A simple price action approach

[mdl060374]

Quote from noaveragingdown:

The failure of the parallel line may suggest a potential change of trend and the easiest way to determine this is when such line begins to act as support in downtrends and resistance in uptrends.

NAD

Exactly. I look at at this as a point of inflection, and usually a chance for volatility (in one direction or another). SO I dont create a bias based on the formation itself, but more where it is in relation to longer term S/R, etc...

Actually I have found failures to give better follow through than continuations, but that is just me....

 

[wrbtrader]

Quote from themadman:

Not to be mean but could you please start your own thread and leave your method out of this thread ?

Anything moving average related is far and beyond inferior to some of the content being posted in this thread and all you'll do is degrade the quality of the discussion.

THE Madman

The problem is that some traders consider indicators like moving averages as a 'simple price action' trading approach...I'm not one of them. Yet, except for charts by the OP and a few others that gives the impression their 'simple price action' method was not using indicators...there's a lot of charts in this thread by others that show indicators. That by itself attracts others that use indicators in their quest to look for a coded profitable system.

Yet, unfortunately the OP is no longer involved in this thread...maybe the thread can be retitled as "Simple Price Action Method with One Indicator".

Getting back on topic, I have a question...can anybody explain why rising/declining trendlines or channels are more popular with traders than horizontal trendlines or channels considering the markets do not trend most of the time ???

Mark

 

[tomahawk]

Quote from tomahawk:

Possible scenario for delayed visit to 50-51 area ... (same chart as last one, widened out a few days).

So far this seems to be the scenario that is playing out.

New chart ...

 

[JoshDance]

Quote from wrbtrader:

can anybody explain why rising/declining trendlines or channels are more popular with traders than horizontal trendlines or channels considering the markets do not trend most of the time ???

Mark

Depends on what time frame you're talking about trending. "Markets only trend 20% of the time" is oft-quoted, rarely supported with data. A range on one time scale is a trend on another. Price moves in a continuous flow, and is always trending in some direction.

 

[cooolweb]

Quote from NoDoji:


I challenge anyone here to provide trading setups more effective at dumping money into your trading account than price action trading off S/R levels.

There are much better ways to trade price.. market psychology, news, tests, and of course high and lows (your s/r but box Channels)

I'd say the highs and lows are quite insignificant in the whole game, required, but not Significant because of too many false entries. Whats significant is synergy.

 

[JoshDance]

Quote from wrbtrader:

Getting back on topic, I have a question...can anybody explain why rising/declining trendlines or channels are more popular with traders than horizontal trendlines or channels considering the markets do not trend most of the time ???

Mark

Here is a CL chart from today. It's only one example so I'm not trying to prove anything by this one example, and it's only one market. In this chart though, do you see the horizontals or the diagonals being respected more? Draw the lines, and draw your own conclusions and post your results if you like.

 

[wrbtrader]

Quote from JoshDance:

Depends on what time frame you're talking about trending. "Markets only trend 20% of the time" is oft-quoted, rarely supported with data. A range on one time scale is a trend on another. Price moves in a continuous flow, and is always trending in some direction.

It doesn't matter if its 20%, 30% or 38%...my stats involved Emini futures, Eurex futures (index), EuroFX 6E futures and Treasury futures. Most of the time (less than 40%) they do not trend. Timeframe was on 2min, 3min, 5min, 15min, 60min and Daily charts. In addition, I distinguished my categories via trend, strong directional and micro trends although I won't go into any details of such in this thread due to the fact we all have our own definition of a trend or sub-categories.

Regardless, horizontal trendlines are less popular as a technical phrase. Is it possible that horizontal trendlines should be refer to as horizontal lines (not trendlines) considering its obviously not in a trend ???

I ask because I see a lot of forum discussions where horizontal lines are refer to as pivots, support/resistance whereas rising/declining lines usually aren't refer to as pivots or s/r except for by a few. Instead, rising/declining lines are refer to as trendlines or channels.

Therefore, wouldn't horizontal lines be properly refer to as channels instead of trendlines ???

My question is more semantics and not how often the market trends or does not trend. I'm just trying to use the correct technical phrase after a debate with others that horizontal lines they believe should be refer to also as trendlines.

Mark

 

[IronFist]

Quote from themadman:

Not to be mean but could you please start your own thread and leave your method out of this thread ?

Anything moving average related is far and beyond inferior to some of the content being posted in this thread and all you'll do is degrade the quality of the discussion.

THE Madman

Lol, sure I don't care. I just posted it here cuz I got paged to this thread.

Just for the record, I wasn't supporting the method. while it was profitable during the time I forward tested it, I still believe MA's, and all indicators, are worthless. If people can make them work, then good for them, but I don't know anyone who can.

I was just giving an example of a 100% specific system with no ambiguity or room for interpretation, since that's what was requested a few posts back.

 

[JoshDance]

Quote from wrbtrader:

It doesn't matter if its 20%, 30% or 38%...my stats involved Emini futures, Eurex futures (index), EuroFX 6E futures and Treasury futures. Most of the time (less than 40%) they do not trend. Timeframe was on 2min, 3min, 5min, 15min, 60min and Daily charts. In addition, I distinguished my categories via trend, strong directional and micro trends although I won't go into any details of such in this thread due to the fact we all have our own definition of a trend or sub-categories.

Regardless, horizontal trendlines are less popular. Is it possible that horizontal trendlines should be refer to as horizontal lines (not trendlines) considering its obviously not in a trend ???

I ask because I see a lot of forum discussions where horizontal lines are refer to as pivots, support/resistance whereas rising/declining lines usually aren't refer to as pivots or s/r except for by a few.

Therefore, wouldn't horizontal lines be properly refer to as channels instead of trendlines ???

My question is more semantics and not how often the market trends or does not trend.

Mark

I see what you mean Mark -- I won't go into my views on trending and price movement then since that's not your intention.

It's funny you mention the terminology, because I almost said in my last post something to the effect of, "horizontal trendline" may a bit confusing. When we think of trend, we think of trending up or down, though the amount of up or down can be different. However, if we define "trend" as a general direction, then I guess it would not be incorrect to say that the trend is essentially flat with horizontal "trend lines."

I more often refer to a "horizontal trendline" as a "level" or an "area of support" or "demand zone" or something to that effect. I love using levels, but I have found that price moves in a diagonally trending fashion, even when price is in a larger range, where the bounds of the range may be quite horizontal.

Generally speaking, I think possibly diagonal lines are not usually referred to as support or resistance lines because an area where buyers support price often requires more than one test of the area, so that buyers can prove their demand for that price. Just one touch of a trendline may not be as strong and thus may be subject to fail more easily. When I see a "base" build up, then I am much more confident in the ability for that level to hold as support. This is just my opinion of course, take it for what it's worth.

 

[bigsnack]

Here is how I see this particular topic:

I would say that it's more about horizontal channels over diagonal channels, but for the weak minded (like myself), some sort of confirmation is needed that the horizontal support / resistance is going to hold. That confirmation comes in the form of a failure of the current diagonal channel that brought us to that support / resistance. So the order of operations would be:

1. ID your horizontal support resistance
2. Wait for price to get there
3. Wait for a failure of the trend that brought us to that level.
4. Trade the first pullback after that failure.

I'm sure a valid case can be made for just trading the support / resistance by itself, but I just haven't done the homework to have a case for knowing which support / resistance will hold right away. The "confirmation" helps me see that someone still cares about that level.