The Problem

So far in this series we have discussed the powerful insights we can get from the foundational concepts of technical analysis that help us understand trend, momentum, volume and volatility. We have argued that a disciplined checklist of tools can bring a greater peace of mind for the analyst and a weight of the evidence approach can bring confidence in a thesis. In this first chart, we have added all of the concepts that we have discussed this week to the price chart of BDX. Now we can really see the problem!

With only these indicators applied, we see how complicated it has become to make sense of the underlying price action. Where does the trend begin? Where are the areas of weakness, possible points of exhaustion? What does volume tell us, where are the periods of reduced volatility?

The Complete Picture

The core concept of GoNoGo Charts is to blend these foundational concepts and principles of technical analysis behind the scenes to give a complete understanding of price action without risking analysis paralysis. GoNoGo Trend color codes the price bar based on trend strength, giving an actionable visualization of price movements.

GoNoGo Oscillator blends several of the most robust momentum tools into one oscillator that allows for traditional momentum analysis. It is easy to see areas of overbought and oversold extremes, as well as look for momentum divergence. Volume is incorporated into the oscillator as it changes color based on volume relative to a historical average. Periods of reduced volatility are highlighted by the climbing amber grid of GoNoGo Squeeze. We have a complete understanding of the technical analysis of BDX with a chart that is easy to read.

Data Visualization

It can be said that data visualization is the democratization of data analysis. I have long believed that technicians are the data visualization experts of the financial world. With GoNoGo Charts, GoNoGo Icons help draw our eyes to the important information. This makes the information easier to absorb even for someone not used to looking at financial charts. In this last chart there are Trend Correction Icons (arrows) and Trend Continuation Icons (circles).

Trend Correction Icons appear when momentum has left an oversold or overbought extreme and moved back into neutral territory. This is a traditional way to read momentum indicators. In this chart, note the Go Trend Correction Icon (red arrow) at the latest high. This informs us that price may struggle to go higher in the short term due to waning momentum.

Trend Continuation Icons appear based on the interaction between trend and momentum. We learned of the importance of the zero line in a prior article, and Trend Continuation Icons highlight this. Note the Go Trend Correction Icons (green circles) throughout the trend. Each time the GoNoGo Oscillator bounces off the zero line we know that momentum is resurgent in the direction of the “Go” trend.

In this way, the analyst can gain invaluable insight into the complete technical picture and easily interpret the data in front of them.

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Shared content and posted charts are intended to be used for informational and educational purposes only. CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. CMT Association does not accept liability for any financial loss or damage our audience may incur.

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