Technical Analysis for the Trading Professional (Constance Brown, 1999)

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  • Moving average, MACD, RSI and Stochastics are all very outdated now.
  • Extremely short horizon trading is more vulnerable to the differences between real-time trade decisions and postmortem evaluations.
  • RSI
    • Bearish divergence occurs when the market forms a new price high on close that is not confirmed by the indicator.
    • It is not the only formula for developing positive reversal signals to reinforce and confirm the trend, but it is the only formula that tracks the ranges.
  • Question before applying the indicator
    1. Does the indicator work well for any market in any time horizon?
    2. Is the indicator as useful in a rising market as it is in a declining market?
    3. Does the signal work equally well in times of low and high volatility?
    4. How much time after any signal does the market take to react?
    5. Is this a signal that has merit as a trading signal?
    6. Why does an indicator work and how do you increase the probability of its accuracy?
  • Gann wheel calculation
    • 45° = (√(x) - 0.25)²
    • 90° = (√(x) - 0.5)²
    • 120° = (√(x) - 0.67)²
    • 180° = (√(x) - 1)²
    • 240° = (√(x) - 1.37)²
    • 270° = (√(x) - 1.5)²
    • 315° = (√(x) - 1.75)²
    • 360° = (√(x) - 2)²
  • Elliott wave
    1. Wave 2 may not break below the origin of wave 1.
    2. Wave 3 cannot be the shortest.
    3. Wave 4 cannot overlap the end of termination of wave 1.
  • Elliott wave building blocks
    1. A simple 5-wave pattern
    2. An extending 5-wave pattern
    3. Truncated 5th wave or failure
    4. Ending diagonal triangle (wedge)
    5. Leading diagonal triangle (wedge)
    6. Zigzag
    7. Double Zigzag
    8. Flat
    9. Expanded flat
    10. Contracting triangle
    11. Expanding triangle
    12. Double threes
    13. Triple threes
  • Stoller Average Range Channels (STARC) Bands
  • No formula is the holy grail
  • Creating vanishing point in 2D plotting.

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