House of If You Can Draw A Straight Line
- Thread starter dbphoenix
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Dbphoenix, I've been following along for the last year or so and up to now I have been hesitant to get involved or ask any questions, this is mainly due to the fact that most if not all of the questions I have come up with have been answered somewhere in one of the handful of straight line threads, the SLA-AMT PDF, the journals of those that are also following along or in the Wyckoff section over at TL.
I appreciate the effort that must go into answering all the questions you get and I apologise in advance if I ask the same old questions again.
Getting to the point.
Premarket range 4202-4213, open sees price breakout but quickly pulls back into the range, fails to make a deep retrace into the range before breaking to the upside creating a HH, again price drops back into the range but it is shallow and brief creating a HL. Other than a slight pull back this rejection breaks the previous high, this new HH only breaks 3 points higher before being stopped.
At this point would you or anyone else reading for that matter, consider the pre open low to this high as a possible range in the making with the MP being the Premarket high? Price drops off this high before making a failed attempt to go higher, whilst this is a possible entry, for now I am more interested in the behaviour.
Price drops off to the the PM high before mustering a rally which fails to make it the the possible extreme before putting in a failure (10:20 bar) and dropping back into PM range, a brief excursion out of the range is rejected and price quickly finds itself back at the PM low.
With price failing to find trades beyond the PM range lows and putting in a DB to boot would this be the time to consider the high as a range top and target?
It's a reasonably easy ride back the the highs but once it gets there, I run into a spot of bother, price churns for a stretch then drops off, it does not go far before it makes a quick return back to the top, it drops off again but creates a HL then breaks out and rallies to an area that might have been influenced by Fridays PA at lunchtime and after hours.
There is a second push higher and failure (12:35 bar) price drifts lower to range high to retest the breakout but the subsequent rally fails and price drops into the range, price tried to rally beyond 4222 and at one point dropped to the mean before rallying again, failed to get higher then dropping below the mean by an equidistant amount before putting in an HL (15:20 bar) and a move back to the top of the contracted range.
What I am asking is, at what point would you look to reassess the mean? and would you also take in the breakout to 4332 or can it be assumed that this could be an overbought condition?
With the observations that have been pointed out in a number of threads I would not have been surprised if price when it got to the lows pushed the breakout distance lower beyond the bottom expanding the range but respecting the mean.
Longer winded than I thought it would be and again sorry if I'm asking the same old questions.
Gamera.
I appreciate the effort that must go into answering all the questions you get and I apologise in advance if I ask the same old questions again.
Getting to the point.
Premarket range 4202-4213, open sees price breakout but quickly pulls back into the range, fails to make a deep retrace into the range before breaking to the upside creating a HH, again price drops back into the range but it is shallow and brief creating a HL. Other than a slight pull back this rejection breaks the previous high, this new HH only breaks 3 points higher before being stopped.
At this point would you or anyone else reading for that matter, consider the pre open low to this high as a possible range in the making with the MP being the Premarket high? Price drops off this high before making a failed attempt to go higher, whilst this is a possible entry, for now I am more interested in the behaviour.
Price drops off to the the PM high before mustering a rally which fails to make it the the possible extreme before putting in a failure (10:20 bar) and dropping back into PM range, a brief excursion out of the range is rejected and price quickly finds itself back at the PM low.
With price failing to find trades beyond the PM range lows and putting in a DB to boot would this be the time to consider the high as a range top and target?
It's a reasonably easy ride back the the highs but once it gets there, I run into a spot of bother, price churns for a stretch then drops off, it does not go far before it makes a quick return back to the top, it drops off again but creates a HL then breaks out and rallies to an area that might have been influenced by Fridays PA at lunchtime and after hours.
There is a second push higher and failure (12:35 bar) price drifts lower to range high to retest the breakout but the subsequent rally fails and price drops into the range, price tried to rally beyond 4222 and at one point dropped to the mean before rallying again, failed to get higher then dropping below the mean by an equidistant amount before putting in an HL (15:20 bar) and a move back to the top of the contracted range.
What I am asking is, at what point would you look to reassess the mean? and would you also take in the breakout to 4332 or can it be assumed that this could be an overbought condition?
With the observations that have been pointed out in a number of threads I would not have been surprised if price when it got to the lows pushed the breakout distance lower beyond the bottom expanding the range but respecting the mean.
Longer winded than I thought it would be and again sorry if I'm asking the same old questions.
Gamera.
I don't know what anyone else would do but I? No. The point of beginning with the weekly, the daily, and the hourly is to provide oneself with a compass. If one tosses all that aside simply because the opening bell has rung, he's in the same position as the man in the desert who drops his compass into quicksand.
You'll see that my first range was off the hourly, with an upper limit of 20. What matters more than whether price reaches it or exceeds it is how price behaves while it's approaching it and how it behaves around it, particularly if it does exceed it. Think of price as a junkyard dog and the upper limit of the range as a bitch in heat. Whether or not price can move above the upper limit of that hourly range (the narrower range is drawn only because it created itself so near the open, which often sends its own message) is not nearly as important as what it does then. Does it hold? Can it hold? That price falls back into the range tells you something. That price keeps trying to rise and keeps failing to do so -- at least to a trending extent -- tells you something. If one keeps raising the bar, he is in effect erasing all the tracks that price has left behind and leaving himself directionless. He could choose to ignore the whole AMT thing and trade the SLA alone, but he'd quickly be "stopped out" of both directions and be forced to stand aside anyway. Notice how the decline in price after the LH at 23 is so much easier and so much faster. Is this because the daily and hourly trends are down? Depends on whether or not one believes there's anything to AMT. Could a break above 13 or 20 signal a rally back to the upper limit of the weekly channel, or even a higher daily high? Sure. But if that were the case, the retracements wouldn't be so deep, there wouldn't be so many overlapping bars, and price wouldn't have to be pushing so hard in order to make so little headway.
Therefore, until I understand what price is telling me to do -- as opposed to its telling me what not to do -- I do nothing. The double top at 24 tells me something. The lower high printed after the next try up also tells me something. If I initiate a trade at either of these levels and neither works out, at least I've had a rationale for it other than "looks like it wants to go down". If I repeatedly apply this rationale and I'm repeatedly wrong, then I need to re-examine the rationale.
Since all of this occurs long before "1020", I assume you're talking about the LH (it helps when posting charts to use NY time; in fact it helps to use NY time whether one is posting charts or not).
The trade is the bottom of the range, particularly since it's a double bottom. It may choke at 13, which it does, and it may choke at 20, which it does. But all that is unknowable. If one takes the trade and exits at 13 for no other reason than 13 is/was the top of the PM range, then he's not paying attention. If he exits at 20 for no other reason than 20 is/was the top of the hourly range, then he's not paying attention. This is what trade management is all about since the upside could be substantial. A scalper may want to exit at what he believes is the "top" of a range, but this isn't a scalping approach.
I never think about the mean once the ranges I've been using are left behind, at least until I'm prepping for the next session (you'll notice that 20 became the mean of the overnight range). If there's no hurdle that is obvious to those who aren't daytraders, such as the previous day's high, I just let price take me as far as it's willing. If the angle changes, pace slows, activity lessens, and traders appear to lose interest, I begin to eye the exit door, but I don't race through it simply because price is taking a breather. I'm certainly not going to let price go all the way back to a mean of one sort or another which may be purely imaginary before I exit the trade. If one is going to be that relaxed, there's no point in trading a small interval.
You'll notice that there's a great deal of ranging behavior here particularly leading up to and following that last failed breakout attempt. Focus on the ranging behavior -- the search for value or equilibritum -- rather than on outlining in real time what may or may not turn out to be a range since by the time you know for sure it'll likely be too late to do anything about it. It's more important to avoid being freaked by ranging behavior by understanding what it is and anticipating it rather than cutting one's profits short and abandoning a trade that may yet have more to go.
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As regards the previous post, you'll see that the upper limit of the hourly range I posted yesterday served as the mean, more or less, of the overnight range (the actual mean of the ON is actually slightly lower). You'll also note that the efforts to break above and below it are relatively equidistant, just like yesterday. What is different is the rally an hour ago. Does it matter that the top of this rally is inside that range to the left of the chart (unboxed)? We'll see what price does over the next hour.
Also trader's might want to take note of the upper limit of the range since Friday's afternoon selling wave - no time for a chart, sorry.
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