SUBJECTIVE METHOD

In this method there are some key point that should be look carefully when you read the graph / chart. The Key point is

1.TREND / TRENDS of MOVEMENT RATES

Trend price movements or trends in the market is a key point that most easily found. Trend analysis based on price movement in a certain time. For example, for the period of 3 daily, weekly, 10 – daily, monthly, or yearly.

Based on the direction of price movement then there are 3 types of trends, including:

a. Up Trend : trend of price movements increased
b. Down Trend : trend of price movements decreased
c. Sideway : trend of price movements is aside

Based on time, trends also can be divided into 3, namely:

– Short Term
– Intermediate / Medium Term
– Long Term

2. LINES / ANALYZING LINES

Lines is the auxiliaries in analyzing the graph / chart. The lines are drawn by connecting the certain points. There is 4 Type of line to note, namely:

a. SUPPORT LINE

That is a line that connects the lowest dots/point in the set of graphs. Support line is the limit psychology of market participant to make a purchase (buying). In the chart that if the price approach (approach) support line, then the price will tend to Increase again. However, if the price of the record (break / Trough) support line, then the price will continue to going down

b. RESISTANCE LINE

Is the line connecting the highest dot/point in the set of graphs. Line resistance is a psychological limit of the market participant to make the sale (selling). In that chart, if prices near approach 9 resistance line, then the price will likely go down again. However, if the price of the record (break / Trough) resistance line, then the price will continue to rise.

c. SENSITIVE LINE

That is the line connecting the highest dots/point in the collection which is horizontal line through the lowest / highest ever achieved before. Through the lowest point is often called SUPPORT LEVEL, while that through the highest point called RESISTANCE LEVEL. The most important is when the SUPPORT LEVEL is penetrated/break through the SUPPORT LEVEL, then the line is changed to RESISTANCE LEVEL movement to the next. Similarly vice versa.

d. CHANNEL LINE

That is a parallel line drawn parallel with the Trend – Line space between 2 lines is called CHANNEL. Channel line help for the trader to know the trading range market so that traders know the support and resistance from the market.

 

3. PERCENT RETRACEMENT

On a trend, after a number of the movement, the corrected price before continuing trend in the movement initially. This correction is called RETRACEMENT

Retracement is a theory which is very important. Through this theory, traders have a “leading” indicators, which know the movement of the price and how big (Price Objective) after the occurrence of a reversal (Top / Bottom). While the reversal point can be searched with Elliot Wave, Japanese Candle Stick, Support / Resistance, Envelope, Bollinger Band, and so forth. Retracement figure is 33%, 50%, and 66% or the fibonacci is 38% and 62%. So if the combined minimum correction is 33% to 38%, while the maximum correction is 62% to 66%. Does is, the price will be corrected to 33% to 38% and the trend will continue. When there is penetrated, the price will pursue to 50% or 62% to 66% – it will return to continue the trend. Meanwhile, when the latter also get penetrated, the price is not corrected, but the reversal TREND pursue to 100% – it.

There are many studies on Percent Retracement, which is:

a. Fibonacci Arcs, Fibonacci Fan Lines
b. Speed Resistance Lines
c. Tirone Level.

4. PATTERN / PATTERN RATES IN THE PAST

PATTERN or price pattern is a description of the history form of market price movements in the past. Based on the assumption that the nature of accident / incident will be repeated in a natural follow a pattern that never happened before. In the Future Trading, pattern of occurrence rates are as follows:

A. REVERSAL PATTERN
B. CONTINUATION PATTERN
C. CHARACTER PATTERN
D. GAP PATTERN
E. ELLIOT WAVE PATTERN
F. JAPANESE CANDLESTICK CHART PATTERN

A. REVERSAL PATTERN

Reversal or turn is a form of direction / pattern of price movements in the turnover trend. For example, if the trend of price increase / Up in the last few times, then the pattern of price movement will become reversal, so usually the trend of the price will go down, as well as vice versa.

Example reversal pattern :

B. CONTINUATION PATTERN

Continuation or development is a form of / pattern of price movement in order to continue the trend. For example, if the trend of price rise / up in the last few times, and continuation pattern of the price movement will be formed, so usually the trend of the price will go up, as well as vice versa.

Example continuation pattern:

D. GAP PATTERN Gaps occur when the today lowest price (low) is greater than the highest price (high) yesterday, or can also be today high price is smaller than the low price of yesterday. Candlestick Japanese called on the window.

There are 4 (four) type of basic gap :

1. Common Gap
There was a time in the market condition is stagnation, and usually the trader didn’t pay attention to this gap matter.

2. Breakaway Gap
Occurs when the price cut through stagnation limit, and cause the area where there are no previous trading activities. If the gap is not filled in a few days is the most important gaps and provide a signal that can be trusted.

3. Runaway Gap
Occurs when the trend continues and is a characteristic of the market that is very bullish / bearish, Runaway gaps can occur respectively

4. Exhaustion Gap
Occurs at the end of the trend and then followed by the inversion .

E. ELLIOT WAVE PATTERN

This analysis was created by R.N.Elliot, using the fibonacci theory. According to the theory, which is known as the Elliot Wave, prices move in waves, and this wave will be repeated continuously.This sequence is called the wave principle, is based on the 5 wave main pattern (up / down) is called impulse wave moving in the same direction with the trend,then followed by the next 3 waves (up / down) called the Correction wave.

With the theory of Elliot, the trader can calculate the price objective and find out the reversal point.

 

F. JAPANESE CANDLESTICK CHART PATTERN

There are many patterns that formed from the Candlestick. There are single, and some have formed a group so that it has meaning. Moreover, not only of the shapes, but also from the location it have different interpretation . The main idea is to know the price point reversal.

(i) Identify the form of the Single Candlestick

a. Marubozu

Black Marubozu often become part of a kontinu pattern in down trend or become the first bar of bullish reversal pattern
Red Marubozu Reverse of Black Marubozu
Closing Marubozu
There is no shadow on the close side Red colour support price Up black colour support price down
Opening Marubozu
There is no shadow on the open side the interpretation is the same with the Closing Marubozu, but not as strong as Closing Marubozu

b. Spinning Tops ( koma )

A small body with the shadow of far more than the length of the body. Indicates indecision between bulls and bears, the color is not so important.

c. Doji

When the body is very small, meaning that open and close price is almost the same. Indicates indecision and uncertainly between bulls and bears, when the doji often happen a day or several days previously, the doji is not important. if it stand on its own, it can show the warning of the reversal.

d. Stars

When you create a small body gaps above or below Marubozu, Uncertainly show.

e. Paper Umbrella

If the body is small with a very long tail (2 to 3 times the body), showed a strong reversal signal, which is a group including hammer, hanging man, inverted hammer , and shooting star. The differentiation is depends on the location in the market trend.

(ii) Candle location

Sometimes the importance of the candle is not only determined by the shapes, but also by its location in the chart. Moreover, this today new candle can change the meaning of the pattern of the candle that is going to happen. There are two classifications that are used to determine the location candle, namely:

a. The location in the trend
b. The location of the previous candle.

There are only two type candle that is influenced by its location, as follow: umbrella and stars.

 

(iii) Reversal Pattern

Here are some examples of Candlestick pattern for reversal pattern. there are a lot of candle pattern , but here only taken just a few popular and easy. There is also software that can recognize some type Candlestick. For single candle reversal pattern is not drawn (hammer, inverted hammer, hang man, shooting star, doji).

Pola Reversal