Help me learn technical analysis, criticism -needed-

[vokain]

Hey friends, just a junior in college trying to learn and practice basic TA, I could use pointers and perspectives to help me point me in the right way to build my own perspective

As of May 16, 2013:
are we in a falling wedge? what am i doing?

http://bitcoincharts.com/charts/mtgoxUSD#rg90zig12-hourztgSzm1g10zm2g25zv
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:falling_wedge_revers

Prior Trend: To qualify as a reversal pattern, there must be a prior trend to reverse. Ideally, the falling wedge will form after an extended downtrend and mark the final low. The pattern usually forms over a 3-6 month period and the preceding downtrend should be at least 3 months old.
Shorter time frame, but would you say we were in a short term downtrend the past month? Can you be on a downtrend for a 1-month cycle within a bigger uptrend?

Upper Resistance Line: It takes at least two reaction highs to form the upper resistance line, ideally three. Each reaction high should be lower than the previous highs.
Apr 9, Apr 24, May 7?

Lower Support Line: At least two reaction lows are required to form the lower support line. Each reaction low should be lower than the previous lows.
Apr 6, 12, 16?

Contraction: The upper resistance line and lower support line converge to form a cone as the pattern matures. The reaction lows still penetrate the previous lows, but this penetration becomes shallower. Shallower lows indicate a decrease in selling pressure and create a lower support line with less negative slope than the upper resistance line.
haha what do you think?



Resistance Break: Bullish confirmation of the pattern does not come until the resistance line is broken in convincing fashion. It is sometimes prudent to wait for a break above the previous reaction high for further confirmation. Once resistance is broken, there can sometimes be a correction to test the newfound support level.
well, can't confirm yet, so until then, this guessed pattern is just whimsical and wishful speculation, correct?

Volume: While volume is not particularly important on rising wedges, it is an essential ingredient to confirm a falling wedge breakout. Without an expansion of volume, the breakout will lack conviction and be vulnerable to failure.
can't confirm yet, right?

[1714971316]

1714971316

[1714971316]

1714971316

[BitcoinAshley]

Yes, you've predicted $10 bitcoins on May 30th. Looks like you're doing everything right.

Folks, get your fiat ready!

[TraderTimm]

Chart pattern technical analysis isn't easy. I see where you're coming from with the Falling Wedge, but I wouldn't be considering that formation just eyeballing the chart. My personal rule for any lines is no more than 4, and if I can help it - just 3 or less.

At this point I'd be drawing a long-term trendline underneath the lows that were made from around April 15th and early May. We've already been "flat" enough that drawing an upper line connecting recent highs would've been broken out of, so it invalidates that anyway.

The best you can say at the moment is that it is above a longer-term trendline. But the thing about trendlines is they aren't containers or deflectors - merely rulers to compare to price action.

There are many indicators, so I won't go into all that - but I would encourage you to formulate your own rules for how price reacts and different points - Highs and Lows, and proceed from there. Some of my most useful tools came from refinement and observation over long periods of time.

[vokain]

Yes, you've predicted $10 bitcoins on May 30th. Looks like you're doing everything right.

Do I have it right that where the point converges is roughly the time range where we can expect a breakout?

Chart pattern technical analysis isn't easy. I see where you're coming from with the Falling Wedge, but I wouldn't be considering that formation just eyeballing the chart. My personal rule for any lines is no more than 4, and if I can help it - just 3 or less.

So how do you identify patterns? Do you even assign patterns that much weight versus your previous observations and rules for price reactions?

At this point I'd be drawing a long-term trendline underneath the lows that were made from around April 15th and early May. We've already been "flat" enough that drawing an upper line connecting recent highs would've been broken out of, so it invalidates that anyway.

thank you, that now makes a bit more sense to me.

The best you can say at the moment is that it is above a longer-term trendline. But the thing about trendlines is they aren't containers or deflectors - merely rulers to compare to price action.

There are many indicators, so I won't go into all that - but I would encourage you to formulate your own rules for how price reacts and different points - Highs and Lows, and proceed from there. Some of my most useful tools came from refinement and observation over long periods of time.

I've been watching charts for maybe a year, I know I have so much further to go. In the mean time, hopefully fundamental analysis can get me by (it's just timing that screws me!). Thank you Timm!

[dataphile]

Taking images of charts and drawing lines on them? Looks like you're doing exactly what you need to do.

Now just start talking about patterns observed in your cherry picked snippet with any combination of adjective and shape. "That's a Bear Triangle!" "That's a Bull Ellipse!" "That's a Pensive Spheroid!" Don't worry, there's no standard duration, axis transformation, or trendline function. Feel free to plot log time against the square root of price for the last eleven minutes if it helps you illustrate your point.

It is important to end your TA post with an extremely strong, very bold statement about where the price is going. It's also important to be vague so that you cannot be held accountable later. But most importantly, this is the Economics Speculation forum on bitcointalk.org, so it is of utmost importance that you are making a bullish prediction. If you are making a bearish prediction, your methods will be criticized.

Hope this helps!

[TraderTimm]

Taking images of charts and drawing lines on them? Looks like you're doing exactly what you need to do.

Now just start talking about patterns observed in your cherry picked snippet with any combination of adjective and shape. "That's a Bear Triangle!" "That's a Bull Ellipse!" "That's a Pensive Spheroid!" Don't worry, there's no standard duration, axis transformation, or trendline function. Feel free to plot log time against the square root of price for the last eleven minutes if it helps you illustrate your point.

It is important to end your TA post with an extremely strong, very bold statement about where the price is going. It's also important to be vague so that you cannot be held accountable later. But most importantly, this is the Economics Speculation forum on bitcointalk.org, so it is of utmost importance that you are making a bullish prediction. If you are making a bearish prediction, your methods will be criticized.

Hope this helps!

Yeah - you're a *great* help. <.<

[BTCThousandaire]

Take a look at this video which uses TA to analyse bigger markets, then apply it to Bitcoin. http://www.youtube.com/watch?v=TXVt5fYKFw0&list=UU0pjWefu2RNLyLcHsgIx4cg&index=1

[||bit]

You lines seem very arbitrarily placed to me. Perhaps, get a better feel for how TA might look from any of these sites. These re off the top of my head, not necessarily the best:

http://www.chartpatterns.com

http://www.chartpattern.com/index.html

http://www.pristine.com

day trading TA:
http://www.tradestalker.com/

If you want just any idea of where bitcoin is now, then one opinion is that if you just draw a upper resistance at about $142 and lower at about $98, and wait for the price to violate either line. When the price moves outside either of these, then I'd suspect it will have a good chance to continue in that direction.  Still, who knows?

[vokain]

I appreciate all the responses guys. Though I'm still downright a beginner, we all have to start out somehow, don't we? Haha while we're at it, I'd appreciate some of your guys' anecdotes about how you started, lessons learned, etc.

 I plan on thoroughly reading through this book as soon as I finish my first session of summer school (ochem, micro and macroecon). Thanks for all your resources, I'll digest those during this session in the meanwhile