Determining Trend

dbphoenix

dbphoenix

I noticed after looking over some of the threads from yesterday that quite a few people seem to be having trouble determining trend. Therefore, they end up shorting when they should be long and vice-versa.

It is important to know how to determine (1) whether or not there is a trend, (2) if so, the direction of the trend, (3) how to determine a change of trend, (4) how to determine a trend reversal.

I won't go into any detail here as there may be no interest in this topic. But the attached chart may be of some help.

--Db
 

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Yes, ladies and gentlemen, the trend is still down. I understand that Thursday and Friday have given so much hope to so many; but the intermediate and the long term trends are still down.

Rallies like the one we're experiencing now are typical of bear markets. When this short term rally runs its course the bears will jump all over it.

The rule of thumb is after the market rallies, and begins to falter iniiate shorts.
 
However, the IT and LT trends are generally irrelevant to the intraday trend, unless there's strong support or resistance somewhere (e.g., the resistance found at the NQ gap). If one is trading intraday and focusing on a timeframe well outside the intraday, he can easily wind up on the wrong side of the trade. Which may be why so many people tried to short the rallies the past two days.

If price is making higher highs and higher lows, one is in an uptrend. If price is making lower highs and lower lows, one is in a downtrend. If price is making lower highs and higher lows, one is trendless, i.e., chopping. And if one is trading intraday, those particular highs and lows are all that matter.

--Db
 
the long term trend is still down but there is such a thing as a tradeable bounce, and thats what this is IMHO. If you don't want to sit on your hands for the next few weeks you should be lookiing for something worth buying.
 
DB,

What is the horizontal line drawn on your opening post from 7:50 to 8:45? it does not seem to be connecting anything...what is the rule? perhaps this is just a resolution issue and it is connecting something.

Michael B.
 
Quote from ElectricSavant:

DB,

What is the horizontal line drawn on your opening post from 7:50 to 8:45? it does not seem to be connecting anything...what is the rule? perhaps this is just a resolution issue and it is connecting something.

Michael B.
More...

No rule. It's the opening high. Each reaction high presents some degree of resistance, but many people set their stops just above the opening high (or just below the opening low). Therefore, an advance through the opening high often propels price to the point where one can at least get to breakeven (note also that price came back to that line to test it before advancing for the rest of the day).

--Db
 
The $spx is still in a downtrend. Now we've come to the top portion of the range and we will have to see what happens. Resistance should come in at Friday's highs, but if the markets trade and close higher than Friday's highs then we'll be looking at a change in the short term trend.
 

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The definition and trading of a trends depends entirely on your time horizon.

The reason I am daytrading is because of the absence of long-term trends. I would even say that it all boils down to finding and trading trends - they may be seconds, hours or months, but in the end you can only make money in a trend.
 
DB..

The opening high was from 6:30...what is that other horizontal line drawn between the times of 7:50 to 8:45?

Michael








DB,

What is the horizontal line drawn on your opening post from 7:50 to 8:45? it does not seem to be connecting anything...what is the rule? perhaps this is just a resolution issue and it is connecting something.

Michael B.
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No rule. It's the opening high. Each reaction high presents some degree of resistance, but many people set their stops just above the opening high (or just below the opening low). Therefore, an advance through the opening high often propels price to the point where one can at least get to breakeven (note also that price came back to that line to test it before advancing for the rest of the day).

--Db
 
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