This is a new section we’re adding to the service. It will be sent out on Wednesdays, featuring assets identified through the quantitative and statistical analysis we share on Sundays.
Here you’ll find: a complete Technical Set Up.
- Trend analysis excluding time.
- Trend analysis including time.
- Timing analysis through the inclusion of cycles.
- Oscillators and their interpretation.
- Volume analysis from the perspective of trade overcrowding and market activity.
- Relative Strength Volume approach combined with a volume profile.
- Most importantly, the search for convergences and divergences.
This study is complemented by the quantitative and statistical analysis we’re conducting on a selection of ETFs that we believe best describe the economy as a whole.
We look at it from two main angles. Excluding time and focusing on prices.
Technical Set Up, Excluding Time
Point and Figure (refresh P&F) is the method to exclude time. Then, we incorporate time through Japanese candles.
By excluding time, we plot the price actions up to 2006. This shows you the big picture. Where you stand today, inside that huge forest. Prices right now are in resistance zone.
We continue excluding time, and also go back to 2006. The daily time frame gives us a different perspective. If you look up, we’re at a trend resistance, and on a daily basis, we’re already starting to move downward.
Granulating further, into a 4 hour time frame and upward trend reveals in a clearer manner.
As a conclusion
- Weekly situation: We are testing a weekly resistance zone. Correction has not started in this time frame yet but neither a break out, even though Sp500 is making ATH on a daily basis.
- Daily situation: Correction has started and a movement is on its way that could transform itself into the weekly correction we are waiting for.
- This daily movement seems overextended as the 4 hour time frame is correcting it.
What are we waiting for:
- A confirmation weekly has started correcting. Need for daily correction to confirm itself by keeping going long enougth.
- Need confirmation that the daily movement correction has ended. These are sequential moments that could be coincident or not.
All of this, of course, needs to have a macro concordance for us.
Technical Set Up: Home builders
We now have a clear picture of how the price is behaving. We trade based on the weekly time frame, but we also have a more granular perspective.
Set Up including Time in the analysis
Technical Set Up: Daily time frame
Notice how both, P&F and candle charting describe the same situation.
Home builders Cycles
Let’s include Time from another angle.Intermediate weekly high will be confirmed once the last low is broken. This would confirm a change in the market structure. Cycle timing is suggesting the same thing we are looking for. The estimated date for the next intermediate low by this method is January 26.
Oscillators
Another perspective on price—relative to itself.
The interpretation is that A shows you there’s a road ahead, while B tells you it’s time to shift gears, brake, refuel, or grab something to eat. Great timing tool
Technical Set Up and volume
The most important nuance—and the reason behind the statistical analysis of prices we send every Sunday. Convergences and divergences are the drivers that push us to take a step further and include Technical Analysis. They are without a doubt the most important signals in technical analysis, and that’s why we’re constantly tracking them.
This asset isn’t overcrowded O.B.V, (were going deep in this indicator shortly), and trading activity is low. We don’t see any divergences nor convergences. Remember, this trade setup comes from a macro hypothesis we went through here, here and across the entire blog actually, specific on the banking system here.
Volume R.S.I, is exactly the same as RSI, the only difference lies in the fact that every price is pondered according to its volume. A price achieved in the early Asian session is not the same as a price achieved in the middle of the New York session. We are in the middle of the river of daily movement being corrected by the 4 hour chart.
All of this generates key price points. Each one of them is set up with alerts while we simply wait. Chartism is another angle, great fortTiming and targeting. Furthermore, head and shoulder is high reliable figure, basically because of its popularity.
This is it. A complete technical setup. Blue and red arrows are prices for alerts settings.
Technical Set Up and the trading System
Risk management, stops, and targets aren’t part of technical analysis—they belong to a trading system. A system is simply a methodology built upon technical analysis. It can be trend-following, mean-reversion, or contrarian, and each has its own rules for triggers, stops, and capital management based on trade size and asset volatility.
Technical analysis, on the other hand, is about considering every possible angle of market behavior. A trading system is different: it applies mechanical triggers, stops, and targets. While it may rely on technical aspects of price, its logic varies depending on the system’s type and objectives.
In our case, technical analysis must always align with our macro hypothesis. That’s when the system comes into play.
This was the launch of a new section within the service, focused on technical analysis but derived from intermarket, macro, and statistical perspectives, which—as you’ve already seen—are becoming increasingly relevant.
Today is the FOMC decision, already priced in by the market. You can follow the probabilities here.
See you soon.
Martin
Inter Market Flow
If you believe this is an error, please contact the administrator.