If You Can Draw A Straight Line . . .

[dbphoenix]

Quote from Gringo:

Most post in this journal are shorter term and I am not even sure I should be posting in Db's journal but then again, I know he'll cut me some slack as he always has in the past. Die hard fans like me are hard to come by now a days

Gringo

It's always interesting to get the perspective of someone who's been at this for several years.

As for the timeframe and bar interval, that's determined largely by those who post. The bar interval itself is irrelevant with regard to applying the principles. A higher high is a higher high whether it's on a 1t chart or a weekly chart.

Besides, after the first ten posts, few people are going to read more than the last post or two anyway

About your second chart: don't forget about preliminary support. All that volume represents buyers rushing in to support the price. Whether they can or not is not as important as their efforts to do so. Those efforts are what lead to bottoming and base-building/reversal. By the time the bottom is reached, the "climax" may be entirely unremarkable.

 

[niko]

NQ Premarket analysis

Daily

60 min

5 min

We are coming back from the top of the trading channel (TC) in the daily and are making a Lower High (LH) within the 60 min uptrending TC.

I have a question though, as we are still in the channel but we have a LH, what is the LOLR?

As for strategy:

Wait for S to be found within the TC or at an oversold area and find a long entry
Wait for the TC to be broken and a LH to confirm and take a short entry.

 

[dbphoenix]

Quote from niko:

NQ Premarket analysis

We are coming back from the top of the trading channel (TC) in the daily and are making a Lower High (LH) within the 60 min uptrending TC.

I have a question though, as we are still in the channel but we have a LH, what is the LOLR?

Don't know what you mean by "trading channel". But go back to the charts I posted on the 14th and 19th. The longer-term chart is always trump. And since we've bounced off the bottoms of at least two trend channels and have made a higher high over May, I suggest we have at least 3150 to get to, which makes the line of least resistance up.

We are currently testing simultaneously the bottom of the 30-day trend channel and the May high, so trading might be choppy.

 

[niko]

Quote from dbphoenix:

Don't know what you mean by "trading channel". But go back to the charts I posted on the 14th and 19th. The longer-term chart is always trump. And since we've bounced off the bottoms of at least two trend channels and have made a higher high over May, I suggest we have at least 3150 to get to, which makes the line of least resistance up.

We are currently testing simultaneously the bottom of the 30-day trend channel and the May high, so trading might be choppy.

I meant the channel within the blue ellipse

 

[dbphoenix]

Quote from niko:

I meant the channel within the blue ellipse

I wouldn't call it a "trading channel", though, since it doesn't appear to be any different than a trend channel, and the profit opportunities in trading a trend channel are different than those in a trading range since the "waves" are not equal.

In any case, I suggest you reduce the number of lines again. The more lines, the more likely you are to focus on the lines than on price. For instance, I don't see any reference to potential support at 40, and it could be important.

 

[niko]

Quote from dbphoenix:


In any case, I suggest you reduce the number of lines again. The more lines, the more likely you are to focus on the lines than on price. For instance, I don't see any reference to potential support at 40, and it could be important.

The problem I have with the lines is that I am not sure what might be important and what not, so I end up tracing way too many lines. Any suggestions about what to focus on.

 

[Gringo]

Quote from dbphoenix:

About your second chart: don't forget about preliminary support. All that volume represents buyers rushing in to support the price. Whether they can or not is not as important as their efforts to do so. Those efforts are what lead to bottoming and base-building/reversal. By the time the bottom is reached, the "climax" may be entirely unremarkable. [/B]

Hi Db,

By preliminary support you mean around 21 to 22 range area where the volume is higher than normal?

Gringo

 

[niko]

Today´s action:

The blue dot signals where I was planning to short. The thing is I was not sure it was a break of what I thought was a TC (In the 60 min) as it was so close to the Demand Line (DL), so i decided to pass. Bad call :doh:

 

[dbphoenix]

Quote from niko:

The problem I have with the lines is that I am not sure what might be important and what not, so I end up tracing way too many lines. Any suggestions about what to focus on.

That depends on what timeframe you're trading and what bar interval you're using to trade it. But whatever timeframe and whatever bar interval, remember what is in your head and what is in the market. Trend is in the market. But what you use to illustrate trend -- e.g., trendlines, trend channels, etc -- is in your head. Therefore, a violation of support or resistance, which is in the market, beats the breaking of a trendline, which is in your head.

Here, for example, price acted as both resistance and then support at 52, and after the open, it never could make a higher high, never making it past 54. So even though the macro trend is "up" and the line of least resistance is "up", you as a trader always have the option of putting the trend on the backburner and focusing on what's happening in the micro. Here, price couldn't make a higher high, so do you want to assume the risk of shorting all of this, even though support is so close? If you had, you would have made up to eight points. If you had hung on, you might have made more. Or you might have exited and re-entered, even though at that point you were sitting dead on support. What would you have done? Only you can answer that, depending on how honest you are with yourself.

If you're trading the 1m, or even the 5m, the dynamics of what's happening with that bar interval will take precedence. However, if you're not aware of the weekly, daily, and hourly trends and S/Rs, you are far more likely to encounter a lot of What The Hell Just Happened? and lose in your trades rather than remain in control. Here, for example, we are still riding the very-short-term trendline, and though we broke through near support at 40, we're holding at Friday's low. If we break Friday's low, we could return all the way back to the longer-term trendline at 2800. Not likely, but possible. All of this should be running through the analytical processors in your head when you're deciding whether to take a particular trade or not.

 

[dbphoenix]

Quote from niko:

Today´s action:

The blue dot signals where I was planning to short. The thing is I was not sure it was a break of what I thought was a TC (In the 60 min) as it was so close to the Demand Line (DL), so i decided to pass. Bad call :doh:

The best short, of course, was the lower high. Waiting for a retracement after a breakdown is lower information risk, but higher price risk. Perhaps that's something you need to talk to yourself about.

Edit: Actually, for the sake of accuracy, the best short was shortly after midnight, this morning.