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blankseplocked Experiment #01: RL finance analysis applied to EvE
 
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Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.29 21:50:00 - [31]
 

Of course in the real market (EvE and RL) things are not so stylized and schematic. So let's see how the situation would show in the case of Gallente Starbase Charters.
To look at it better, we look at a shorter time frame snapshot of the "dip" with the following, heavily commented picture.


Picture linkage


It's possible to see the various steps playing out.

Important notice: if you recall what I have written in the first post, the "easy to see" lines are just averages. They show how price reacts but are NOT valid triggers.
The trigger is the exact price, therefore we'll use the 5 SMA as helper to find out an area of interest but then we'll look at the corresponding yellow dot (price) as reference for what actual thresolds to look after.

Look at 3a and 3b or 4a) and 4b). They show that we will look at the red line to gauge it's time to do something, but at the price indicated by the yellow dot at the corresponding day.

At 3a we see the price bottoming up, but our target price (where we can expect for price to drop) is lower, in fact it's at 3b level.


To put the example in numbers, a guy could dump his whole stock at 3.1k isk and later on buy it back at 1.5k. Now he has the same stuff he had before, but with 1.6k ISK plusvalence per each charter. He could then proceed dumping them again at point 4.b.


This concludes the first series of posts about this experiment.

Image changed to URL. Zymurgist

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.29 22:33:00 - [32]
 

Edited by: Vaerah Vahrokha on 02/09/2010 06:51:40
Little riddle / homeworks.


What does this graph about Robotics tell us?


Picture linkage

Image changed to URL. Zymurgist

Breaker77
Gallente
Reclamation Industries
Posted - 2010.08.29 22:42:00 - [33]
 

Originally by: Vaerah Vahrokha

What does this graph about Robotics tell us?




It tells us that the people with ISK and/or half a brain bought millions of units and are capitalizing on the shortage of goods right now.


Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.29 22:53:00 - [34]
 

Originally by: Breaker77
Originally by: Vaerah Vahrokha

What does this graph about Robotics tell us?




It tells us that the people with ISK and/or half a brain bought millions of units and are capitalizing on the shortage of goods right now.




Check price and volume. That's what will happen, but it's not what the picture says right now and it's not what's being done ATM.

Breaker77
Gallente
Reclamation Industries
Posted - 2010.08.29 22:56:00 - [35]
 

Originally by: Vaerah Vahrokha

Check price and volume. That's what will happen, but it's not what the picture says right now and it's not what's being done ATM.


You do know that people speculated that robotics would be a bottleneck considering the work required to make them? A lot of PI went into making robotics due to making them "rich".

Irokoi Purisukin
Minmatar
Posted - 2010.08.29 23:04:00 - [36]
 

So you learned the first notion anyone learns when they start trading in RL: "The trend is your friend". Now you just need a minimum of 4 years of formal education on economics and you're good to go.

I have yet to be impressed.

Breaker77
Gallente
Reclamation Industries
Posted - 2010.08.29 23:05:00 - [37]
 

Originally by: Irokoi Purisukin

I have yet to be impressed.


I like you already


JitaPriceChecker2
Posted - 2010.08.30 00:17:00 - [38]
 

Eve market is so much simpler then RL, the economics theorys might actually work in here.

Good luck.


Xylopia
Gallente
Center for Advanced Studies
Posted - 2010.08.30 00:52:00 - [39]
 

Edited by: Xylopia on 30/08/2010 04:17:01
Why so much of whine? Wouldn't it be helpful to arm with ability to read what ppl think behind that yellowish lines and dots when you bump into déjà-vu?

Anyway, thanks for the time and energy you put into this VV.

Keep it coming.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 04:57:00 - [40]
 

Edited by: Vaerah Vahrokha on 02/09/2010 06:52:22
Edited by: Vaerah Vahrokha on 30/08/2010 05:11:01
Originally by: Irokoi Purisukin
So you learned the first notion anyone learns when they start trading in RL: "The trend is your friend". Now you just need a minimum of 4 years of formal education on economics and you're good to go.

I have yet to be impressed.


If you'd be impressed, then I'd have done something wrong.
I don't recall being impressed when at school they teached me additions and subtractions.
It's still some of the most valuable stuff I learned and use every day.

-------------------------------------------------------------------


Regarding the little homework

Do the same Robotics look under another light now? We just switched to an higher time frame.


Picture linkage


What do we see here? oh, another head and shoulders is forming! This time we can see it before it happens.

What could we learn from this picture? Because the whole reason of this experiment is to find concrete applications of finance mechanics in EvE, isn't it?
One was the breakout trade shown above, next we'll see what to do in the case of head and shoulders. After all it's a common scenario, expecially common for new expansions items that scream "buy me!".

This will come in a next post.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 07:53:00 - [41]
 

Edited by: Vaerah Vahrokha on 02/09/2010 07:11:23
So, let's put the past "lessons" together.

We have an head and shoulders - a quite massive one - and several small "waves" which represent sub-trends where supply would temporarily dominate over demand or vice versa.

Looking at the zoomed in area, there is a break out pattern (seen in length at the Gallente Starbase Charters example) that tells us that something "broke" in the equilibrium and we are to see a large change.


Picture linkage


Now, I'll stop with the finance geek talk and I'll start talking EvE.


If you were an alliance logistics officer (like I was) or a wholesale buyer, you'd have bought all of the NPC sold stuff. You could even have waited a bit longer but not further than the zone I zoomed in and shown to the left.

The yellow line is the breakout, it tells us to stop amassing items ASAP, because a breakout means that something significant happened and from now on the price will skyrocket.

Of course, with hindsight it's really easy to say "well we could have bought for a lot longer for our alliance" but that's the problem with finance and hindsight: that when you are in "real time" and don't know the future (i.e. the graph stopped at June 20th), going ahead blindly is a recipe to disaster. Speculation becomes gambling.

A speculator, instead, does not need to "buy and hold" (or consume) like an alliance. They earn on plusvalence. They could have bought (most have) before the first breakout, since patch notes would highly suggest to invest in those former NPC items.
But even if such speculator would "come late", a brief look at the graph would have told him the following (explained at the above breakout "lesson"):

1) Sell all of his stuff at the third yellow price dot in the zoomed area, right above the yellow line. He'd sell i.e. 3B worth of stuff @12500 (240k pieces).
2) Buy it back at the bottom of the "pit". See how big volume is precisely at that dot? The bottom of the pit was at a BRN (big round number, a psychological support), 10k ISK p.u. As usual, the momentum briefly pumped the price a bit below 10k (happens in RL markets too), but the day after it was sticking to it already.

A speculator doing the above, right now would have his 3B worth of stuff back minus broker fee plus 12500 - 10000 = 2500 isk per item. You have now 300k pieces instead of 240k pieces of 6 days ago.
This means instead of 3B now you have an stock worth 3.75B. You made 750M in six (6) days without doing nothing but waiting.

Image changed to URL. Zymurgist

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 07:58:00 - [42]
 

3) At this point the choice is yours. You can buy the stuff back and keep it to resell later. In RL a trader could short at the yellow dot before the head of the blue arrow and quickly earn more money before it retraces back.

4) But we are in EvE, no short sell. You quickly evaluate the 2-3 days past your buyback and notice the trend is steeply going up. This means profits will come in quick and big, but since the trend slope is above Gann's preferred slope of 45°, it means it won't go up so hard for a long time.

5) In fact, at graph point 3), the first large speculators started dumping stock. To have such an impact, they should be an alliance worth of strength.
You can easily see this would result in another break out, the trend re-adjusts its aim at an humbler pace.

6) Your 3.75B of stock at July @3) point would be worth 7.5B. Since you are a smart speculator, you know how trend steam is running out. This time you'll take the prudent approach and won't immediately dump stock. You wait for a confirmation like a RL trader would do (the 4a) point in the commented Gallente Starbase Charter breakout example.

7) Therefore you WILL NOT sell your stuff at 3), there was too little preadvice and you'd end up selling at 22k instead of 25k (the intermediate dot 1 day past the big dump). The steep dip is telltale of an healthy setup coming soon though. You can have your take at profits!

8) Therefore you setup your position to trigger at price coming back to 3) levels. The first dot doing so is 26k. You dump all your 7.5B of stuff (just an example) that this day means 288461 items.

9) You attentively wait for the price reaching the bottom (as it should), this is a delicate part of the speculation so you have to be on maximum attention.

10) Price reaches BRN at 22k pu. You buy back all for a total of 7.5B.

11) As price recovers to previous level, your plusvalence is 4k per unit. You now have 340909 items instead of 288461. This means now you have 8.864B worth of value. A billion made in few days again.

12) At this point price is rising again but at very small volume. You must now be very careful because it's "running on fumes" as they say in the airforce.

13) At the next dip or few days later you dump all. Soon more do the same and market sentiment drastically changes.

14) It's now the future, the head and shoulders is evident now and there's a violent rush at dumping everything before price crashes to a seemingly bottomless pit.

15) In about the same time separating the left shoulder vs the head top, some guys will judge the price will have fallen enough and will start buying again. This will form the second shoulder.

16) But it's an operation made just by small and irrelevant buyers, with minimal volume, so shortly after a new huge sellout happens and price goes down to almost the levels it had before NPC robotics stopped to exist.

17) The descent will be slowed down or even reversed and bumped up a certain way because robotics "true market value" is higher than NPC robotics, therefore we won't see a true return to the old price but a new stabilized price at the proper PI demand vs offer new equilibrium.



Notice: in a 3 months graph you could see little "shadows" (thin lines) protruding off the yellow dots. Despite the underlying EvE graph mechanics don't match a real graph (ie it uses Donchian channel, not proper candle bars), those have a very high signifiance at price trend estimation. The shadows at June 18th would scream "sell time is soon".

Akita T
Caldari Navy Volunteer Task Force
Posted - 2010.08.30 08:40:00 - [43]
 

Care to tackle the "big four" moon minerals too ? Wink
If anything, those should have been almost purely speculation-driven for a good while (with everybody guessing just how high the stockpiles for two of them might be and the rest guessing how low the other two will crash)... pretty sure they're not into "normal mode" yet, and they have been some of the longest-running items that would fit that kind of profile, so "psychology-based graphology" would be most appropriate there (and theoretically yield at least interesting, if not useful results).

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 09:08:00 - [44]
 

Edited by: Vaerah Vahrokha on 30/08/2010 09:28:23

Originally by: Akita T
Care to tackle the "big four" moon minerals too ? Wink
If anything, those should have been almost purely speculation-driven for a good while (with everybody guessing just how high the stockpiles for two of them might be and the rest guessing how low the other two will crash)... pretty sure they're not into "normal mode" yet, and they have been some of the longest-running items that would fit that kind of profile, so "psychology-based graphology" would be most appropriate there (and theoretically yield at least interesting, if not useful results).



ATM I am on a limited bandwith connection (read: pay 100 times more if I break the contract limit) so I cannot deal with pictures. In about 8 hours I'll go home and then I'll give them a look.

Don't expect a really informed look though, I never followed those markets fundamentals.

-------------


Just gave a quick look at Dyspro, that was a good one to play. OFC it got its nice head and shoulders the last year for people to make a ton of. On July 14th it had a big breakout to play as well, you could sell @18.5k and buy back @16k for 2.5k profit p.u.

If you draw a trend line from bottom of July 30 to Aug 18 you could see it's breaking down to a lower level @Aug 22. Next days will tell if it's a temporary break out or if such trend line became the new resistance (as you well know, support turns into resistance when violated). In that case, a further slope down is possible and with accelerated speed.

I can't see in the future but I think the renewed demand off the new gaming season could turn the trend up or horizontal. If this dip happened 1 month ago, the excess of supply shown at Aug 21 and then at Aug 29 would have probably lead to a replica of the huge dip @ around Jun 8.

Caleb Ayrania
Gallente
TarNec
Posted - 2010.08.30 09:31:00 - [45]
 

I was wondering if you would make a comment and analysis of the look of market graph from a "type" market perspective..

In my assesment there are currently 2 types dominating eve. Unstabile sellers market and unstabile buyers markets. The "normal" balanced and smooth reacting optimized and equilibrium markets from real life is not very represented in EVE.

You pointed out the flat areas of the prices in your example above. The 3000 isk area. This in my humble opinion is a clear price floor from the buyers market. Its buyorders. Thus the floor is representing the flat area of a low number of players, maybe just one buyer. Thus it is a proof of to few active competitors in that item group. If there were more buyers the "floor" would be rugged and not flat. OFC there could be an "agreement" of sorts and the "floor" would be kind of plane/horizontal. However this is rarely the case.

The reverse is also true when you see the flatness on the top of the graph that is a low number of sellers in the market. Usually this is rarer because selling is more "safe" then buying, so most traders in EVE are operating on a sellers/retailers model, and less on a speculative buyers model.

A balanced and more smooth developing graph is what I have been voting for with the request for more buy orders for ages. That is exactly to grant players that are in the buyer model to be less limited by this feature. Some might still think my argument is crazy, and that it would change very little in the game, but your analysis shows rather well exactly what is wrong with the current game mechanics, and why some better solution should be considered.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 10:06:00 - [46]
 

Edited by: Vaerah Vahrokha on 30/08/2010 10:12:16
Quote:

In my assesment there are currently 2 types dominating eve. Unstabile sellers market and unstabile buyers markets. The "normal" balanced and smooth reacting optimized and equilibrium markets from real life is not very represented in EVE.



There's no "normal" market. When you talk about a balanced and smooth reacting market you got it completely at the opposite at what it should do.

A flat market is a dead market. August has been HORRIBLE (like most Augusts) and loss bringer for most RL market players exactly because it was flat and "balanced".

An healthy market is one sailing upwards or downwards, with "ripples" caused by the various people contracting on price.
A dead market is a flat market. An inflated market with soon-to-burst speculation bubble is the head and shoulders examples I plenty posted in this thread.

A bubble market is not good (except for the speculators of course!) but still plenty better than a flat market.

Look at how good is doing to the world economy to have a flat market between USA and Europe. It's stagnation and stillness.


Second, the hard floors are not "low number of players". It's called support exactly because tons of orders sit there (usually at a BRN or big round number) not because they are few. If they were few, price would break thru the support with ease.

Third, the hard ceiling is not "low number of players" but the opposite. There are sell orders enough to make an impenetrable upward barrier to price.


Quote:

A balanced and more smooth developing graph is what I have been voting for with the request for more buy orders for ages. That is exactly to grant players that are in the buyer model to be less limited by this feature. Some might still think my argument is crazy



This would be the equivalent of an heavily "Europe style" externally over-compensated and sick market and it would cause unsurpassable damage to EvE's economy.
This will just not happen, EvE's model is centered around hyper-capitalism with little to no rules. Supply and demand interact freely, without any "uptick" rules, no "maximum % daily change" rules nor anything else. Nor some subsidy to keep alive truly dead whole categories.

EvE graphs are magnificent, I'd give both of my nuts to have such nice and clear markets in RL, EvE markets look like some decade's ago RL markets.

You have all of the best intentions, but you are asking for something very, very bad.

Caleb Ayrania
Gallente
TarNec
Posted - 2010.08.30 10:45:00 - [47]
 

Are you seriously claiming that a "perfect" horizontal line is more than one player?

Sure there might be a few rare examples in "matching" prices in locations of huge volumes, but everywhere else a flat line means one or very few players orders.

This is the same on floor and ceiling of your graph.

The markets that are shifting and moving "naturally" are where there are cometition. This is clearly shown by no planed floors or ceilings.

The starbase charters are a good examples. There are very few buyers of these generally. This is exactly why you see such a nice clean and smooth floor.. That is when the sellers reach the "last" backordering buyer. In many items these are way worse and your floor/ basement dvelling buyer is only offering a griefer price. This being usually something that will bring him or her several hundred percent if sold at a more volume rich market, like a hub.

I am fine with you saying that more orders will reduced and nerf these nice monopolistic benefits, but at least admit how it works..

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 12:36:00 - [48]
 

Edited by: Vaerah Vahrokha on 30/08/2010 12:39:50
Quote:

Are you seriously claiming that a "perfect" horizontal line is more than one player?

Sure there might be a few rare examples in "matching" prices in locations of huge volumes, but everywhere else a flat line means one or very few players orders.



It's neither me nor you to be able and dictate how and why pivot lines form.
We are passive spectators before Market. You just happen to be in denial (which is a natural reaction and it costs A LOT of losses to understand the pure neutrality of price action) while I just watch what happens.

These are the most simple kinds of pivot / trend lines (there are diagonal trends, channels... lots of stuff I won't cover in EvE, not now at least).
They work on rules understood decades if not centuries ago, we cannot do a thing.

They work like this: when price tests and tests again and again against a certain price (often an obvious round number aka BRN) across a time span (some months in our case), a pivot line may be drawn joining all of the points.

That's it. Also, another of the zillion properties of trend lines (or pivot lines) is: the more they are touched the more they become significant for the future.
Usually an average pivot line has 3-5 points touching it, in our case there are a dozen and they span 3 months just in this graph. How probable is that the same guy is holding recurring prices for 3 months?
What if I am ready to bet that in 1 year they will still be valid pivot lines?

It's not something me or you can decide, like or dislike. It's traditional market rules at work. Rules that derive from mankind psychology and behavior observed with a stockastic eye.

You can find pivot lines in every market on Earth (and beyond, like in EvE), even in huge turnover products, even if you KILLED every player who setup a price at a pivot line. There will be just another who likes to put stuff at 3k isk and not at a random other number nearby and he'll do it.

P.S. pivot lines <> trend lines even if I am referring to both with loose terms. Trend lines == pivot lines in case of oscillating markets like in the example.


Quote:

I am fine with you saying that more orders will reduced and nerf these nice monopolistic benefits, but at least admit how it works..



There's no monopoly over months and months. I had myself my turn ad monopolizing that market... for a while.

What you refer to is known as wholesale supply and / or market makers. You can easily find it in futures, on Forex, on stocks... everywhere.
The smaller players are retail consumers or traders and they must abide to the market maker or lose big time.

It's the equivalent of having the huge blob alliance of 1000 going against the group of 10. Is it unfair? Who knows. It happens. No rule you will do can change that.

They perform an important function: liquidity providers. Take away liquidity and a Jita market becomes like some forgotten Solitude system market.
The small players ride their liquidity and use it to perform their stuff.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 13:59:00 - [49]
 

(4k characters per post limits suck)

For those who want an in depth, easy to understand explanation about pivot lines you may download this free PDF document:

Linkage

Expecially relevant are:

Pages 4-6
Page 10 first paragraph
Pages 12-17


Manivald Kostaja
Posted - 2010.08.30 15:07:00 - [50]
 

DO these pattern help to make more profit or at least understanding the market in eve at all? Will they still work without understanding the market driving forces or is this stuff just some financial mumbo jumbo?

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 15:28:00 - [51]
 

Originally by: Manivald Kostaja
DO these pattern help to make more profit or at least understanding the market in eve at all? Will they still work without understanding the market driving forces or is this stuff just some financial mumbo jumbo?


The publicly stated aim of this experiment was to find out ties between how RL and EvE markets work and if the same techniques could be used at studying both.

Said that, if you scroll back and look at the pictures and text, you'll find a quite meausurable amount of concrete examples at how to look at EvE charts to make profit.
Again, I am not sure how you missed it, but rightly above these last posts there's an example at how hundreds of millions could be made and how.

Finally: I don't minimally expect for even 10% of the MD readers to (want to) understand what I am posting. There are about 1600 or more views to the pictures (the host site has counters) which to me it means someone has interest into this analysis.

Consider it like some document being offered for free. You may trash it, look at it and trash it or study it. It's your very choice, like everything in EvE.

Manivald Kostaja
Posted - 2010.08.30 16:15:00 - [52]
 

Well ok then. Did I notice some bitterness in your tone?

I have few questions:

Why does the head and shoulders patter happen? Why did those nitrogen isotpes perform that pattern instead of some other?

Quote:

Finally, prices tend to clump around mathematical points of interests. Some of the most used are known as Fibonacci Retracements.



Why? And what determines the location of those points?

Why do W pattern spread fear? It indicates something bad obviously but what happens during the pattern?






Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 17:01:00 - [53]
 

@Akita T: I have looked at Dyspro harder. If someone has iron hardened balls and a good wallet, it's possible to play the current dip and try to grab about 1k to 1.8k per unit profit by 1-4 days.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 17:52:00 - [54]
 

Quote:

Well ok then. Did I notice some bitterness in your tone?



Yes, it's due both to my lack of ability to write in good English and because of a personality defect of mine. Please excuse me, I don't mean to be nasty.


Quote:

I have few questions:

Why does the head and shoulders patter happen? Why did those nitrogen isotpes perform that pattern instead of some other?



Head and shoulders are one of many patterns that may happen. Now, why this pattern and not i.e. a "double top" or "triple top" was chosen by the players in Nitrogen's market it's not something we can know.
Btu a Technical Analyst does not care (and CANNOT care) about the causes. He looks at patterns whatever their cause and can match them with hundreds of years of past heads and shoulders happening in any market and make an educated guess at what will come after.

Anyway an head and shoulders borns because of the following:

1) Something substantial happens (i.e. a new patch, a big event, Christmas vacations where demand spikes hugely (this specific case)).
2) Suddenly offer is found to be vastly insufficient, therefore supplies thin out and price skyrockets.
3) Speculators see the opportunity and add to the effect by buying themselves.
4) The super-buy frenzy makes the price climb like an arm until the items become so expensive and supply increased its production power enough that the price reaches a temporary hard ceiling, the left shoulder.
5) Some start selling, they think a price crash is next. This causes a dip (the descending part of a fully developed shoulder)
6) But demand is still strong and the slightly cheaper price attracts "noobs" (the big players are leaving this market) who start a new buying frenzy. Price climbs again by like 20% or more, forming half of the head.
7) Once at the top, those noobs suddenly realize no one is buying any more. Terror ensues. The classic short end of the stick is what they have in their hands and it burns!
8) Massive selling frenzy starts. The price dives down madly, often quicker than the time it took to climb up.
9) After a certain drop, that I'd take pages to explain, the price gets down to about the same height of the left shoulder plus the former trend slope (which could be flat).
10) After this drop, people start buying again. *Speculators* and not real demand will hold up price and form the right shoulder. There's no real volume sustaining it nor real demand. Just another bubble.
11) Once again, someone starts dumping more stuff and it's clear the situation cannot hold any longer. Everyone and their mother start dumping everything they got in order to recoup part of the losses.
12) Price crashes down to the base of the pattern. A new cycle starts again. The smart players sold HIGH at or above the left shoulder and bought CHEAP what the desperate noobs dumped in the descent.

Quote:

Quote:
--------------------------------------------------------------------------------

Finally, prices tend to clump around mathematical points of interests. Some of the most used are known as Fibonacci Retracements.

--------------------------------------------------------------------------------

Why? And what determines the location of those points?



The matter is long, I suggest you go and have a look at Fibonacci numbers on Wikipedia or any financial site. They are special numbers that recur everywhere in nature, in men's artifacts and in men's mass psychology which in turn determines prices.
Therefore people will always look for obvious pivot lines first, but also look if price stands on number that is a multiple of a Fibonacci number.
At a certain point, people are so accustomed at finding stuff at Fibonacci numbers that they make it a self-fulfilling prophecy by placing their orders at Fibonacci numbers even if there weren't any before.

To be continued...

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 17:57:00 - [55]
 

Quote:

Why do W pattern spread fear? It indicates something bad obviously but what happens during the pattern?



W is a bottom pattern, i.e. when prices crashes hard.
A W pattern is usually found at the base of a crashed head and shoulder.
Price drops like a stone to the bottom of the first "pit" of the "W" then slowly and painfully rises to its central tip.

Now, what the stupid politics hope and hype for that the W central tip magically becomes a steady climb.
This very hope is what pumps optimism rising economies / prices / markets / currencies up to the W central tip.
But that's just void hope. Soon economists and generally people with more clue than politics (who want to look good to those voting them) start showing report after report about the crysis not being over. At all.
This creates a reflux of desperation pushing economies (worldwide included) / prices / markets / currencies DOWn in the second pit of the W, which is usually deeper than the first pit.

Only once the deepest of the low has been reached, millions of workers were fired, companies collapsed and all the speculation bubbles burst, only then the whole game starts climbing again. Slow at first, but then the now cheap money / resources not aggravated by speculation start self fueling the economy / market / currency / mass men psychologic optimism rebirth.
The climbing is in the form of the rightmost part of the "W".

After the W is climbed we may look for further slow and healthy improvement, for an explosive growth forming a new heads and shoulders or for a peak and new black period in a new and deeper and DEEPER W.

No one can say if our world is headed up or even worse down after our current W.
A technical analyst won't consider that, but will for sure make money in both cases.

Scott McClellan
Forum Posters Anonymous
Posted - 2010.08.30 19:23:00 - [56]
 

Isn't the W pattern just a wider view of the "dead cat bounce" pattern. I've never heard the "W pattern" notion before but the two seem to be much the same thing.


Originally by: Manivald Kostaja

Why? And what determines the location of those points?

Why do W pattern spread fear? It indicates something bad obviously but what happens during the pattern?



1. Lots of goods hit the market in a big sell or price war, everyone tries to compete so they can dump their goods before they devalue.

2. Smart investors capitalize on this and start grabbing cheap goods, other investors climb onboard, leading to a temporary price swell.

3. The "smart ones" dump their stock almost immediately, many others are left holding the bag and want to liquidate but are forced to compete with that many more goods on the market.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 19:38:00 - [57]
 

Edited by: Vaerah Vahrokha on 02/09/2010 07:12:59
The following is for Akita T: Technetium


This graphic is very interesting:


Picture linkage


As we can see, another (how boring!) speculation bubble caused head and shoulders is forming up.
It will eventually blow up, as long as nothing changes in the supply / demand rate.

The price is describing the first half of the pattern as of now but there are some ambiguities.
It's currently impossible to determine whether it will blow at 55k or at 55-60k

Arguments in favor of it blowing up at 55k:

1) Two shoulders made, the second is small enough to look like it's the last before the blow. Almost no head and shoulders manage to get 3 or 4 shoulders except huge companies stock.
2) 55k price is a pivot line, a resistance (price tested it thrice) and also a BRN (big round number) with psychological meaning.
3) The last available price is a typical bearish reversal pattern called "hanging man" (check any candlestick patterns guide)
4) The slope is going parabolic (check the yellow dots not the red SMA), one of the signs price is next to crush over itself after a last desperate attempt to rise.


Arguments in favor of it blowing up at above 55k:

1) The middle region slope is not _that_ steep as it should be.
2) The hanging man is nearly at the resistance. Any event could make the price break out over 55k which would become the new support for a new rally up, probably a short lived one.
3) The hanging man requires 1-2 further price bars / candles as confirmation, which are not available yet. In case of 2-3 next yellow dots whose close is below it, it will be confirmed.
4) Volume is too high. Unless it's 3-4 huge players warring against each other, there's still demand, it's not just speculation. This volume could cause a break out towards 55k+

Image changed to URL. Zymurgist

adriaans
Amarr
Ankaa.
Nair Al-Zaurak
Posted - 2010.08.30 21:12:00 - [58]
 

I'm enjoying reading this actually... Shocked

I've even tested it on 2 products both which seem to be going good, so seems I've learned something useful Very Happy


Akita T
Caldari Navy Volunteer Task Force
Posted - 2010.08.30 21:34:00 - [59]
 

Edited by: Akita T on 30/08/2010 21:34:43


Interesting looking analysis on Technetium, to say the least, but with a tricky caveat - you only analyzed the short-term graph, and as such, I somewhat expect for you to have only reached a short-term set of possible conclusions (which might indeed be quite accurate, for the relative near future).

As for the actual possible short-term scenarios, my guess is that it will wiggle a bit around 55k, drop a little, then go towards 60k (which is a "bigger, rounder" number compared to 55k).
Also, as you noticed, transaction volume is fairly steady, and if there's any manipulation attempt, it's smaller scale, and on the back of a natural upwards trend.

I wonder what would happen if you took the whole one-year graph (maybe cut out the first 3 months or so) and analyzed that, just how different the longer-term conclusions will be.
Also, what would happen if you took the apparent trend line from last year until today and assumed it would continue in a roughly similar fashion for another year or so, how would that change your shorter-term interpretation of the recent graph ?

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.08.30 22:38:00 - [60]
 

Originally by: Akita T
Edited by: Akita T on 30/08/2010 21:34:43


Interesting looking analysis on Technetium, to say the least, but with a tricky caveat - you only analyzed the short-term graph, and as such, I somewhat expect for you to have only reached a short-term set of possible conclusions (which might indeed be quite accurate, for the relative near future).

As for the actual possible short-term scenarios, my guess is that it will wiggle a bit around 55k, drop a little, then go towards 60k (which is a "bigger, rounder" number compared to 55k).
Also, as you noticed, transaction volume is fairly steady, and if there's any manipulation attempt, it's smaller scale, and on the back of a natural upwards trend.

I wonder what would happen if you took the whole one-year graph (maybe cut out the first 3 months or so) and analyzed that, just how different the longer-term conclusions will be.
Also, what would happen if you took the apparent trend line from last year until today and assumed it would continue in a roughly similar fashion for another year or so, how would that change your shorter-term interpretation of the recent graph ?



I did not do long term because I am relatively new to the game so I don't know Technetium story before the yearly graph. I see it used to be almost free (dupe exploit iirc?), then an huge peak, and now problems begin.

Problems begin because that spike screams Fibonacci study and ofc EvE does not have it. Anyway you will notice how its peak is guess what? BRN 60k.

There's also a retracement to 40k which matches quite well with the base of the head and shoulders. Strongest support seems at 30k, which could be Technetium fair value once you remove speculation.

And no, without Fibo retracements I can't see where there would be a confluence of price after the bubble pops so I am sorry I cannot tell the long term trend. It appears to be 30-40k pu but that's guesstimating, not an analysis.


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