 5min & One hr,stoch 8,3,4.
Though,the stoch stayed in o/b from 10.35-11.05,7bars,it did not exceed the high of 4808 made at 10.55.
Remembering the Longer TF,one hr chart did not suggest any Down trend,perhaps a retracement was thought because of o/b in 5minTF.
At 11.10,it formed a Lower pivot,tempting a buy.But the stock fell all the way,forming a H & S pattern also.

Pl discuss,why one should not have gone long on dips esp 11.10 pivot

It also formed +ve Divergence bet 11.45 to 13.05,which also did not pay had one gone long above 4772,13.0hr candle.Ofcourse,at this time the one hr trend was down but for a 20pts tgt,what was wrong in going long in a lower TF anticipating a pull back?

Rangarajan,

I have mentioned so many times that when oscillator goes into overbought zone and stays there for more than 5 bars,the market is likely to go higher but when we say buy the dips...means buy when ? when the fall stops and the upmove resumes. This is confirmed when some pivot high is broken...but today we saw that there was no pivot high broken after that 5 bars in OB and market came down and the oscillator went in oversold area....so no no buy here. Also by that time we knew that the 60 min chart had a bearish piercing /tweezer top pattern which is bearish...this again suggests no buying...

Smart_trade

 

[theartofweb]

Please, look at the image below (15min chart).

27 december: You can see oscillator staying in OB region for longer than 5 bars then sliding to OS region (!). Is that good BUY opportunity, because it came back from OS reagion after 1/2 bars?

 

[murthyavr]

Ranga

1) When the stochs are above 90, there's not much room for them to go up, is there ? It doesn't mean that the price won't go much higher, but it means that a downside is near.

2) You can google for tweezer tops / bottoms. There's a wealth of material on the net about it. Basically a Tweezer Top is formed when a green candle and the following red candle have the same top (of body), and a tweezer bottom is formed when a red candle and the following green candle have the same bottom (of body, I am not sure about the wicks/tails).

Click here.

No, timepass..

Having same top in terms of real body (in case of tweezer tops) is easy enough
to achieve, because the second candle starts where the first candle ended, generally.

So, that's not the idea.

In case of a Tweezer top, the following conditions should be met:
(From "The Candlestick Course" by Steve Nison)

1. There is an uptrend, and the first candle is a bullish candle with a long real body.

2. The second candle - preferably with small body - could be anything like a
hanging man/harami cross/dark cloud cover/shooting star etc.

3. Most importantly, both the candles should have the same high.

Mirror image for Tweezer bottoms.

Steve Nison adds that these Tweezer Tops/bottoms are insignificant in so far as
intraday/daily charts are concerned. According to him, they are more relevant
in Weekly/Monthly charts.

 

[Smart_trade]

I would like to point out a divergency which did not work on the chart above.

Jun 14, 2009 the market did gap-up and the oscillator went OB for more then 5 bars. Then, it went to neutral region and went OB again this time for 1/2 bars before coming down from OB region. By that time, a divergency was discernible and then you can see a red candlestick. Yet, the market is going up again

These false signals will come on any method. Show me any one method on which there are no false trades. The short trade was perfect.....but when the market which broke the pivot low, reversed and closed above the pivot is called a breakdown failure. In such failures either you have to get out of the short trade quickly with minimum damage . The failures set up very reliable trades in the opposite direction. An alert trader can even go long on this failure and profit from the upmove which followed.

Also if you see the larger picture, the uptrend has just started, the gap was a breakout gap...so got to be very fast and agile in short trades.

Smart_trade

 

[anjanbm]

Dear ST,
In nifty futures weekly basis there is positive divergence on both stochastics and rsi, those who have sold at higher levels, now is the time to book profits or any other confirmation needed ? Please reply at your free time.
regards,
anjanbm
Dear ST,
At your free time please reply your valuable comments on my query , if any mistake in my query guide me.
Regards,
anjanbm