A simple price action approach

[wrbtrader]

Quote from JoshDance:

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.

Your correct, it's only one trading day. Also, I've never tested Light Crude Oil CL futures for trends, micro trends and strong directional price movements. Yet, I do see trend, micro trends and strong directional movements and range on your chart...range is the lesser that the others.

Yet, you can post about 8 years worth of charts similar to what I typically have used in the past and if I have the time to go over each of your charts of CL futures...I can give you a more precise answer that would allow me to make a general statement about trends in CL futures.

Mark

 

[JoshDance]

Quote from IronFist:

I still believe MA's, and all indicators, are worthless.

In the context of a 100% mechanical, objective system that blindly buys and sells based on MAs, I agree. When human discretion can be allowed to give context to a particular moving average serving as support, then they can be quite useful. "When X crosses over Y, then buy..." is bound to fail, as are all mechanical systems over time.

 

[JoshDance]

Quote from wrbtrader:

Yet, you can post about 8 years worth of charts similar to what I typically have used in the past and if I have the time to go over each of your charts of CL futures...I can give you a more precise answer that would allow me to make a general statement about trends in CL futures.

Mark

lol, let's leave it as is

My point is only that diagonals work quite often, as do horizontal levels. I think discounting the significance of traders to respect either, in the appropriate context, would be a mistake.

 

[wrbtrader]

Quote from JoshDance:

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.

Thanks...

I agree. Also, I see a phrase you've now used that I will use for now on as in your explanation via the words diagonal lines in comparison to my phrase as 'rising/declining' line or trendlines.

Quote from JoshDance:

lol, let's leave it as is

My point is only that diagonals work quite often, as do horizontal levels. I think discounting the significance of traders to respect either, in the appropriate context, would be a mistake.

I understand.

Mark

 

[NoDoji]

Josh, I draw horizontal S/R lines a lot with CL because the levels are tested so reliably and I like to have a visual reminder of where they are while I'm in a trade. It's like those dotted outlines of letters the kids use when learning to write

 

[JoshDance]

Here are a couple of channels I traded today. Took the trade on the first chart and one of the ones on the second chart.

The first trade was pretty clear because it was a nice bull flag, we broke out, retested, and tested just below the pit open and came back to the little double top at .47, so I longed .48.



On the chart below, I connected the top two points after it formed and went down a bit, and the bottom blue line is the parallel. Notice how the green line held (drawn from earlier lows at 11am), and price failed to reach the bottom of the channel. Then after the low formed at 13:45 or so, I connected those two points and the parallel is the upper red line. The long wick at 13:55 indicated a probable move up to the upper channel line, which happened by 2:15.

Finally, when price reached the lower channel line 5 minutes before the close at 99.40, it was also a retest of the prior channel, and being near .50 and the daily mid, it was a good buy. Being this close to the end of the day I closed quite quickly for a small gain.



I am showing the second one to illustrate how I drew the channels as the day progressed, and how I see the new channels forming.

 

[themadman]

Quote from NoDoji:

Josh, I draw horizontal S/R lines a lot with CL because the levels are tested so reliably and I like to have a visual reminder of where they are while I'm in a trade. It's like those dotted outlines of letters the kids use when learning to write

Horizontal lines got some uses at the proper spots but the dynamic diagonals are far superior the comparison is not even close, the precision is not even close, the occurance is not even close.

Takes a few more years of price action to actually visualize it.

Less 20 EMA more lines

THE Madman

 

[Gabe2004]

I have traded USO which moves like CL/
1 CL contract = 2,500 Shares of USO so trading 100 shares of USO represents a 25 fold reduction in risk (and profit) relative to 1 CL contract. The only drawback is that one must have at least 25K in their account to day trade the USO.
I will start adding trendlines in the near future.

Gabe

 

[Gabe2004]

A higher resolution of the previous chart.

 

[athlonmank8]

Quote from jack hershey:

Were you to consider several aspects of monitoring and analysis, you could eliminate most all of the brickwalls you are facing re: knowledge and skills improvement.

They are as follows:

1. In a time based system there is one and only one P, V pattern. It shows the trend beginning and ends of trends and the fact that trends overlap.

2. It is required that day to day records be degapped to remove the non trading hours.

3. There are fewer than 10 rules you need to follow to never have losing trades.

Oh man. You really need to stop. You're getting out of hand