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Sentiment Indicators - Renko, Price Break, Kagi, Point and Figure: What They Are and How to Use Them to Trade

Book Description

Praise forSentiment Indicators - Renko, Price Break, Kagi, Point & Figure: What They Are and How to Use Them to Trade

"By marrying technical analysis and market sentiment, Abe Cofnas takes the art of interpreting the markets' topological patterns to a new level. Sentiment Indicators shows us why shapes count."

Steve H. Hanke, Professor of Applied Economics, Johns Hopkins University

"The process of extracting alpha in today's markets grows increasingly challenging as strategies become more automated, technology becomes more robust, and the market as a whole becomes more dynamic. Abe Cofnas's ability to quantify market sentiment gives traders an effective means to compete in this new paradigm. Sentiment Indicators provides one-of-a-kind insight into the world of proprietary trading strategies and serves as a solid framework for those professionals looking to further enhance their current trading protocols, as well as those seeking viable inputs in the programming of black box and algorithmic trading models."

John Netto, President, M3 Capital, and author of Spread Trading EurexEquity Index Futures: A Guide for Traders

"Abe Cofnas does a great job in delivering how traders can profit from the proper use of Sentiment Indicators. This book is a must for all traders. I highly recommend it!"

John Person, founder, NationalFutures.com

"Maybe you're already using technical and fundamental analysis to guide your portfolios. But if you're not also looking at sentiment indicators, then you're missing out. Sentiment indicators provide you with improved skills in filtering the noise of the market. And Abe Cofnas's book is a must-have manual for anyone working to grow their market knowledge and individual wealth."

Addison Wiggin, three-time New York Times bestselling author; Executive Producer, I.O.U.S.A.; and Executive Publisher, Agora Financial

Table of Contents

  1. Copyright
  2. Acknowledgments
  3. Introduction
    1. The Decision Path of the Trader
  4. 1. The Geometry of Emotions and Price Action
    1. 1.1. Building Investor Emotional Intelligence
      1. 1.1.1.
        1. 1.1.1.1. Chapter Notes
  5. 2. Price Break Charts: Key Concepts
    1. 2.1. High-Probable Entry Conditions
    2. 2.2. What are Price Break Charts? Basic Concepts
      1. 2.2.1. Rules for Construction of Price Break Charts
      2. 2.2.2. Reversing Block Colors
      3. 2.2.3. Reversal Parameters
      4. 2.2.4. Selecting the Time Interval
      5. 2.2.5. Column Shape Changes
      6. 2.2.6. Pattern of Block Sequences
      7. 2.2.7. Flip-Flops
    3. 2.3. Reversal Distances: A Key Metric
    4. 2.4. Consecutive High and Low Close Sequences
      1. 2.4.1. Copper (HGN9 COMDTY) Price Break Sequences
      2. 2.4.2. Histogram of S&P 500 Price Break Sequences
      3. 2.4.3. Dollar/Yen Up and Down Price Break Sequences
      4. 2.4.4. Gold Up and Down Price Break Sequences
      5. 2.4.5. European Currency Up and Down Price Break Sequences
    5. 2.5. Is the Reversal Serious?
      1. 2.5.1.
        1. 2.5.1.1. Chapter Note
  6. 3. General Trading Strategies for Applying Price Break Charts
    1. 3.1. Trading in the Direction of the Trend after a Counterreversal Block
      1. 3.1.1. Select Prevailing Trend
      2. 3.1.2. Select Entry Time Interval
      3. 3.1.3. Detect Counterreversal in Place
      4. 3.1.4. Place a Buy Stop Order or a Sell Stop Order
    2. 3.2. Join the Trend after the Appearance of the First or Second Reversal Block
    3. 3.3. Fibonacci Resistance Confirmation
      1. 3.3.1. Entry Location
    4. 3.4. Countertrend Scalper
    5. 3.5. Always-In Strategy
    6. 3.6. Flip-Flop Reversal Entry
    7. 3.7. Momentum Trading—Six-Line Break
    8. 3.8. Price Break and Volume Data for Equity Charts
      1. 3.8.1. Stop-Losses, Trailing Stops, and Price Break Charts
    9. 3.9. Multiple Setting Intervals and Price Break Charts
      1. 3.9.1.
        1. 3.9.1.1. Chapter Note
  7. 4. Applying Price Break Charts to Markets and Data
    1. 4.1. S&P 500: Price Break Chart Patterns Using the Day Chart
    2. 4.2. Crude Oil and Price Break Charts
    3. 4.3. Microdetection of Sentiment Reversals—The Use of Price Break Charts for Momentum Trading
      1. 4.3.1. Momentum Trading: 6-Line Breaks and Tick-Level Data
    4. 4.4. Price Break and Tick-Level Price Action
    5. 4.5. Six-Line Breaks and Fibs
  8. 5. Channel Patterns, Cycles, and Price Breaks
    1. 5.1. Cycles and Price Break Charts
      1. 5.1.1.
        1. 5.1.1.1. Chapter Note
  9. 6. Multiple Market Applications of Price Break Charts
    1. 6.1. Contemporaneous Visual Correlation of Instruments
      1. 6.1.1. S&P 500, Dow, Cash, and USDJPY
      2. 6.1.2. Copper and Freeport–McMoRan Copper and FCX
    2. 6.2. Volatility and Price Break Charts
    3. 6.3. Price Break Charts and Sentiment Data: Innovative Applications
      1. 6.3.1. University of Michigan Survey of Consumer Confidence Sentiment
      2. 6.3.2. ZEW German Confidence Index
    4. 6.4. Price Break Charts and the Global Financial Crises
      1. 6.4.1. The Bloomberg United States Financial Conditions Index
      2. 6.4.2. Senior Loan Officers Survey
      3. 6.4.3. Philadelphia Federal Reserve Bank Business Outlook Survey
      4. 6.4.4. The Milwaukee Purchasers Manufacturing Index
        1. 6.4.4.1. Price Break Charts and Inflation Watching
      5. 6.4.5. German Business Expectations
      6. 6.4.6. Japan Tankan Survey of Business Conditions
      7. 6.4.7. Commodity Markets and Price Break Charts
  10. 7. Price Break Charts and Option Trading
    1. 7.1. Selecting Direction with Price Break Charts
      1. 7.1.1. Rules for Buying Calls and Puts with Price Break Charts
    2. 7.2. Selecting the Strike Price
    3. 7.3. Risk Reversal Price Break Charts Analysis for Currency Traders
    4. 7.4. Price Breaks and Currency Volatility Smiles
      1. 7.4.1.
        1. 7.4.1.1. Chapter Note
  11. 8. Renko Charts Revived: The Microdetection of Sentiment
    1. 8.1. What is Renko Charting?
    2. 8.2. Tactical Trading Rules for Renko Charts
    3. 8.3. Key Components of a Renko Charts Trade
      1. 8.3.1. Fear and Renko
    4. 8.4. Step 1: Renko Chart Setting Sizes and Time Intervals
      1. 8.4.1. Gold and Renko Chart Variations
      2. 8.4.2. Crude Oil and Renko Chart Variations
      3. 8.4.3. Dow Jones Cash
      4. 8.4.4. U.S. Treasury Notes
    5. 8.5. Step 2: Select Chart Time Interval: Use Three Time Intervals
    6. 8.6. Step 3: When a Trade Enters the Average Target of Profitability, Turn On the Renko Charts
    7. 8.7. Time and Bricks
      1. 8.7.1. The Silent Doji
      2. 8.7.2. Bricks per Minute or Bricks per Tick
    8. 8.8. Renko Charts and Economic Data Release Trading
      1. 8.8.1. Renko Charts and Economic Data Releases: Trading Strategy Variations
    9. 8.9. Using Renko Charts to Enter Positions
      1. 8.9.1. Renko Charts and Parabolic Curves
      2. 8.9.2. Renko Charts and Fibonacci Resistance Lines
      3. 8.9.3. Renko Charts and Bollinger Bands
    10. 8.10. Renko Charts in Multiple Markets
      1. 8.10.1. Gold
      2. 8.10.2. Crude Oil
    11. 8.11. Renko Charts and Six-Line Break: Tools for the Scalper
      1. 8.11.1. EURJPY
    12. 8.12. Renko Bricks at the Tick Level
    13. 8.13. Renko and Volume
      1. 8.13.1.
        1. 8.13.1.1. Chapter Note
  12. 9. Kagi Charts: Waiting for the Turn of Sentiment
    1. 9.1. Kagi Chart Basics
    2. 9.2. Buy and Sell Signals with Kagi Charts—When Yin Turns to Yang
    3. 9.3. Kagi Charts: The Keys to the Turn of Sentiment
      1. 9.3.1. Alternative Settings for Kagi Turnovers
    4. 9.4. Quantifying Kagi Charts
    5. 9.5. Kagi Versus Candlesticks—Which Is Better?
  13. 10. Point and Figure Charts
    1. 10.1. How Point and Figure Charts Work
      1. 10.1.1. Reversal Settings: When to Vary Them
      2. 10.1.2. Setting Box Size as a Basis for Stop Strategies
    2. 10.2. Variations in Settings in Selected Markets
      1. 10.2.1. Gold Day Chart Compared to Ten-Minute Chart
      2. 10.2.2. Crude Oil and Point and Figure Charts
      3. 10.2.3. The Horizontal Count
      4. 10.2.4. Fibonacci Resistance Levels and Point and Figure Charts
      5. 10.2.5. The Dollar Index and Point and Figure Charts
        1. 10.2.5.1. Strength of Direction
    3. 10.3. Combining Chart Types
      1. 10.3.1. S&P 500 Cash Day Chart
      2. 10.3.2. Multiple Views of Gold
      3. 10.3.3. Multiple Views of Oil
      4. 10.3.4. Multiple Views of S&P Cash One-Minute Charts
      5. 10.3.5. One-Minute Example
        1. 10.3.5.1. Chapter Notes
  14. 11. Integrating Price Break, Kagi, Renko, and Point and Figure Charting
    1. 11.1. Using the Price Landmark Matrix
      1. 11.1.1. Components of the Price Landmark Matrix
        1. 11.1.1.1. Section 1: Raw Price Data
        2. 11.1.1.2. Section 2: Price Break Chart Components
        3. 11.1.1.3. Section Three: Kagi Chart Components
        4. 11.1.1.4. Section 4: Renko Chart Components
        5. 11.1.1.5. Point and Figure Chart Components
      2. 11.1.2. The Price Landmark Matrix Map: A Visual Path Analysis
        1. 11.1.2.1. EURUSD
        2. 11.1.2.2. Gold Price Landmark Matrix
        3. 11.1.2.3. Crude Oil
        4. 11.1.2.4. The DAX and the Price Landmark Matrix
        5. 11.1.2.5. S&P 500 and the Price Landmark Matrix
        6. 11.1.2.6. The SPX Price Landmark Map
      3. 11.1.3. Conclusion on the Price Landmark Matrix
  15. 12. New Directions in Sentiment Analysis: Charting Words
    1. 12.1. Decreasing Frequency Comparison
      1. 12.1.1.
        1. 12.1.1.1. Comparison of Ben Bernanke's and Jean-Claude Trichet's Speeches: A Cross-Sectional Analysis
        2. 12.1.1.2. Words Shared between Ben Bernanke and Jean-Claude Trichet
      2. 12.1.2. Text Mining of Federal Open Market Committee Statements
      3. 12.1.3. FOMC Minutes
      4. 12.1.4. Comparing Trichet Testimony with Bernanke Testimony
        1. 12.1.4.1. Chapter Notes
  16. 13. Beyond the Trend: Cycle Indicators Independent of Time
    1. 13.1. Cycle Detection and Projection
      1. 13.1.1. What is a Wave?
      2. 13.1.2. Methodology for Generating Cycle Waves
        1. 13.1.2.1. Fourier Analysis
      3. 13.1.3. Cycles and Volume Data
      4. 13.1.4. Wavelet Cycles Are Coming
        1. 13.1.4.1. Chapter Note
  17. Epilogue
  18. About the Author