It is the first section of 4XEagleEye technical report. It is designed to brief traders about daily technical outlook for selected instrument. This section includes current day expected direction as well as the price level where this outlook might change (Our Analysis Change Level).
How we identify current market direction?
Simply we are applying the simple Dow Theory analysis principles.
Market Trends Have Three Phases
Dow Theory asserts that major market trends are composed of three phases: an accumulation phase, a public participation phase, and a distribution phase.
The accumulation phase (phase 1) is a period when investors “in the know” are actively buying (selling) stock against the general opinion of the market. During this phase, the stock price does not change much because these investors are in the minority absorbing (releasing) stock that the market at large is supplying (demanding). Eventually, the market catches on to these astute investors and a rapid price change occurs (phase 2). This occurs when trend followers and other technically oriented investors participate. This phase continues until rampant speculation occurs. At this point, the astute investors begin to distribute their holdings to the market (phase 3).
Trends Exist Until Definitive Signals Prove That They Have Ended
Dow believed that trends existed despite “market noise”. Markets might temporarily move in the direction opposite to the trend, but they will soon resume the prior move. The trend should be given the benefit of the doubt during these reversals. Determining whether a reversal is the start of a new trend or a temporary movement in the current trend is not easy. Dow Theorists often disagree in this determination. Technical analysis tools attempt to clarify this but they can be interpreted differently by different investors.
How this is can be Useful for My Trades?
Knowing expected market direction will assist you on your trading decisions by taking your positions with market direction and not against. You may use our support (resistance) levels provided to buy (sell) the instrument of your choice. Also, you may use our analysis change level as your stop loss level.