Weekly Equity Indices 2015 – 03 – 16 to 20

5 simple steps to build, understand and use charts

  1. Trend definition: A bullish trend is a succession of Higher Highs and Higher Lows. A bearish trend is a succession of Lower Lows and Lower Highs.
  2. Paint and annotate price bars: This is a simple intuitive visual aid. Olive for bullish, Tomato for bearish. Swing Highs are in green, swing lows are in red
  3. Draw Volatility Channels: Volatility channels are the dotted lines with annotations. They are only featured and colored in the direction of the dominant trend: Olive for bullish, Tomato for bearish. They are calculated as: Bullish Volatility Channel = Swing Low – 1 * Average True Range of 14 days (ATR[14])
  4. Annotate the Distance from Volatility Channel: This is the distance from the Volatility Channel to the Bar when swing is identified. Think of it as a simple position sizing algorithm: what size should be traded to riske 1% of the portfolio ?
  5. Bullish weakness and Bearish strength: are short term counter-trend signals. Weakness is over, bullish trend resumes. Strength is over, bearish trend resumes.

Bullish Weakness Weekly

Shanghai Composite bullish weakness

Bearish strength weekly SEMDEX


Bearish strength SASEIDX


Bearish strength weekly Kuwait Index


Bearish strength weekly FTSEM

Abu Dhabi Index bearish strength weekly

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