I
have a chat with a Facebook friend and he/she is apparently using a somewhat
similar version of John Murphy's Ten Laws of Technical Trading. He is not
using a real account so I better not disclose his/her identity but he/she is
giving tips for free.
Three Short Way to Analyze Charts:
1st Step: Monthly Chart
Analyze
the Monthly chart and identify its trend direction; locate its significant
support and resistance, chart patterns, Fibonacci ratios, etc. Apply all technical analysis to read the
trend.
2nd
Step: Weekly Chart
Identify
the current trend from the Weekly chart.
If
the Monthly chart is bullish and the Weekly chart is bearish, find out if the
bearishness of the Weekly chart is a retracement of some patterns from the
Monthly Chart. Use this retracement as
an opportunity to enter Long position.
Use your Fibonacci retracement tool to measure the % retracement areas. Significant Fibonacci retracement ratios are
38%, 50%, and 61%.
If
the Monthly chart is bearish and the Weekly chart is bullish, find out if the
bullishness of the Weekly chart is a retracement of patterns from the Monthly
Chart. Use this retracement as you
opportunity to Sell Short. Use your Fibonacci
retracement tool to measure the % retracement areas. Significant Fibonacci retracement ratios are
38%, 50%, and 61%.
If
both the Monthly and the Weekly charts have the same direction/trend, find out
if the trend is still in progress and trade in that direction. Avoid trend exhaustion. You will be left out from its tops and
bottoms.
3rd
Step: Daily chart
This
is the chart that pinpoints the exact trade Entries, based on the exiting trend
of the Monthly chart. This is your area
of precision. It is in this chart where
you are going to precisely locate the turning points of the price movements and
create your positions at those turning points.
READY, AIM, FIRE
method (Summary of the Technique):
READY
- identify the major trend from the Monthly chart and trade in that direction;
AIM
- create your timing during retracements utilizing the Weekly chart. If the Monthly chart is bullish, BUY low
during retracements from the Weekly chart.
If the Monthly chart is bearish, SELL high during retracements from the
Weekly chart.
FIRE
- achieve a precision timing for your Entries at the Daily chart by pinpoint
the exact areas of price's turning points.