Similar to how you have defined ranges using a swing h/l of a single or group of bars, that range is also a channel on a faster timeframe.
Channels are useful to build envelopes that encapsulates the PV relationship. The envelope one uses is dependent upon the distinctions a trader has built in their mind.
That mental picture of the market then determines what a trader is able to perceive based upon their beliefs distilled from experiences.
The minimum price points one needs to build a range are two points, with the addition of time then that can get to 3 pts which then gives a vector or simply directionality in the current sentiment.
Time is not as supportive in viewing the market as events. The market moves can then be described as going through a sequence of events. These sequences build until they fail thereby describing sentiment changes.
For example, all price bar combinations can be reduced to 10 unique forms. Of those ten only two are associated with making money, the others are ‘waiting’ if not in the market or ‘holding’ if one is.
Let’s take a reference bar (n-1) and the current bar (n) makes a HL and a HH. The low of n-1 bar is pt1. The low of n bar is pt3. A line connecting these two points is the right trendline. A parallel line connected to the high between these two points is pt2.
Price oscillates between these two lines until is doesn’t. The moment price crosses the rtl, it’s a Breakout and the current trend has failed giving birth to a new channel. The moment price closes back within the established channel, then price exposed the event Failed Break Out - FBO.
In the above description most can see when TL are crossed but the part that most do not see is the mental picture of an archetypal trend. All trends fail, that is what gives rise to cyclic and periodic price fluctuations.
The moment a trend fails is the moment that ‘change’ is signaling, this moment is when price can no longer traverse the established boundaries formed by discretionary/mechanical placement of trendlines. This is known as an FTT - Failure to Traverse.
By applying the above, then ‘trends’ are ‘cantered’ ranges and R&S levels also have the same orientation.
