Chart Patterns versus Technical Indicators!

in this video traders let’s have a look at chart patterns versus indicators stay tuned they traded one welcome whew alright so it’s a good suggestion from a viewer maybe a subscriber I don’t know comment was on a previous video chart patterns or how useful our chart patterns versus indicators now I really thought about separating them so extremely like this to me they kind of go hand in hand a chart pattern and indicator is a similar type of thing but really really think about it it’s actually not this is a good kind of thing for us to think about and delve into so chart patterns versus indicators so a chart pattern let’s use an example so we know where we are with this would be something like okay a head and shoulders maybe some kind of candlestick pattern like a shooting star maybe something like a trendline channel or something like that something that’s actually on the candles itself what they’re talking about a group of candles and it’s a candlestick pattern or a broad a pattern on the chart like the head and shoulders like the low high etc etc whereas an indicator or is about thousands of indicators moving averages stochastics Bollinger Bands et cetera is derived from price sometimes volume sometimes time and we use these to guide us into making training decisions so let’s have a look at a comparison between the two so these are my thoughts again them say I’m right or wrong on this this is a kind of unusual topic to look at would be teachers and here what you guys got to say about this in the comment section below as always alright so pure price versus price derive so this side of course we’ve got a chart pans something that clearer here and this time we’ve got our indicators so pure price is obviously one of the benefits of using a chart pattern right it’s just literally price there’s nothing else to worry about whereas an indicator is derived from price anyway so you’re always looking at second derivative a moving average is the average of price Oh versus number of days stochastic the same kind of thing divided by number of days you’ve got Bollinger Bands of the standard deviation so everything that we’re looking

the common indicators are all derived from price anyway so the argument could be well you can often see what the indicator will be just by looking at price you know if price suddenly starts to rip off hi you pretty much know the moving average is going to be trying to catch up but if it’s a recent rip it will be kind of catching up slow depending on the on the distance or the this size of the moving average you’ve got all the number of days and moving average same as sarcastic if it’s kind of been arranged now it’s breaking out the highs you kind of know it’s gonna be overbought because the stochastic looks the period you’re looking at and then decides what the price position is in that so you can kind of get a good idea so do you necessarily need indicators to get this feel maybe maybe not there’s one thing to consider the other thing is they’re they’re then gone value changing what do I mean by that so they’re then gone means that hey most of the time a chart pattern will be there and then it disappears and let’s say okay you’re going to use an example of a higher a higher low okay a one two three panel something like that you have the low okay we use with your double bottom because it’s very easy to kind of visualize on a mind as well markets come down mines come down and then that’s it once we’ve had the double bottom it’s gone okay we are now from this point onwards we’re now in the territory of we did just how a double bottom but then where do we consider that still valid up here is it still valid double bottom there where you might be considered to be chasing a little bit there what about right down here is if my liberal might not even have been done yet so the point is here is that you have it and then it’s gonna have to decide how valid and relevant that is coming up into future trays whereas an indicator has a constantly changing value so the moving average let’s say your stock as is a great example let’s say it’s gone oversold okay but then it goes back into neutral territory is no longer over so the still is still a we are reading which you can judge from it so you like okay we’re it’s this or the other words you’ve got chart pattern it’s either it’s like a binary event it’s done it and that’s it so how do you how do you kind of look from now do you look at it with some more weighting less weighting or as indicating go or we’re in the middle of the range now you can see that value is changing or the moving average you know is now at this distance away from the price or this distance away from the slow moving average or whatever it may be

so the indicator is always giving you a value where everywhere it is a chart pattern either its form then it’s gone ten days ago two days ago or it’s forming and there’s no kind of in between it’s difficult to judge

sometimes how much influence it has on it whether it’s kind of work to hats way out now for example you could be thinking oh it’s a double bottom and in fact the stochastic is now gone over bull and maybe you’re better off waiting for a kind of retracement of

consolidation before buying that kind of thing so something to consider there these is very similar guys it can be misleading on lower timeframes I think this is the same for both chart patterns and indicators if I’m honest

you know shallower timeframes it’s not that useful 1 minute 3 minute 5 minute it can be in the right conditions don’t get me wrong but I think that majority the 5 minute bars and 5-minute candles are relevant you know who cares will happen in 5 minutes or is it daily or weekly or monthly because they’re interesting far more money’s involved in that candle than in a one-minute candle a 5-minute camera so very similar there guys it can be misleading on lower timeframes indicators grab sarcastic swinging around in a 1 minute it stupidly can be sitting in a range for kind of 14 minutes and then just pop out the radio all of a sudden it’s overbought and everyone’s crying either to make any sense it’s a little bit with our time frames double bottom double top on a small tight range entry down in one minute char completely irrelevant by rods with chart patterns I think you get a better feel for the market we can watching pure price of seeing how it moves you’re seeing that price responds you get a bit of feel or I think you’re one step removed okay get is similar to the price to ride but one step remove indicates if you’re almost constant look an indicator

you’re constantly not just looking at a purely one digit in other words Haley says the indicates this is the value of the indicator whereas price you know it’s very much I’m kind of very very different the way that these chart patterns form isn’t it if you think about you know double bottom we can have like a double

bottom that is big there and kind of breaks through lows you can have a real tight one here you can there’s so many different variations or as an oversold stochastic it’s just a number hey it’s it’s – it’s a it’s 20

oh it’s 15 it’s a number yes there’s some intricacies potentially of how it gets there but it’s so much narrower than it is perhaps prices prices got much more to look at and the chart pattern can be much more interesting the position of that relative to the day difficult to kind of sometimes judged up with indicates this is not a bashing indicator video by imagination but it’s understanding some of the intricacies of trading other chart pattern or the indicator a final one is one against the chart pattern here is it it can be subjective for as indicator is binary you know if you’re in if you’re moving averages crossing over then it’s crossing over in other is or it isn’t if you’re oversold you’re oversold rather every sold or you’re not I need to find it and it’s yes or no now I know the some chart patterns are like that let’s say you’ve got a head and shoulders as soon as it crosses that it’s formed but there’s still some subjectivity there right and a higher low cetera fine but they’re still at some point there’s some subjectivity at some point they’re stochastic or whatever in the case using one level it goes into overboard so this is very very clear whereas here where we call it double bottom you know down here we’ll the moment if it’s down here you through the low the moment it’s not as it’s come back up is it’s the double bottom yet so you got some subjectivity there which can make it challenging to decide whether it’s valid or not whether it’s formed or not and then the other argument courses are after is formed then you say oh yeah don’t was the double bottom maybe it’s too late to even respond to it so it’s something to consider there for that as well guys so chart pans but has indicators not really a face off that you’d expect I think this place for both of them I think it makes sense to kind of be mindful you know for loading your chart with indicators same with chart pads not look at every single chart pattern out there just pick a couple of things you think a useful fuel strategy recognize the downfalls of them recognize the the power of them and then kind of try and use a hybrid model or in a train that’s what I do and it seems to work take care guys bye bye


Leave a Reply

Your email address will not be published. Required fields are marked *