Kangaroo Tails
Recognize these? One of the few original concepts in ‘Naked Trading’ isn’t so original and they didn’t even give Dr. Elder any credit! Although if I recall correctly my test of Kangaroo Tails didn’t turn out too well. Maybe he has a better take on it?
Recognize these? One of the few original concepts in ‘Naked Trading’ isn’t so original and they didn’t even give Dr. Elder any credit! Although if I recall correctly my test of Kangaroo Tails didn’t turn out too well. Maybe he has a better take on it?
- A kangaroo tail consists of a single, very tall bar, flanked by two regular bars, that protrudes from a tight weave of prices. Upward-pointing kangaroo tails flash sell signals at market tops, while downward-pointing kangaroo tails occur at market bottoms
- They leap at you from the charts and are easy to recognize. (true, but they are also surpassingly rare, at least when I checked)
- Oh go on, let’s have another check. Especially since that’s the end of the chapter. Then we’ll move on to ‘Computerized Technical Analysis’
- EURUSD - using the loosest definition (ignoring the ‘tight weave’ requirement for example) I found 12 bars that might be kangaroo tails in 1000 bars of history. About 10 were successful) Good win rate! But hard to make a career on such a rare signal
- Maybe stocks work better? I checked AAPL and found 3 instances in 1000 bars. All probably would have given you at least one day’s worth of profit. Notice that Elder doesn’t tell us how long to hold the kangaroo tail trades.
- TSLA? I found 6 instances in 1000 bars, of which only about 2 would have given you more than a day’s profitable opportunity.
So either this pattern is too well known now or it’s a typical TA effort.
Next: 'Computerized' Technical Analysis!!! Attached Image
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