Author : G. A. Burgess
People lie, charts do not, so when I pull up a chart onto my screen and apply techniques that help me interpret the price action of the market I feel more confident in my own ability to understand the financial markets and the financial industry as a whole. My judgement and decision making is therefore stronger because it is based on sound reasons that are not subject to someone else’s mistakes or lies. I am alone with my business, but my business is stronger because I am at the heart of the decision-making process and do not have to rely on half-hearted attempts from others. My first experience with charting began back in 1988, I used an Amstrad PC and spreadsheet software known then as Supercalc 3, to create a type of chart. It wasn’t very successful but it was my first attempt at creating a chart. I didn’t follow it any further because I went off to study at university. Since that time, however, I have visited various technical analysis courses and seminars, read some very useful books and some books that are a useless waste of valuable time. Since 1999, however, I have been drawing lines on charts as a professional and over the last five years I have invested a lot of my time in researching the financial markets. Chart analysis, to me, as a method of interpreting market price action is actually a very efficient way of finding great investment opportunities. For the technical trader it is a method of finding the optimal point at which to enter the markets. The difficult part about charting, however, is the correct interpretation of price action and with so many techniques and signal based packages available today, it only goes to make the process of price interpretation even more complicated. I have researched many markets using certain ideas or a certain criteria believing that the more complicated the analysis the greater the success at trading. The more I searched and researched the more I have come to realise that the most suitable methods, at least those methods that suit my character, are the simplest methods. That is to say, trend lines, support and resistance levels, patterns, Japanese candlesticks, moving averages and in many cases Fibonacci based signals. All of which are very straightforward and visually very well displayed on a financial chart. To me these are the essential chart techniques necessary to find trade and investment opportunities in the financial markets today. For this reason they are compiled in this book. All of these aspects of charting have one very significant and little thought about fact, they are the aftermath of market price action, therefore they do not rely on a system but instead your own interpretation of the price action; and because trading and investing is essentially the task of finding opportunities in the financial markets, chart analysis is about finding and confirming investment opportunities. The reason I believe this is that the markets are always trending either long term, intermediate term, short term and very short term i.e., intra-day. The advantage of this phenomenon is that you find a market where change is taking place and use the opportunity to go with it. A market that has been trending upwards changes and moves sideways, then changes again and moves down. In fact, that is all the markets do, they either go up or down, it’s that simple. Yet for many traders and investors making consistent profits is anything but simple! Likewise over the years I have seen how many traders and investors are too concerned about the immediate and fundamental aspect of the markets, listening to every piece of news and reading various recommendations that might help them determine the direction of the market for the next 100 or 200 pips, even if there are sufficient technical reasons that are pointing essentially to a market top. Given enough recommendations or positive news releases, it is enough to make traders and investors abandon their initial idea and fall into the trap of becoming unseated, disconcerted and then lost, resulting in poor performance. Even when some traders are able to find sound investment ideas and initiate a good trade they tend to be disconcerted the moment the market moves against them, and change their opinion completely. I have also seen how many traders, especially those new to the business and those who trade in their spare time, do so without a plan and with the most complicated or flawed technical set up. Even if it is a short-term trade, by creating a plan based on the daily charts the short-term trading becomes easier and has more directional bias if the context of the bigger picture is understood. Quite simply, if there is a signal on the daily chart that the market is going to retrace the short-term trade should be interpreted with that direction in mind. Traders new to the business are often more interested in the reasons than trading the actual price. The very nature of trading and investing makes this business difficult. The uncontrollable human emotions that rotate around greed, fear and hope are the elements of the human reaction in the markets that form the same repetitive scenarios time and time again. The need for some sort of confirmation or more useful methods is always at the forefront of investing, and when I came across Japanese candlesticks they seemed, at first, to be the answer. It was, however, after many attempts at trying to decipher candles that I realised they would not be the final part of the puzzle in my investment strategy, at least not applied on their own. I do make use of Japanese candlesticks as signals but they have to be confirmed and put into context. In this book they are used on a very basic level, but are an essential aspect of interpreting market sentiment visually. The purpose of this book is to demonstrate how to find opportunities that present themselves as trade and investment opportunities. The signals, the warnings about market sentiment, and the context and confirmation of signals that are necessary will become apparent, and you will be introduced to some of the familiar chart techniques that have stood the test of time, examples made available in such a way that it will not take long to understand how to apply these techniques to your own charts and study them for market opportunities. The financial markets do not care who you are or what you do but you care about the markets because you don’t want to be treated badly by them for not having done your chart analysis properly. Remember, opportunities don’t look you in the face every day, but when they do you should exploit them to the full. Chart technical analysis will help you do this, set strategically into the financial playing field where luck is not a fact! Finally, if you have experienced bad investments and wrong trade decisions you need to identify those factors that have undermined the investment and neutralise them. You will have to take steps to strengthen your decision process and become capable of resisting other challenges that might give rise to faulty decision making. This book will help you to at least see signals that are presenting a market that has an investment opportunity. They are clear and concise and therefore should help your decision-making process. If you feel, however, the need to look for advice by listening to other people, or other recommendations, then at least try to listen only to those people who have real trading experience!