If You Can Draw A Straight Line . . .

[NoDoji]

Quote from dbphoenix:

Many/most people confuse timeframe with bar interval. The timeframe extends from this point to that point: a day, a month, five years. The bar interval has to do with how one elects to illustrate that timeframe, anything from a 1t chart to a yearly bar. So a 1m bar, for example, is not a timeframe; it's a bar interval.

I always used the term "timeframe" for the bar, knowing it really wasn't accurate. Bar interval makes sense!

Quote from 1a2b3cppp:

Despite being unable to successfully predict market direction after years and years of trying, I am still interested in learning how, so a thread on trend channels that can be quantified is interesting to me.

I don't know how it would be possible to predict market direction accurately for any particular trade idea.

To me, the only thing you can predict is the probability, over a consecutive series of N trades, of price moving at least this many ticks in direction A before moving no more than that many ticks in direction B.

 

[Redneck]

Quote from NoDoji:

I don't know how it would be possible to predict market direction accurately for any particular trade idea.

Not to mention the mental sluggishness and potential ego associated with prediction

We observe, we anticipate, we act/ react - repeatedly

RN

 

[dbphoenix]

Quote from NoDoji:

I always used the term "timeframe" for the bar, knowing it really wasn't accurate. Bar interval makes sense!

I should say here at the beginning that "bar" is simply a convenience, stemming perhaps from Homma's "candles" in the 18th century (though I doubt this since Dow probably never heard of Homma). When charts were published in the paper, it made sense to note the range of activity from low to high along with the closing price and, sometimes but not always, the opening price.

Bars, however, are nothing more than a choice the trader makes to illustrate the movement of price in segments. Price is continuous and uninterrupted (unless the market is closed). A more accurate representation of price movement would be a line chart, but this is nearly always too big a step for the wannabe to handle, which is why I usually recommend a very small bar interval instead, even a 1t if he can deal with it. If he can't, he's welcome to use a larger bar interval as long as he can view the bars as continuous -- which is far easier to do if done in real time or via replay -- rather than get tangled up in "opens" and "closes" which exist only because he has chosen a particular means of illustrating what is, again, a continuous movement. Put simply, there are no "opens" and "closes" except -- in the case of the NQ, which will be used in this thread -- from the Sunday evening open to the Friday afternoon close. This can sometimes become more clear if one zooms out of his chart window so that the bars melt together into a continuous line. Some have actually had Ah-Ha moments after having done so.

Price is a movie, not a slideshow.

 

[dbphoenix]

Moving right along, the daily chart provided in post #1 will still apply for tomorrow. Price could of course plunge right through the bottom of it, but traders seem strangely comfortable with 2900. The chart below is a zoom-out of the hourly chart provided in post #1. I was intrigued by how nicely that congestion provided support for price when sellers drove it down to the midpoint, so I zoomed out to see if there was anything further in the past that might account for it. As you can see, there was a |/| type movement, a backward "N". This was not a trading range per se or even a congestion. More a bounce off unanticipated support followed by a reversal off unanticipated resistance. But whatever it was, price spent time there and transactions were made. Whether this had anything to do with the congestion on the 26th/27th beats me. May be entirely coincidental. But it may also be important for tomorrow or the next day, so it's worth at least noting.

As for 2900 (+/-), traders have tested that from below and from above on multiple occasions. Who knows why? If it's the midpoint of a trading range (from 2885 to 2915, +/-), it's the sloppiest trading range I've ever seen. Nonetheless, there's tested support and resistance here. The fact that traders are so comfortable nestling into this midpoint, however, makes any trade here problematic. If price were to bounce off it from resistance or ricochet off it from support, that would be one thing. But that ain't happening. And it's difficult to make money off comfortable people. Better to wait until they're anxious and confused. Right now, they're neither, which may of course change by tomorrow morning.

If no one has any questions, I'll check in tomorrow morning premkt, but it's getting late on the East Coast and most of you have probably had enough
ET for one day.

If any of you decide to trade tomorrow, good luck.

 

[heypa]

word games. You act because you expect a result to happen more likely than not or more times than not. Your not predicting it's what is often referred to as swag . That is a scientific wild assed guess.

 

[dbphoenix]

Incidentally, I just noticed that I neglected to draw a midline through the trend channel on the daily (I don't actually draw these lines on my charts; the lines are in my head). The midline would cross through 2920 on the right. If traders are finding resistance at that midline, this may be one reason why they're retreating to 2900.

Stay tuned.

 

[Redneck]

For anyone interested, here’s a step by step method to help get comfortable with drawing channel lines w/ 50% line

Note;

I’m using the fib retracement tool, with the settings changed to 150, 100, 50, 0, -50

The 150/ -50 are for extended channel lines (fodder for a different discussion)

fyi - I don't know how to post multiple attachments in one post - sorry

RN

 

[Redneck]

Step 3

 

[Redneck]

Step 4

 

[Redneck]

Step 5