The Most Reliable Trading Tool You Will Ever Use!

Written by Greg Capra President and CEO of Pristine Capital Holdings WWW. PRISTINE.COM
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What is Technical Analysis?

The analysis of past price changes in the hope of forecasting future price changes. The studies of supply and demand in a market in an attempt to determine what direction (trend) prices will continue in the future. Investing in which price movements are predicted from charts or patterns of past price movements. Technical analysis is a financial markets technique that claims the ability to forecast the future direction of security prices through the study of price and volume. 2

How Will The Analysis Be Done?

Types of Analysis / Methods and Technical Tools
Cycle Analysis Gann Analysis Astrology Analysis Fibonacci Analysis Elliot Wave Analysis Point and Figure Analysis Trendlines Moving Averages Price Oscillators Volume Oscillators Bollinger Bands Envelops Volume Weighted Average Price VWAP

Simple Technical Analysis

Pattern Recognition Price Support and Resistance Study of Price and Volume trends
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Educating Investors And Traders For Success In Todays Market!

Technical analysis is about reading the interaction between buyers and sellers. That prior interaction between buyers (demand) and sellers (supply) forms chart patterns. Patterns show past beliefs and expectations of the traders that created them and where they will act again. Their thoughts and expectations of the moment will be displayed in the most recent data. There are many patterns, we must define the ones to use. 4

Candlestick Analysis
Candle Language Produces Thoughts
Proper trading is said to be proper thinking, but how do we know what to think?
Pattern recognition is a recurring arrangement of price bars that suggests the future movement of prices, which guides our thoughts. These patterns communicate how traders have acted and what their beliefs (expectations) are in that time frame, at the moment. Candles provide a picture of those expectations on an ongoing basis. Those pictures speak to us in Candle Language and are the basis for our continuous thoughts and trading decisions. 5

Understanding Candlesticks
Bulls Win
Closing Price

Bears Win
Opening Price

Momentum Slows - Neutral

Opening Price

Closing Price

Topping Tail (TT) TT = Sellers have taken control What did this look like before it became a Topping Tail?

Bottoming Tail (BT) BT = Buyers have taken control What did this look like before it became a Bottoming Tail?

Where and how these occur within a trend makes All the difference!
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DEFINE A PRICE PATTERN

Trading is psychological to a great extent. Lets use that to our advantage through technical analysis. Price patterns are pictures of psychology in motion. Have you ever bought a breakout or shorted a breakdown? Have any of those breakouts or breakdowns ever failed? How did it make you feel, think and what did you do?

Shock Bar Patterns

A candle is not complete until that time period ends, so dont assume. A candles message will be confirmed or negated on the next candle.
What were traders thinking when the bar was forming as a WRB, and then when it became a BT?

What are they thinking after the reversal at (C)?

C
What about the +WRB at (B) becoming a TT?
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Shock Bar Patterns

Normal or obvious Reversals Potent Reversals = Shocked Expectations

BOF

BBF

BDF

Shakeout

Candlestick Analysis

Can you see how various combinations of opens and closes speak to us about ours and others expectations!
Go Baby! It gapped down near the prior low and then closed under it! It opened ok, but closed under the prior low, and at the low of the day!

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TREND and TREND REVERSALS

Strong Uptrend

BO

Higher highs and higher lows. Buy pullbacks against the trend or breakouts (BO) from a base.

All retracements stall and reverse at or above/below MS/MR. Shock Bar Patterns increase the odds of a successful trade!

Short pullbacks against the trend or breakdowns (BD) from a base.

Strong Downtrend
BD

Lower highs and lower lows.

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TREND and TREND REVERSALS

Breakout Failure Base No stall Pivot or Swing Low Breakout Failure (BOF) is defined as prices moving above a consolidation and then closing back below it.

Short retracements Shock Bar Patterns increase the odds of a successful trade!
A break of a prior swing high or after a lower low negates the downtrend and breaks above Major Resistance (MR) .

Pivot or Swing High LH LL Downtrend Failure

LL

Buy Pullbacks
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Educating Investors And Traders For Success In Todays Market!

After a break of a downtrend buy pullbacks or after a correction bar.

New high bar High prior to new low Break PBS Correction bar

New low

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Educating Investors And Traders For Success In Todays Market!

Breakdown Failure is Complete

Pullback Breakdown
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Educating Investors And Traders For Success In Todays Market!

Shock

Shock Same as TT

Break

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Educating Investors And Traders For Success In Todays Market!

Once a trend reversal occurs buy pullbacks and/or after a Shock Bar Pattern. Prices must trade above a bars high for confirmation.

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Support and Resistance Analysis

The Theory of Self-Fulfillment
Trendlines, Moving Averages and Fibonacci Retracement levels are used to locate Support or Resistance. Traders ask, Why do prices reverse there? They reverse there, at times, because so many believe they are support and resistance and act there. If enough people believe something, whether factual or not, they can have an effect when they act on that belief (e.g., buying or selling at a MA, or T-Line).

Much of technical analysis is a Self-Fulfilling Prophecy

Pristine Capital Holdings, Inc.
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Prices Move Between Reference Points

Traders Bid at references of Support and Offer at references of Resistance, which may create enough Demand or Supply to form reversals.

Reference points of support and resistance can be based on Actual Price or Subjective tools. When both aligned the odds are the best.

As technical traders, our job is to define a trend and reference points with a trend to assess the likelihood of trend continuation points.

Trader Pivot Lines provide a subjective, but reliable reference point that e-mini traders focus on as support and resistance.
Pristine Capital Holdings, Inc.
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TRADER PIVOT LINES

How they are calculated
Resistance 3 = R2 + (High Low) Resistance 2 = Pivot + (R1 S1) Resistance 1 = 2 * Pivot Low Pivot Point = (High + Close + Low) / 3 Support 1 = 2 * Pivot High Support 2 = Pivot (R1 S1) Support 3 = S2 (High Low) Midpoints are simply lines between pivots
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TRADER PIVOT LINES

General Trading Concepts For Trader Pivot Lines

Once a pivot line is violated, a retest of that line may be an opportunity to fade the move to it. Buying pullbacks in an uptrend to a pivot line and vice versa Against the trend, pivot lines are a lower odds tradable reversal point. Unless the move lower has become climatic. Best used for profit-taking. The addition of trend analysis, market internals and price pattern recognition will increase your odds of using these lines as reference points to place a trade.
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Educating Investors And Traders For Success In Todays Market!

Buyers at Pivot after move above Shock Bar at Pivot

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Educating Investors And Traders For Success In Todays Market! Retest of Pivot Line after a break and sellers Breakout

Failure

What are traders thinking after the failure? Where are they likely to act? Wait for a setup!
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Educating Investors And Traders For Success In Todays Market! Shock bar at mid-point, but trend in this time frame is not down.

Longs are caught!

Break

What happened here? What did it look like before it became a BT? What were they thinking?
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Educating Investors And Traders For Success In Todays Market! Breakout Failure at the Pivot Point. This is an obvious reference point to sell longs, use it!

PP

Buyers are here Mid-Point Failed attempt to move lower. You know what to do!

Break

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REVIEW
Define the trend or the lack thereof Define when the trend breaks Define the reference points that buyers and sellers will use Define the price patterns are that will signal an entry Define your money management and position management Remember that much of technical analysis is a self-fulfilling prophecy, so defining where others will act is key.
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FINAL THOUGHTS
Price patterns are pictures of the thoughts, expectations and emotions of the traders that formed them. When those pictures tell you that others have been caught on the wrong side of the trend and market internals, you have an opportunity to take advantage of it. Odds of similar patterns repeating an outcome in exactly the same way are low. That said, pattern recognition does suggest a similar outcome. Accept the fact that you do not know what will happen next. The odds will be on your side, if you have a method of trading that you have internalized, have confidence in and, of course, have the discipline to follow.

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Thank You for Attending !

This is a great start to understanding price action and putting together a trade plan. If you have not taken a Pristine Seminar, consider it. Success in anything comes from education, then practice. We will be happy to assist you further in order to help you achieve the financial goals you have set for yourself.

In closing, we at Pristine wish you great success!

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