STD Channels
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Hello all and good morning,
Just wanted to make a brief post and include some charts with STD channels as someone asked me last night about them and I do find them helpful just for a bit of perspective and confluence in the markets. STD channels are plotted at a set number of standard deviations around a linear regression line. STD channels are useful as you can fade the extremes / edges and have a pretty high hit rate whilst doing so. Will include some daily charts below:
SPX
QQQ
IWM
DIA
/DXY
/BTCUSD
/EURUSD
/GBPUSD
AMZN
AAPL
GOOG
MSFT
TSLA
/TNX
Some brief charts and main ones that almost all of you should be familiar with besides maybe the FX pairs. Standard deviation channels are good for perspective in terms of looking for swing trades / momentum / extremes on charts. For example, looking at the STD channel charts I provided, EURUSD & GBPUSD are near the lower bound of their respective STD channel whereas DXY is near the top of its respective channel, hence an dollar cool down in the interim may happen here soon which also happens to coincide with a huge pivot on DXY around 104.7 paired with the dollar also being overbought, just multiple ways to be used in terms of looking for confluence and perspective for swings just as the example as I provided above. In terms of the indices, nothing necessarily stands out too much, but you can see on the last pullback in the indices, they all bounced at the lower bound part of the STD channel and we’ve had a nice bounce in the indices since with SPX for example 4% off the lows, an additional confluence that I personally used to find an interim bottom when the indices were pulling back most recently was MCCO readings paired with the STD channels, MCCO readings being the most oversold since the March banking crisis levels paired with SPX being at the lower bound of the STD channel gave good confluence and warning to look to take some risk off on the short side as well as maybe look to add some risk back on. Just a little write-up this morning that I thought some would appreciate and find useful to implement into their personal trading styles. I hope you all have a great rest of the week.
~ Eliant