Defining The Bull And The Bear by Chuck Dukas
“Bullish” and “bearish” are terms frequently used
to describe the price behavior of financial instruments.
What exactly do they mean?
All price action can be categorized into
six phases of trends that describe the
cycle of markets. You can apply this insight to any financial instrument on any time frame.
Although the principles will be illustrated with daily
bars, you can utilize the concepts on intraday data, daily, weekly, or any time frames
on commodities, stocks, or indexes
or in fact any financial instrument
subject to market forces.
To be able to precisely categorize
all price activity into the six phases enhances your ability to assess the quality of the price
structure of the instrument you are examining. You
can take this one step further by categorizing price
with specific moving averages enabling you to statistically
analyze price structure. In addition, this allows
you to compare the quality of different instruments
using specific criteria, enhance objectivity,
and reduce subjectivity. Finally, but perhaps most
important, it is a guide on how money can be deployed
in the markets; the core principles of trend
analysis can be used in constructing trading systems
or in adjusting capital exposure in an instrument
according to its phase.