Sentiment Indicators: Renko, Price Break, Kagi, Point and Figure

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Sentiment Indicators: Renko, Price Break, Kagi, Point and Figure COFNAS $60.00 USA | $72.00 CAN PRAISE FOR Renko, Alternative charting tools that allow Price Break, SENTIMENT traders to identify high probability Kagi, entry and exit points that leave less SENTIMENT INDICATORS Point & Figure— money on the table RENKO, PRICE BREAK, KAGI, POINT & FIGURE What They Are In Sentiment Indicators, noted trading expert What They Are and How to Use Them to Trade and How to Abe Cofnas draws on his own trading and Use Them training experience as he shares his knowledge “By marrying technical analysis and market sentiment, Abe Cofnas takes the about the latest techniques and strategies for art of interpreting the markets’ topological patterns to a new level. Sentiment to Trade using Renko, price break, Kagi, and point and ABE COFNAS is the forex trading columnist for Indicators shows us why shapes count.” fi gure tools to successfully analyze all markets. Futures magazine since 2001 and has written — STEVE H. HANKE, Professor of Applied Economics, Johns Hopkins University over 100 columns on forex trading strategies Written with the serious trader in mind, and tactics. He is also the author of two Wiley “The process of extracting alpha in today’s markets grows increasingly challenging Sentiment Indicators offers key information titles, The Forex Trading Course and The Forex as strategies become more automated, technology becomes more robust, and the on these potential-fi lled tools and how to use Options Course. He has, for over two decades, market as a whole becomes more dynamic. Abe Cofnas’s ability to quantify market each in shaping trading strategies. Along the provided fundamental and technical analysis sentiment gives traders an effective means to compete in this new paradigm. way, it provides a practical overview of how to on trading strategies in currencies and inter- Sentiment Indicators provides one-of-a-kind insight into the world of proprietary use these little-known indicators and how each markets. He is the founder of learn4x.com, trading strategies and serves as a solid framework for those professionals looking can enhance your trading endeavors. which provides private coaching and semi- INDICATORS nars on currency trading. In 2008, he formed to further enhance their current trading protocols, as well as those seeking viable Chapter by chapter, this reliable guide: FXDimensions Inc., a third-party trading system inputs in the programming of black box and algorithmic trading models.” • Focuses on measuring sentiment change to and signal development company that has — JOHN NETTO, President, M3 Capital, and author of Spread Trading Eurex avoid counter trend trading pioneered the concept of Trading Avatars. He Equity Index Futures: A Guide for Traders • Explains the comparative advantages of each is a recognized expert in technical analysis and tool and when to use one tool versus another has lectured in London and Dubai (with appear- “Abe Cofnas does a great job in delivering how traders can profi t from the • Presents new sentiment research that ances on CNBC Arabia) and continues to work proper use of Sentiment Indicators. This book is a must for all traders. I highly analyzes word mining and what it means with students and businesses abroad. Mr. Cof- recommend it!” for markets nas holds a master’s in political science, and a —JOHN PERSON, founder, NationalFutures.com • Shows how the indicators work in different master’s in public policy from the University of markets: futures, equities, forex, and others California, Graduate School of Political Science, “Maybe you’re already using technical and fundamental analysis to guide your • Provides a solid understanding of charting and the Goldman School of Public Policy, at the portfolios. But if you’re not also looking at sentiment indicators, then you’re Abe techniques and uses real-world examples to University of California, Berkeley. missing out. Sentiment indicators provide you with improved skills in fi ltering illustrate strategies and tactics the noise of the market. And Abe Cofnas’s book is a must-have manual for anyone • And much more JACKET DESIGN: JON BOYLAN Cofnas working to grow their market knowledge and individual wealth.” ORIGINAL KAGI CHART COURTESY OF DAN NORCINI — ADDISON WIGGIN, three-time New York Times bestselling author; From historical context and Robot Trading Executive Producer, I.O.U.S.A.; and Executive Publisher, Agora Financial alerts to the critical factors of a trading system, Sentiment Indicators presents a proven ap- proach to trading that will help you identify conditions that have a high probability of profi t. Read it today and discover the differ- ence these techniques can make to your port- folio’s bottom line. THEAUTHOR.indd 278 5/7/10 6:32:18 PM SENTIMENT INDICATORS Renko, Price Break, Kagi, Point and Figure ffirs.indd i 5/7/10 6:30:34 PM ffirs.indd ii 5/7/10 6:30:34 PM SENTIMENT INDICATORS Renko, Price Break, Kagi, Point and Figure What They Are and How to Use Them to Trade ABE COFNAS ffirs.indd iii 5/7/10 6:30:34 PM Copyright © 2010 by Abe Cofnas. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifi cally disclaim any implied warranties of merchantability or fi tness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profi t or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com. Library of Congress Cataloging-in-Publication Data: Cofnas, Abe. Sentiment indicators: Renko, price break, Kagi, point and fi gure : what they are and how to use them to trade / Abe Cofnas. – 1st ed. p. cm. Includes bibliographical references and index. Summary: “A noted charting expert shows how to use Renko, price break, Kagi, and related sen- timent indicators in any market. This book introduces these little-known technical analysis tools to active traders, and is fi lled with key information on how to use them”–Provided by publisher. ISBN 978-1-57660-347-5 (alk. paper) 1. Stocks–Charts, diagrams, etc. 2. Technical analysis (Investment analysis) I. Title. HG4638.C64 2010 332.63’2042–dc22 2010002402 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 ffirs.indd iv 5/7/10 6:30:34 PM This book builds upon the knowledge gained from working with my students all over the world. Through them, I gained a deeper understanding of the role of emotions in markets and analysis. A special note is due to my wife, Paula, whose support during the research and writing of this book was indispensable. ffirs.indd v 5/7/10 6:30:34 PM ffirs.indd vi 5/7/10 6:30:34 PM Contents Acknowledgments x Introduction 1 The Decision Path of the Trader 3 1 The Geometry of Emotions and Price Action 9 Building Investor Emotional Intelligence 13 2 Price Break Charts: Key Concepts 15 High-Probable Entry Conditions 16 What are Price Break Charts? Basic Concepts 20 Reversal Distances: A Key Metric 31 Consecutive High and Low Close Sequences 32 Is the Reversal Serious? 36 3 General Trading Strategies for Applying Price Break Charts 39 Trading in the Direction of the Trend after a Counterreversal Block 39 Join the Trend after the Appearance of the First or Second Reversal Block 42 Fibonacci Resistance Confi rmation 43 Countertrend Scalper 44 Always-In Strategy 45 Flip-Flop Reversal Entry 45 Momentum Trading—Six-Line Break 47 Price Break and Volume Data for Equity Charts 48 Multiple Setting Intervals and Price Break Charts 50 vii ftoc.indd i 5/10/10 11:49:35 AM viii CONTENTS 4 Applying Price Break Charts to Markets and Data 53 S&P 500: Price Break Chart Patterns Using the Day Chart 53 Crude Oil and Price Break Charts 54 Microdetection of Sentiment Reversals— The Use of Price Break Charts for Momentum Trading 57 Price Break and Tick-Level Price Action 59 Six-Line Breaks and Fibs 59 5 Channel Patterns,
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