The chart is everything! We all look at it, some analyze it, but only a small part of investors know how to read it correctly.
(Let's talk about charts.)
I am sure you are familiar with the basics of technical analysis, the two Wyckoff schemes, Elliott waves, and Smart Money.
All of these are examples of various concepts of graphical analysis.
At the same time, you have probably noticed that:
The Wyckoff accumulation scheme sometimes doesn't work.
Elliott waves growth seems subjective and doesn't justify itself.
Technical analysis sometimes resembles reading tea leaves.
Do you know why?
Because this is just a visual picture that requires real confirmation in the form of liquidity and volumes.
Graphical analysis alone is insufficient. Here are some key mechanisms to pay attention to:
Volume is the king of the market. Without volume confirmation, any pattern is just a drawing. Who is putting in money and how? This is the main question.
Liquidations and stops. The liquidation map is not just a picture, but a map of the participants' pain. Where can the market 'hit' the crowd?
Algorithmic movements. The market is not only traders but also algorithms of large players. Pay attention to repeating patterns in price movement before strong impulses - this is often the trace of algorithms that 'clean up' liquidity levels before reversals.
Evaluate patterns through statistics. Not all figures work the same way. Check how often the pattern you chose has worked on historical data, what conditions contributed to this (volume, volatility, liquidity) - this can increase the probability of a successful trade.
Order flow is the key to understanding real supply and demand. The chart shows the past, but the market moves based on real trades. To understand who dominates - buyers or sellers - watch for:
The delta of volume shows who is more aggressive right now.
With volume clusters - where are the large trades concentrated, at breakouts or in accumulation?
With the tape of prints - who is entering the market: large players or a crowd of small traders?
With orders in the order book - are they real limit orders or are they canceled before the movement?
Such graphical analysis considering volumes, liquidations, algorithms, statistics, and order flow will help you see where the real liquidity is and where there is just a pretty picture without real confirmation.
Trade wisely!
#TechnicalAnalys #FollowTheLeadTrader #MasterTheMarket
