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HEIKIN-ASHI TRENDS

NEWSLETTER
INDEXES | EQUITIES | FOREX |CRYPTOCURRENCIES

#247 | 03.03.2019

© EDUCOFIN 2013-2019. ALL RIGHTS RESERVED


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Technical and Non-technical Commentaries for the Coming Week

• (!) Conflict between short- and medium-term heikin-ashi charts. Consolidation?


• (!) The combined currencies price and heikin-ashi charts show the high level of noise FX
markets display. Noise = frequent alternations between green, yellow, and red bands.
• (!) haDelta and haOscillator are at elevated levels on weekly charts.

• (+) The short-term positive bias remains for some days ahead.
• (+) haDelta offers another positive signal on most daily charts.
• (+) Well above the trailing-stop on daily and weekly charts.

• (-) Long-term, the market is getting closer to hit a resistance.

• (+) The S-oscillator chart is an accurate proxy for the filtered trend.

Last week

• (+) The positive bias remains. Not many changes from last week.
• (+) Well above the trailing-stop on daily and weekly charts.
• (+!) Long-term, the market is getting closer to hit the buy-stop.

• White (QE), grey, and/or black swans may fly over anytime.

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Heikin-Ashi Education Corner

• Candle-inside-candle Heikin-Ashi pattern: A Heikin-Ashi candle inside another Heikin-Ashi


candle is sign of a trend slowdown. It may be a sign of reversal or a sign of a pause, too, before
the trend resumes. A stop-loss is highly recommended.

• When you listen to talking heads or get stock recommendations, trust, but verify. If Heikin-Ashi
charts tell the same story, it’s a confirmation and not the final decision. Otherwise, ignore the
advice.

• A short talk about haOscillator: A falling oscillator in an uptrend is a sign of a consolidation, not
of a trend change. A rising oscillator in a downtrend is a sign of consolidation, not of a trend
change.

• About perfection: There is none, especially in trading. Too much effort – time and money - is
wasted in search of ‘perfect’ entries, exits, and stops. They work once, twice, and then they
don’t. One solution is to avoid trading noise in lower time frames and use a stop-loss and trends
(lesser noise) in higher time frames.

• A short talk about haDelta: There are five (5) possible scenarios when haDelta and its short
average are crossing above/below each other. Not all these signals are strong as the following
table shows:

haDelta average (1) haDelta (2) Crossing 1x2 Signal strength


Below zero Below zero Positive Weak positive
Below zero Below zero Negative Strong negative
Above zero Above zero Positive Strong positive
Above zero Above zero Negative Weak negative
At/near zero(*) At/near zero(*) Positive Very strong positive
At/near zero(*) At/near zero(*) Negative Very strong negative
(*) It may also signal a consolidation. Tricky.

• In an uptrend, pullbacks are accepted as long as the close doesn’t go below the previous
important low.
• In a downtrend, reactions are valid as long as the previous important high is not taken.
• (+++) A good trailing-stop takes most emotions out of a trade or investment.

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SP-500 – Daily S-oscillator

S-oscillator over 50 or at overbought/oversold levels = (Strong) continuation of the existing trend.

Last week: Continuation of the S-oscillator at overbought/oversold levels = (Strong) continuation of the
existing trend.

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S&P 500 – Yearly Heikin-Ashi chart (March 1, 2019)

Dramatic change.

Back to bullish mode only if the market (SP-500) will make a new high in 2019. Odds are low.

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Another daily market (SP-500) breadth approach, this time based on price rankings. Notice how the
market breadth synchronizes with market peaks and troughs. Watch out for +/-300 levels.

How can you use market breadth based on price rankings?

o Long/Short when the market breadth indicator has a higher/lower value than the
previous one
o Use a trailing stop
o (optional filter) Combine it with the S&P-500 above/below its 200-day average

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SP-500

This week: Short-term: positive bias. Medium-term: consolidation. Long-term: positive, near
resistance.

Last week: Short-term: positive bias. Medium-term: positive bias. Long-term: positive but below the
buy-stop @2,878.

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Volatility Index (VIX)

This week: Short-term: the downtrend points to lower volatility. Medium-term: bullish for stocks.
Long-term: anticipating a serious volatility fall (haOscillator fell below zero).

Last week: Short-term: the downtrend points to low volatility. Medium-term: bullish for stocks. Long-
term: anticipating a serious volatility fall (haOscillator fell below zero).

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GOLD

This week: Short-term: gold dropped below the support (trailing-stop). Negative bias. Long-term:
consolidation (2016-present). Approaching a top (haDelta).

Last week: Short-term: bullish. A problem occurs if gold drops below the trailing-stop. Long-term:
consolidation (2016-present). Approaching a top (haDelta).

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OIL

This week: Short-term: indication for a pullback in a comfortable position above the trailing-stop .
Medium-term: top/consolidation. Long-term: positive.

Last week: Short-term: positive even with a pullback above the trailing-stop. Medium-term:
top/consolidation, haDelta anticipated another positive move. Long-term: limited risk, positive.

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HEIKIN-ASHI MARKET BREADTH - DAILY

%Net < 0 = weakness. %Net > 0 = strength.

+/-90% are reversal levels.

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HEIKIN-ASHI MARKET BREADTH - WEEKLY

%Net < 0 = weakness. %Net > 0 = strength.

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HEIKIN-ASHI MARKET BREADTH – MONTHLY

%Net < 0 = weakness. %Net > 0 = strength.

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Table 1: Morningstar® sectors + industry groups (31) – daily, weekly and monthly heikin-ashi
perspectives.

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Table 2: Select Sector SPDRs (9) - daily, weekly, and monthly heikin-ashi perspectives.

Note: The tables in Figures 1 and 2 are based on heikin-ashi change of color indicating a possible change of trend or the
start of a consolidation. Other heikin-ashi criteria can be used to generate similar tables. For more information about heikin-
ashi check the daily personal blog http://heikinashi.wordpress.com and http://www.educofin.com. All tables and charts are
generated at the end of the week. The monthly view (Monthly HA Trend) is not final until the end of the calendar month.

Table 3: FX pairs - daily, weekly, and monthly heikin-ashi perspectives.

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Figure FX1: EURUSD daily – Price and heikin-ashi chart shows the level of daily noise for EUR/USD.
Positive.

Last week (daily): Expected to go lower with support @1.2000.

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Figure FX2: GBPUSD daily – Minor top. Event-driven.

Last week (daily): A pause. Event-driven.

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Figure FX3: AUDUSD daily – Consolidation, negative bias.

Last week (daily): Consolidation.

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Figure FX4: USDJPY daily. Uptrend.

Last week (daily): Non-event.

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(Source: GDAX)

Figure FX6: BTCUSD daily – Consolidation with negative bias.

Last week: Positive signs.

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(Source: GDAX)

Figure FX7: ETHUSD WEEKLY – Negative bias.

Last week: Very positive indication (haDelta).

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Figure 1: QQQ – Short-term: tired, possible consolidation ahead. Medium-term: weakness. Long-term:
Overextended, near a top.

Last week: Short-term: positive bias. Medium-term: positive. Long-term: sign of a revival (haDelta)..

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Figure 2: IWM (iShares Russell 2000 Index ETF) – Short-term: positive for the next days. Long-term: a
top is expected.

Last week: Short-term: positive. Long-term: positive signs (haDelta), near buy-stop.

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Figure 3: SMH (Market Vectors Semiconductor ETF) – positive. Long-term: top. Near the buy-stop.

Last week: tired (haDelta+haOscillator values), but positive. Long-term: positive bias. Near buy-stop.

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Figure 4: XLF (Financial sector ETF) – Short-term: positive, approaching a top. Medium-term: top. Long-
term: positive.

Last week: Short-term: positive bias. Medium-term: positive. Long-term: Positive.

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Figure 5: DIA (SPDR Dow Jones Ind. Average ETF) – Short-term: positive. Long-term: still positive,
approaching a top.

Last week: Short-term: above resistance, see QQQ above. Long-term: still positive. Near nuy-stop.

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Figure 6: EEM (Emerging Markets ETF) – Short-term: bullish pattern after an uptrend (small
cup&consolidation). Long-term: minor top.

Last week: Short-term: bullish pattern after an uptrend. Positive. Long-term: positive bias.

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Figure 7: TLT (iShares Barclays 20+ Year Treasury Bond ETF) – Short-term: TLT broke down below the
lows in early February and January. Negative. Medium-term: consolidation with negative bias. Long-
term: Still in a downtrend.

Last week: Short-term: positive pattern, consolidation of the small cup-and-handle. Medium-term:
consolidation. Long-term: Still in a downtrend.

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Figure 8: IYR (iShares Dow Jones US Real Estate ETF) – Short-term: a consolidation is expected. The
trailing-stop is the exit. Long-term: at resistance, near a top.

Last week: Short-term: positive in an overextended trend. The trailing-stop is the exit. Long-term:
Positive signs at resistance.

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Figure 9: IBB (iShares Nasdaq Biotechnology Index Fund ETF) – Short-term: positive bias. Medium-
term: positive. Long-term: near a top.

Last week: Short-term: positive bias in a consolidation. Medium-term: positive Long-term: Positive
signal.

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Figure 10: MJ (ETFMG Alternative Harvest ETF) – Short-term: at resistance. Pause. Long-term:
overextended, near a top.

Last week: Short-term: positive. Follow the trailing-stop. Long-term: A bottom. Positive signs.

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DISCLAIMER - This newsletter is published only as an educational tool for those who are interested by
and want to know more about heikin-ashi noise filtering / trend technique. The information in this
newsletter represents author’s own opinions and does not recommend any trades or investments and
at no time should the reader infer that any such recommendations are given. The content of this free
newsletter is an illustration of how various heikin-ashi techniques apply in the field of technical analysis.
This information is not to be construed as an offer to sell or the solicitation of an offer to buy any
securities. All information presented herein is believed to be reliable, but we cannot guarantee its
accuracy. The author(s) may hold positions or other interests in instruments mentioned in this
newsletter. Past performance is not a reliable indicator of future returns. All charts are for illustrative
purposes only. Reproduction, disclosure, or dissemination of this newsletter is allowed with no
alteration of its content and only with a mention of its author(s) and source.

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