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RE: Stage Analysis Beginners Questions - yellowcup - 2021-07-15
(2021-07-15, 07:33 AM)fabi470 Wrote:(2021-07-15, 03:50 AM)yellowcup Wrote: Hello Guys!
First of all, thank you @issatrader for this blog this is very helpful in the trading community.
My question is, how can we differentiate a Stage 2B on a Stage 3.
See chart below for analysis. I've excluded the stock name so that we can only focus on price action.
Thank you.
Hi yellowcup,
Nice to have you here! I am not Isatrader and not as experienced as him, but maybe i can still help / have a guess.
I would start with a definition of stage 2b / 3. Basically, stage 2b means an uptrend that is in a later stage (but is still an uptrend). An uptrend is defined by a series of higher highs and higher lows.
Stage 3 is the topping phase. That means, the stock is not anymore powerfoul enough, to make a higher high.
-> Conclusion: if the stock (see your picture) is not able to make a higher high, you are probably in the transition to stage 3 or already in stage 3 (topping phase).
It is the same with stage 4 and the transition into stage 1: the first higher low after the decline may signal a new stage 1 basing period.
I really hope, that this may help you out
@fabi470,
Thanks for the detailed answer.
It is still better to have known different ideas and perspective how to interpret the stages.
more profit to you on your trading.
RE: Stage Analysis Beginners Questions - yellowcup - 2021-07-15
(2021-07-15, 07:46 AM)Lebo44 Wrote:(2021-07-15, 03:50 AM)yellowcup Wrote: My question is, how can we differentiate a Stage 2B on a Stage 3.
For me the answer is simple.
Stage 2B - both 30MA and 10MA are trending upward (and pointing up). 2B means a strong uptrend so all key MAs must be going up (this is simple trading strategy, Minervini has the same criteria for estimating uptrend). Also all MAs in correct order: 10MA > 21MA > 30MA etc.
Stage 3A (early Stage 3) - 30MA is losing momentum and is flattening (or even slightly pointing down in the last weeks) and 10MA is pointing down (even more than 30MA because it is faster MA). There could be also signs of distribution: big red bars with very high volume, kind of exhaustion gap, stock very extended and selling visible (many red bars in a row). See attached Starbucks example (around the week marked by the dotted line) - notice flattened 30MA (yellow) and 10MA (white) lost momentum and going down
@Lebo44
Thank you for this, it adds to my perspective viewing the Stage 2B/Stage 3A
-So basically in the chart of Starbucks, An early stage 3B occur then followed by a stage 2A breakout? or this is still in the Stage 2B
area.
RE: Stage Analysis Beginners Questions - Lebo44 - 2021-07-15
(2021-07-15, 10:46 AM)yellowcup Wrote: -So basically in the chart of Starbucks, An early stage 3B occur then followed by a stage 2A breakout? or this is still in the Stage 2B
area.
Yes, the Starbucks entered Stage 3 but failed to enter Stage 4. Instead transitioned into another Stage 2 and went a little bit higher.
In case of the chart you posted - the stock also ended its Stage 2 and entered Stage 3 (30MA is flat and the price is oscillating around it). Also there was another Stage 3 earlier after the Stage 2 breakout.
RE: Stage Analysis Beginners Questions - isatrader - 2021-07-15
(2021-07-15, 03:50 AM)yellowcup Wrote: My question is, how can we differentiate a Stage 2B on a Stage 3.
The very first thing you'll see is a Change of Behaviour which will be a more signifiant reaction than you've seen during the rest of the Stage 2 advance. This may have a signs of an initial Buying Climax followed by what is a known as an Automatic Reaction which takes it down to a swing low and then rallies into a Secondary Test of some kind, which then fails and a Trading Range begins to form. The reaction will have bigger ranges on the price bars on the downside than previously and volume will usually increase as large operators start to distribute their positions near the highs on each rally. All of this will show up as a Change of Character as the initial part of the trading range completes and it moves into the testing phase of the base structure.
I recommend learning some Wyckoff, as it will really help you to differentiate between re-accumulation bases in Stage 2 and bases that are showing a Change of Behaviour and signs of distribution and moving into Stage 3.
RE: Stage Analysis Beginners Questions - yellowcup - 2021-07-15
(2021-07-15, 11:55 AM)isatrader Wrote:(2021-07-15, 03:50 AM)yellowcup Wrote: My question is, how can we differentiate a Stage 2B on a Stage 3.
The very first thing you'll see is a Change of Behaviour which will be a more signifiant reaction than you've seen during the rest of the Stage 2 advance. This may have a signs of an initial Buying Climax followed by what is a known as an Automatic Reaction which takes it down to a swing low and then rallies into a Secondary Test of some kind, which then fails and a Trading Range begins to form. The reaction will have bigger ranges on the price bars on the downside than previously and volume will usually increase as large operators start to distribute their positions near the highs on each rally. All of this will show up as a Change of Character as the initial part of the trading range completes and it moves into the testing phase of the base structure.
I recommend learning some Wyckoff, as it will really help you to differentiate between re-accumulation bases in Stage 2 and bases that are showing a Change of Behaviour and signs of distribution and moving into Stage 3.
@isatrader,
Thank you for your response.
Definitely, I will read more wyckoff theories.
RE: Stage Analysis Beginners Questions - collotennis - 2021-07-16
Combining the method with Wyckoff, how do you find the success rate with and without combining the Wyckoff method?
Also curious what resource/study guide would you recommend on learning to better understand applying the wyckoff method?
Appreciate your thoughts
RE: Stage Analysis Beginners Questions - fabi470 - 2021-07-16
(2021-07-16, 05:35 AM)collotennis Wrote: Combining the method with Wyckoff, how do you find the success rate with and without combining the Wyckoff method?
Also curious what resource/study guide would you recommend on learning to better understand applying the wyckoff method?
Appreciate your thoughts
Actually i am not sure if Wyckoff really improves your success rate. Nevertheless it helps you to understand better what happens in Stage 1 / 3.
I bought a book on Amazon about Wyckoff. I am not sure about the authors name, but it is something spanish. It offers basic knowledge on Wyckoff, but is hard to read as it is some sort of "Spanglish".
But David / isatrader knows lot of good books, about Wyckoff of course as well.
Wyckoff Method and Stage Analysis - isatrader - 2021-07-16