Price Information: Open-High-Low-Close-OHLC

To accurately read the market, you only need four pieces of information: the Open, the High, the Low and the Close Price.

Vocabulary

e to reflect — рассматривать

The Open Price

This is the price at which the first trade for the day takes place. Both buyers and sellers have had time to reflect upon the markets close on the previous day. Their perceptions will affect whether the stock opens higher or lower the next day. The subsequent price holds the clue as to which side of the market is the more dominant force — the buyers or the sellers.

The High Price

This refers to the highest price at which the security has traded that day. It is at this point that buyers decide not to push the price up any higher or alternatively, when sellers have gained control. If the high is at or near the opening of the day, that is a sign that the sellers have been the dominant force. If the high occurs near the end of the trading session and the open was near the low of the day, the buyers have had control.

u: 'clue — ответ

Э:

to occur to gain control

—

 случаться — устанавливать контроль

The Low Price

This refers to the lowest price at which the security has

traded that day. At this point the sellers have decided not to accept a lower price or alternatively, when buyers have gained or regained control of the market.

If the low is near the opening of that day, that is a sign that

the buyers have been the dominant force. If the low is near the close of the day, that is a sign that the sellers are keen to sell and that therefore they have been in control.

The Close Price

The close is also sometimes called the sentiment. It is the

price at which the security is trading at the end of the day. This is the most watched price in analysis as it is seen as the final judgement on who won the day between the buyers and the sellers.

If the close is at or near the high of the day and the opening was near the low, it points toward a day of buying. An intra day chart would also reveal that prices were probably in an upward trending mode all day.

If the close is halfway between the high and low irrespective of the open, that is interpreted as the market being evenly divided. That is, that the buying power was balanced by the selling pressure.

to be keen

— быть заинтересованным

e

'sentiment

— настроение

to win the day

— добиться победы

l

'irrespective of

— независимо от

Before A the neckline was a resistance line. Once it was

broken the resistance line turned into a support line. At points В and С the price bounced off it twice. The neckline was broken in point D and the trend reversed. A retest took place at point E.

The neckline was a resistance line again. The resistance point held, and the price declined to the level of F, the price target of the head and shoulders formation.

In an uptrend Left Shoulder represents a correction. If it

takes place — traders may take profits. Trend is still intact.

The Head indicates: that prices move up and surpass the

high of the left shoulder (Climax), but then move down again.

This places the upward trend in question.

Rieht Shoulder represents a retest. Buvers re-emerge and

price starts to go up again. If price moves up to the same level of the left shoulder or if it retraces 50% from the Head to the ootential neckline — the rieht shoulder is complete. It is an indication that a down trend is in place.

There are various analysis regarding the role volume plays

with Head and Shoulder patterns. In an uptrend some maintain that the left shoulder carries the hiehest volume, that volume, decreases at the Head and then falls substantially by the right shoulder. Others maintain that the volume is highes at the Head and has a greater decline in the right shoulder.

When the market moves out of a Head and Shoulders

pattern to the upside, it must have high volume.

au

to 'bounce off -

- отскакивать

a.

'target

- цель, точка движения цены

Time

Double tops and bottoms are more common than (but not as significant as) triple tops and bottoms. A double top is referred to as an M, while a double bottom is termed a W. Double top and double bottom patterns are fairly common on price charts, but are often ovemsed. In a double top, a new high is set on strong volume, then volume subsides as prices decline. On the ensuing rally, prices climb back to the first high, but fail to close above this level, and prices begin to fall again. (C) At this point, there is only a potential double top. It is not confirmed until prices close below the first low, usually on strong volume.

sju: ensuing — следующий

i: to exceed — превышать

u: 'crucial — решающий, важный

ei prevailing — господствующий

A less frequent, but no less useful technical formation is the rounding bottom and rounding top. They are sometimes referred to as saucers and inverted saucers, respectively. As the name implies, a rounding bottom occurs when prices gradually shift from a downtrend to an uptrend to form a short of shallow "U" shape on the charts. To validate this formation, it is important that the volume also form a saucer formation: that is, volume should gradually decline as the downtrend ends, then slowly increase as prices begin to rise again. In a bottom formation, this type of price action represents accumulation — the "smart money" slowly adding to long positions. At tops, this formation represents distribution, or the "smart money" getting out of long positions and adding to short ones. A common variation of saucers is for prices to rise sharply and suddenly on strong volume near the mid-point of the formation. This activity only lasts a few sessions, after which prices fall back within the rounding pattern. It is difficult to determine exactly when the pattern is complete, but a good indication occurs when volume begins to increase sharply or prices break an important area.

0:

'saucer

ae 'shallow

ae to validate

smart money

— блюдцо, соусник — мелкий

— узаконить, сделать действительной

— вложение денег без риска, используя секретную информацию

There is an understandable tendency to look to see kev horizontal support and resistance levels tested when they are reapproached. Many traders tend to set profit targets referenced to such levels, and stops also tend to be positioned relative to breaches of these levels. This is all verv well but disappointment often results as the key support and resistance levels in a structure aren't necessarily the isolated highs and lows. Thus very often the market will reverse just short of these levels, much to the fury of many traders who'd been counting the pennies before they were securely in the till! Consider the stylised bar chart in figure 1, areas (A) and (B) represent a two period reversal stmcture that is commonly seen in the markets. Taking the highlighted (A) area first, the bulls would have been well contented at the close of the period (close "C"). However, they were due for a shock, as whilst the market did push higher to begin with in the next period (sucking more weakly committed bulls in), by the close (close "D") there were a lot of unhappy and damaged traders around. The high of the first period "b" constitutes a much more potent resistance level when retested, than the actual isolated high of the structure marked "a". This is not to say that "a" won't be attacked, but time and again you'll find it's "b" where the real battle is fought, and where the subsequent reversal or

Vocabulary

to set targets — ставить цели

ja fury — бешенство

till — касса

л to suck in — всасывать

ou 'potent - сильный

consolidation will be initiated. In the practical sense one could say "b" is more significant than "a" due to a greater degree of market confidence at "b", and it is almost certainly associated with higher volume. There is however another way of looking at it, which I call the "Concept of Maximum Bearishness/Bullishness".

Maximum Bearishness/Bullishness

If in the first highlighted period of (A) the bulls had been

totally in control, with the bears utterly routed, then the close of

the period would have been at "b", the period high. One can

look at this pullback from the high — the difference between "b"

and "с" — as representing the ability of the bears to fight back.

Similarly in the second oeriod of (A) the orice difference

between "d" and "e" represents the ability of the bulls to fight

back after being mauled. The way to evaluate which is the period of maximum bullish strength in any structure (which is where the bulls had maximum control) is to sweep back these differences (the pullback from the high) through the respective closes and compare the levels obtained. This is the concept of SWEEP and it is the period with the highest sweep level that constitutes maximum bullishness.

The high of this maximum bullish period is a key resistance. I think it can be easily seen that reflecting "b"—"c"

back through "c" gives a much higher level than reflecting "a"—"d" back through "d". Thus it's the first period of (A) and its high "b" that qualifies as the maximum bull point not point "a", despite it being higher. Note the maximum bull period may indeed be the one that includes the actual isolated high (area (D)

is such an example).

Resistance Level Strength

Price action as depicted in (A), being a two period bull

reversal structure, needs to be viewed in light of the above if, or when, the market returns to the same level. There are a couple of tests that can be applied to make a judgement on how potent the resistance level "b" is likely to prove:

1. Reflect the "sweep" movement of the price curve points

"b"-"c" down through "c" and "d"-"t" up through "d". Do

the two levels cross or are they able to "hold hands" as I term it?

If they do not, it's a measure of how many people have been

caught and how badly they've been caught. It is the pain and distress that materialises from a reversal level that directly and strongly influences how potent it will prove at a later time. If the reversal was violent, closing on or near the low of the period and thereby giving the majority in a bad position little or no time to get out, then "b" will return to "haunt" the market if the level is re—attained — pain is remembered even if only subconciosly!

2. Look at the price action following the reversal period,

did it make a fair job of re-tracing before going down again, or did the market just plummet? If it's the former then "b" won't be nearly so key a level than if we get a nose dive. Again it comes back to giving traders an opportunity to get out when wrong without a serious loss. Remember a violent one-way market means somebody somewhere is in distress!

au

to rout — разгромить

о:

to maul — калечить, бить

to hold hands — занимать выжидательную

политику

e distress — горе

pain — боль

О' .

'to haunt - преследовать

л

to 'plummet — резко упасть