Bar chart with swing linesToronto TASUG March 2003 preliminary 030326 - 1
[email protected] OHLC Bar • Bar is represented by 4 elements Open High range = high - low Close Low preliminary 030326 - 2
[email protected] Bar classification[1][2] • 1. Up bar The bar on the right is called an “UP” bar. It has a higher high and a higher low than the previous bar. Open and close positions do not matter. preliminary 030326 - 3
[email protected] Bar classification • 2. Down bar The bar on the right is called an “DOWN” bar. preliminary 030326 . It has a lower high and a lower low than the previous bar.4
[email protected] . Open and close positions do not matter. Inside bar The bar on the right is called an “INSIDE” bar.”[4] preliminary 030326 .com . This behavior suggests the market is „undecided‟ about direction. It has a lower high and a higher low than the previous bar or simply its trading range is inside that of the bar on the left.5
[email protected] classification • 3. “Inside days are essentially slowdowns or pauses in the market action – Temporary interruptions as buyers and sellers are unable or unwilling to push beyond the previous day‟s range. Open and close positions do not matter.”[3] “Narrow-range bars and inside bars represent short-term volatility lows out of which price can move sharply. if you know what to look for – and what to look out for. It has a higher high and a lower low than the previous bar or simply the trading range is outside that of the bar on the left. Outside bar The bar on the right is called an “OUTSIDE” bar. depending on these factors. Some traders interpret outside days as signals of either continuation moves (i.e.com . those in the same direction of the trend) or reversals.Bar classification • 4.” [6] preliminary 030326 .”[5] “Outside bars can provide potential entry signals. Open and close positions do not matter.6 johncw_97@yahoo. “Outside days are fairly common and any value they have is tied to such factors as the relationship of the bar‟s closing price to the opening price and current trend. * Some people may relaxed definitions such that these bars may be included in the previous four classification. some may consider it to be a down bar or maybe an outside bar.com . Neutral/borderline bar* The bar on the right is an example of a “NEUTRAL” bar. It is a bar that does not fall into the other previously defined classifications. Open and close positions do not matter. preliminary 030326 . For the example above.7 johncw_97@yahoo. Basically either the high or low is the same as the previous bar.Bar classification • 5. com . neutralbar is one that does not match any of the above or neutralbar = L = Ref( L. -1 ) AND L > Ref( L. 4. outsidebar = H > Ref( H.Bar summary 1. -1 ). -1 ). -1 ). 3. 2. -1 ) OR H = Ref( H. -1 ). -1 ) AND L > Ref( L. 5. -1 ). preliminary 030326 .8 johncw_97@yahoo. downbar = L < Ref( L. upbar = H > Ref( H. insidebar = H < Ref( H. -1 ) AND L < Ref( L. -1 ) AND H < Ref( H. 4.com . 3. -1 ). downbar = L < Ref( L. -1 ) AND L >= Ref( L. -1 ) AND L < Ref( L. -1 ) AND L >= Ref( L. An alternative (without neutral bar): outsidebar = H > Ref( H. -1 ). 2. upbar = H > Ref( H. insidebar = H <= Ref( H.Bar summary • 1. -1 ). -1 ). -1 ) AND H <= Ref( H. preliminary 030326 .9 johncw_97@yahoo. preliminary 030326 . The position of the closing price within the range of the bar. 5. 3. The size of the range versus the previous bars. The volume traded.com .10 johncw_97@yahoo. Gaps[7] within the chart.Who is in control? • 1. 6. 4. one can tell how bullish or bearish a bar is by looking at factors such as: The closing price versus the open price. 2. The closing price versus the previous close. In general. First two are positive or bullish (open > close) and the next is negative or bearish (close < open).Control example • Bearish example One would expect that price would be lower in the short term because: • Down bar • Negative (close < open) bar • Open near the high and close near the low • Low is lower than low 2 bars ago • Not only did it closed below the close of previous bar. it closed below the close of 3 bars ago Series of three up bars. preliminary 030326 .com .11 johncw_97@yahoo. hanging man. Pring[1] has a chapter “one and two bar patterns” with Key Reversal Bars. • preliminary 030326 . Examples charts of chart patterns provided at the end. one should look at candlesticks pattern – doji. Exhaustion Bars and Pinocchio Bars.com . harami. hammer. engulfing etc.Further control information • • • In terms of the battle between buyers and sellers. Pring[9] recently published an article on two bar reversal pattern.12 johncw_97@yahoo. Stevens[8] has a chapter “Recognition and Analysis of Chart Patterns” which covers bar patterns with numerous examples. Colour bars with green representing close greater than previous close and red representing close less than previous close. One colour bars with symbols showing various patterns like reversal pattern. 5.com . preliminary 030326 .13 johncw_97@yahoo. Colour bars (like candlesticks) with green representing open greater than close (like up candles) and red representing close less than open (like down candle). Various colours for each type of bars. 3. 2. One colour for all bars. 4.Some ways to plot bar charts 1. 3.com . 4.14 johncw_97@yahoo. Up bars Down bars Inside bars Outside bars Neutral bars green red yellow blue white preliminary 030326 . 2.Colour bar chart • One can assign colours to the bars 1. 5. com .15
[email protected] bar chart of DJ-30 preliminary 030326 . 16
[email protected] .Daily bar chart of DJ-30 Colour bars using AmiBroker[10] preliminary 030326 . Daily candlestick chart of DJ-30 preliminary 030326 .com .17 johncw_97@yahoo. com .18
[email protected] candlestick chart of DJ-30 Colour candlesticks using AmiBroker[10] preliminary 030326 . most consider • Uptrend is a series of bars with higher highs and higher lows.19
[email protected] .Trends In general. • Downtrend is a series of bars with lower highs and lower lows. preliminary 030326 . swing lines can be drawn easily.com .20 johncw_97@yahoo. preliminary 030326 .Trends • With up and down bars. 21 johncw_97@yahoo. Prices then remain in an Upswing until such a bar that the high and low prices decline below the respective high and low prices of the highest bar of the Upswing. preliminary 030326 .com . The highest price in the Upswing is called a TOP.Trends According to Dunnigan[2]: • An Upswing starts when a bar‟s high and low prices rise above the respective high and low prices of the latest Downswing. Trends According to Dunnigan[2]: • A Downswing starts when a bar‟s high and low prices decline below the respective high and low prices of the highest bar of the latest Upswing. Prices then remain in a Downswing until a bar high and low prices rise above the respective high and low prices of the lowest bar of the Downswing. The lowest price in the Downswing is called a BOTTOM. preliminary 030326 - 22
[email protected] Trends • Dunnigan swing[2] Highest bar of Upswing Start of downswing Start of Downswing Start of Upswing Start of Upswing Lowest bar of downswing Lowest bar of downswing preliminary 030326 - 23
[email protected] Trends According to Gann swing[11]*: • Upswing: From down to up. The swing direction can change from down to up only if the market makes two consecutive highs. When the swing direction changes from down to up, the low of the downswing is called a valley and represents supports. *Using Gann swing definition[11] (on page 54) used by charting program Fibonnaci Trader. preliminary 030326 - 24
[email protected] preliminary 030326 .com . the high of the downswing is called a peak and represents resistance. When the swing direction changes from up to down.25 johncw_97@yahoo. The swing direction can change from down only if the market makes two consecutive lows.Trends According to Gann swing[11]: • Downswing: From up to down. Trends • Gann swing[11] Highest bar of Upswing Start of downswing Start of Downswing Start of Upswing Start of Upswing Lowest bar of downswing Lowest bar of downswing preliminary 030326 .com .26 johncw_97@yahoo. • Examples • Why modified swing line? preliminary 030326 .Swing charts • Have implemented swing function that can produce various swing types.27
[email protected] . • There is a minimum of one bar required to figure out the start of a new swing line. com .Daily bar chart of DJ-30 preliminary 030326 .28 johncw_97@yahoo. 29
[email protected] .Daily bar chart with swing of DJ-30 Modified swing lines using AmiBroker[10] preliminary 030326 . com .Daily bar chart with swing of DJ-30 preliminary 030326 .30 johncw_97@yahoo. Weekly bar chart of XAU preliminary 030326 .com .31 johncw_97@yahoo. Daily bar chart of XAU preliminary 030326 .32
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[email protected] bar chart of XAU Down bar with close below previous bar low Negative up bar Negative up bar & bearish harami Two bar reversal & bearish engulfing Upswing ends with negative up bar to trend line then down bars Positive down bar with close above previous bar low Series of up bars followed by pullback to support and then a positive bar Series of down bars to trend line followed by two positive bars preliminary 030326 . pl/kr/AFM/e-se-Dunnigan_Trend.message 23815 has an attempt for swing code.com/Documentation/FEEDbk_docs/Archive/022003/TradersTips/TradersTips. . Cringan. 2.traders.html preliminary 030326 . . Amibroker: In the Yahoo Amibroker message group. Tradestation and Amibroker in http://www. “Zigzag Targets” Technical Analysis of Stocks and Commodities.gsp?subjectid=51961 3. . February 2003 code for programs like Metastock.tasug.34
[email protected] 34064 has swing code with a swing size defined. . William.message 2098 has Gann Swing Chart code written by Tomasz Janeczko (see AFL library).zip Tradestation: On Silicion Investor site.message 29073 has zigzag code based on percentage swing.siliconinvestor.com/stocktalk/subject. there is a discussion subject called “Dunnigan's Swing Formulas” under the forum “Market Trends and Strategies”: http://www.html http://toronto.Info/code for charting programs • 1.com/CodeSnip. Here are a few related(?) references (with some code) that may be interest to others: Metastock: http://eis. .com .message 27893 has kagi/swing code (see AFL library). The examples are taken from various articles that discusses those patterns.35 johncw_97@yahoo. preliminary 030326 .com .Chart Patterns • Following are some examples of chart patterns with modified swing lines added. Please refer to the articles and references such as Pring[1] and Stevens[8] for more detail. com .36
[email protected] – bull flag[12] Morning star preliminary 030326 . 37
[email protected] – bull flag[12] Two hammers preliminary 030326 .com . com .Pattern – bear flag[12] Bearish harami preliminary 030326 .38 johncw_97@yahoo. Pattern – bear flag[12] Bearish harami cross preliminary 030326 .com .39 johncw_97@yahoo. com .Pattern – (long) broadening triangle[13] preliminary 030326 .40 johncw_97@yahoo. Pattern – (short) broadening triangle[13] preliminary 030326 .com .41 johncw_97@yahoo. Pattern – symmetrical triangle[14] preliminary 030326 .com .42 johncw_97@yahoo. 43
[email protected] – symmetrical triangle[15] preliminary 030326 .com . Pattern – symmetrical triangle[15] preliminary 030326 .44
[email protected] . Pattern – symmetrical triangle[15] This is just a weekly view of the previous chart preliminary 030326 .45
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[email protected] .Pattern – symmetrical triangle[15] preliminary 030326 . 47
[email protected] – symmetrical triangle[15] preliminary 030326 .com . Pattern – ascending triangle[16] preliminary 030326 .48
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[email protected] .Pattern – compact ascending triangle[16] preliminary 030326 . Pattern – descending triangle[16] preliminary 030326 .com .50 johncw_97@yahoo. Pattern – descending triangle[16] preliminary 030326 .51
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[email protected] – falling wedge in an uptrend[17] preliminary 030326 . com .Pattern – falling wedge in a downtrend[17] preliminary 030326 .53 johncw_97@yahoo. Pattern – a rising wedge in a downtrend[17] preliminary 030326 .com .54 johncw_97@yahoo. 55
[email protected] .Pattern – a rising wedge in an uptrend[17] preliminary 030326 . 56
[email protected] .Pattern – head and shoulder[18] preliminary 030326 . com .57
[email protected] – inverse head and shoulder[18] preliminary 030326 . 58
[email protected] .Pattern – symmetrical broadening top[19] preliminary 030326 . Pattern – ascending broadening top[19] preliminary 030326 .com .59 johncw_97@yahoo. com .Pattern – ascending broadening top[19] This is just a weekly view of the previous chart preliminary 030326 .60 johncw_97@yahoo. 61
[email protected] – descending broadening top[19] preliminary 030326 .com . “Twice as nice: The two-bar reversal pattern”. “Flags by candlelight”. Hartle. Pring. No. “How to trade Broadening Tops”. No. 8. 4. “Outside bars: From concept to strategy”. April 2003. pages 30-35.. Active Traders. April 2003. 14. 6.. 11. April 2003. Active Traders Magazine. 4. “Standing the test of time: The head and shoulders pattern”. “The ups and downs of triangles”. September 2002. Active Traders Magazine.. Bierovic. Martin. 12. Bierovic. 4th ed 2002. No. No. “Technical Tool Insight: Triangle”. March 2003. Volume 4. Volume 3. 3. December 2002. 1. pages 48-51 AmiBroker. pages 88-89 Hartle. Active Traders. March 2003. William and Mack. Volume 4. Thomas A. January 2002. 1. pages 32-37. pages 86-87. No. pages 40-43. No. Active Traders. Bierovic. Thomas A. Active Traders. 9. Volume 3. pages 36-38.. No. No. 12. “Broadening Horizons”.. 3. “Technical Tool Insight: Outside days”. “Technical Analysis Explained”.com . 2. Active Traders. Stevens. 18. No. pages 50-55. 4. pages 86-87. June 2002. 4. 9. Tom. http://www. No. 1. 11.62 johncw_97@yahoo. page 50-57. No. “New blueprints for gains in stocks and grains & One-Way Formula for Trading in Stocks and Commodities”. pages 34-38. April 2003. No. August 2002. pages 82-84. January 2002. “Technical Tool Insight: Gaps”. 13. “Technical Tool Insight: Inside days”. McGraw-Hill Trade. preliminary 030326 . Volume 2. 4. 7. Bierovic. Bierovic. Volume 3. January 2003. Bierovic. 19. No. Leigh. “Opening shots”. Donald. Staff.References 1. Active Traders. Volume 4. 5. No. Andrews. 6. 10. Active Traders. No. Volume 3. Kira Mccaffrey Brecht. pages 3235.amibroker. 16. “Triangle Trader”. 8. 17. December 2001. October 2002. Paul. Volume 4. Volume 3. Active Traders Magazine. 3. pages 38-39. Thom. Volume 4. “Essential Technical Analysis: Tools and Techniques to Spot Market Trends ”. Kira Mccaffrey Brecht. 10. Active Traders. Staff. John Wiley & Sons 2002. Thomas A. “Winning with wedges”. Financial Times Prentice Hall 1997. Pring. Martin. Dunnigan. pages 42-46. Volume 4. Thom. Volume 4. Active Traders. “Swing trading price and volume”. 15. Active Traders. Thomas A. Thomas A. Volume 3. Active Traders..com Davis. Volume 3. Active Traders Magazine. Timothy.