Having programmed the Wyckoff Wave indicator (Named the ZZ-V/ZZ-VPT), I thought it would make sense to compile a resource list to show everyone how to use it. This list will be updated as I encounter more wave videos:
To identify support or resistance, analyse regions where figures (Xs or Os) halt and move in the opposite direction. Take a look at the picture below. Can you spot the support and resistance levels ?
Here is my interpretation:
Lets first identify support. I’ve spotted two locations at regions A and B. The fact that A and B are vertically apart by only 1-box suggest that this zone is of significance. Lets identify resistance. It is clear that region C is a zone of resistance. Whenever a triple top appears, take note. It often signals strong resistance. Where should the resistance zone end ? When in doubt, look left. Left of region C are a number of double tops. I’ve spotted a double top just to the left of region C and at the beginning of the resistance zone (far left).
If price manages to break above region C, this informs me that the bulls are in control since they’ve managed to gather enough momentum to break strong resistance. However, this is not the case. Notice what happens at D. At D, price broke below regions A and B. Given that price managed to break significant support and heavy resistance has developed at region C, it is fair to suggest that the bears are in control. In other words, there is a higher chance that price falls to lower levels of support.
Point-and-Figure charts are great at showing support and resistant levels, right ? I hope you’ve found this useful !
A fulcrum in Point-and-Figure lingo basically means a double bottom. I’ve been anticipating a change in trend for a while now. Price has recently developed a local double bottom and price is currently testing for the 4th time what is ostensibly strong resistance at 7.7k. Notice how price has broken above the downward trend line. This suggest that the downtrend is retarding. This is confirmed when price reaches 7.8k. Given the local double bottom (yellow box) and the development of a fulcrum pattern, I believe Bitcoin has reached a bottom. I will be going long and buying the dips as soon as a change in trend is confirmed; when price hits 7.8k.
I began to write this blog post on the 6th of January 2020. Today is the 7th January 2020 and price has broken above resistance and is currently trading at 7.9k.
As anticipated, a change in trend, from downwards to upwards, has now occurred. I had a limit-buy order at 7.8k. I will continue to buy the dips at local supports and ride this trend until my price objectives have been reached. Counts in Point-and-Figure are price objectives calculated in several ways which I will discuss in a different post. I have calculated two counts: the first count is at 9k, the second count is at 12.2k. Check this out, the first count towards 9k just so happens to be at the same level where previous support (now resistance) developed. Coincidence ? I think not !
There are three types of trend indicators; objective, dynamic and subjective. A subjective trend line is a trend line drawn by the analyst based on logical judgment. Moving averages or the Ichimoku Cloud provide a dynamic method of determining the trend – the trend moves with price. Lastly, an objective trend is one which follows a set of rules, does not move with price and removes any personal bias. An example of an objective trend line is the 45- degree point and figure trend line.
It is popular among technical analysts to use dynamic and subjective trend techniques. Objective trend lines are often ignored because little objective-trend tools exist or are difficult to obtain and their utility is heavily underrated. In this blog post, I’d like to show you the power of objective trend lines on Point-and-Figure charts.
It is important to note that the trend line on a point and figure chart shows the constant price per reversal since the x-axis represent the number of columns, or the number of times price has reversed.
When price is above the trend line, the market is said to be in an uptrend. When price is below the trend line, the market is said to be in a downtrend. Trading is a game of probabilities. A traders goal is to increase the probability of a trade succeeding and reducing the probability of a trade failing. Trading with the trend increase the chance of your trade succeeding. Thus, knowing the trend is of crucial important because trades should be committed with the trend – not against it.
Analyse the picture above. Notice how the objective trend lines clearly show the trend. There is no confusion whatsoever – upon glance, you’ll know immediately whether the trend is up or down. Moreover, such objective trend lines show changes in trends far quicker than dynamic and subjective trend lines. Including objective trend lines to your analysis gives you a competitive edge, greater profits and protects losses since you’ll know when the trend changes far earlier than others and most importantly, you’ll know whether you should be shorting or longing.