Technical analysis has a new tool?

Posted on 10 March 2010

Reflecting on yesterday’s post about the rise of data visualization technologies, got to thinking about how technical analysis might respond to these developments. After all, if anyone is studying patterns in the financial markets, it’s those that use technical analysis.

I’ll admit to dabbling in the black arts on occasion (spent enough time on trading desks to know that it has it’s place in the world) but would not consider myself more than a brown belt at best. Be that as it may, thought I’d try and explore how Google Motion Charts might be useful in bringing together different threads. For example, consider the following chart that maps the worlds largest miner’s share price against trends in traded volume:

I know it’s a little crowded – heck, Rorschach would have a field day with this. Notwithstanding, the aim is to explore whether the tool has merit – and in that spirit, I’d suggest the short answer is yes, but…

As for BHP, is the current low volume rally signalling a non-confirmation of current prices? Or, as was the case in previous rallies, are we due a more rapid push higher to complete the current move?

And for those that want to torment the real thing – following is the motion chart. I know some of you are time challenged so to make it abundantly clear “Click the play button at the bottom left of the chart“. (I am actively seeking ideas on how we can further develop this tool – so any suggestions would be more than welcome.)

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