STA Blog

An economist’s lexicon: Alphabet soup to describe economic recovery

Nouriel Roubini

Jul 21
What the shape of the recovery? A V-shaped recovery with rapid return to strong growth? An anemic sub-par recovery that is U-shaped? A double-dip W recession as a second wave emerges? An L-shaped depression in two years? See my broadcast today at @ 10am
V-shaped rapid recovery
Anemic U-shaped recovery
Double-dip W recession
Future L-shape depression
1,029 votes · Final results

Above, a Tweet last week from Nouriel Roubini, one of the few economists I used to listen to; now he too is jumping on this silly bandwagon. As the Queen famously asked of the 2008 financial crisis (at the London School of Economics), ‘’why did no one see it coming?’’. What hope is there then of this lot spotting not only when the corner has turned, but how much momentum there’ll be in the next move?

These are the situations in which technical analysts excel.

First, they can see when a trend is mature and when it’s out of control. This is done via oscillators like Relative Strength Index, divergence and breadth od movement. This then prompts them to be on alert for special reversal chart patterns.

The best-known of these is probably the head and shoulders, which gives you one or more downside objectives; it’s inverse is just as applicable today. More interesting perhaps is the island reversal, where a market is already in free-fall, and on opening for trading the following day has so many sellers trying to dump the asset, that there are no trades between closing and opening prices. It continues on down for a day or seven, then re-thinks as suddenly a herd of buyers arrive, causing it to gap higher on opening. In a way this is a more dramatic version of the ‘head’. Fibonacci retracement measurements give you a good idea of how far things might go in the opposite direction.

Sometimes turns can be timed to the day. I surprised myself when, as gilt futures pit trader, I told my co-workers in the aisle of booths we had, that the bottom to gilt prices was ‘in’ (they had been slipping and sliding for years). It was a hammer on the daily chart, which then translated into a powerful bullish engulfing candle on the weekly and monthly charts. At market tops, this idea, and feel for the market, is known as a shooting star.

Foresight, timing plus targets gives you a huge edge. Use it!

Posted in Finance, Markets, STA news, Technical Analysis, Technical Analysis Courses, Trading, Trending
Tags: , ,

The views and opinions expressed on the STA’s blog do not necessarily represent those of the Society of Technical Analysts (the “STA”), or of any officer, director or member of the STA. The STA makes no representations as to the accuracy, completeness, or reliability of any information on the blog or found by following any link on blog, and none of the STA, STA Administrative Services or any current or past executive board members are liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. None of the information on the STA’s blog constitutes investment advice.

Not ready to join? Stay Updated

If you want to learn more about membership and being part of the STA, sign up for our updates so we can keep in touch.


Monthly Meetings

The STA holds 11 monthly meetings in the City of London, including a summer and Christmas party where canapés and refreshments are served.


Latest Videos

As a service to our members, many of whom are unable to attend all our monthly meetings, we have been making videos of meeting presentations for several years.


STA Libraries

The STA has an extensive library of classic technical analysis texts. There are over 1000 books in the collection. It is held at the Barbican Library with a smaller...


Market Technician

Latest research and news

More Info

World Class Tutors

STA Course Lecturers

More Info


Be part of something special

More Info


View latest posts

More Info