If You Can Draw A Straight Line . . .
- Thread starter dbphoenix
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I've put this together in order to give you and whoever else is interested some idea of the zoom out/zoom in process I go through in order to "place myself" in the trend. This is not a course, and the process will be different for everybody, if for no other reason than each trader will be trading within a different timeframe and using a different bar interval. I use a longer timeframe because I want the longer trend behind me, supporting me, but not everyone will make this choice. The "longer trend" here is four years, though I've posted only the most recent two (the four-year chart was posted on the 14th).
I don't draw all these lines, of course. In fact I usually don't draw any because I've found that my view becomes self-narrowing as soon as I begin doing so. Not physically drawing anything enables me to keep the "gestalt". The lines are drawn only to give whoever is interested some idea of my process.
This goes as far as a 15m bar. One can also easily zoom in to a 5m bar or a 1m bar or even less. Trader's choice. But it might be useful for whoever wants to keep this to add today's chart to show that we found support at Friday's low and have been making higher highs and higher lows ever since.
http://cdn3.traderslaboratory.com/f...6390-re-trading-off-daily-charts-quintych.png
I hope it's clear than when one is looking for the line of least resistance, it's pretty much up to him to pick his spot and decide what timeframe he's most interested in, then the bar interval he's going to use to trade within that timeframe.
Note: this is a huge chart, but reducing it made it too difficult to read. Click the chart after clicking the link in order to open it up fully.
And so now we break the June trendline and fail to hold on to the higher high. Dropping all the way to 2820 seems extreme, but those who have bought since that point are going to be wondering if they ought to worry and how much.
And there are stopping places along the way.
Edit: though I didn't draw the line, interested bystanders should note that Friday's low hits the 10th's overnite high. This increases the importance of 30. Currently buyers are trying to pull back above it. We'll see.
And there are stopping places along the way.
Edit: though I didn't draw the line, interested bystanders should note that Friday's low hits the 10th's overnite high. This increases the importance of 30. Currently buyers are trying to pull back above it. We'll see.
Quote from bigmoose:
DB I sincerely appreciate this thread.
Is the lower high you would short at the one I put the orange dot on in the chart below?
Let's change it to "is the lower high you would" to "is the lower high one could". The lower high one could short would be the first one, 9-11 minutes earlier. If that was missed, then definitely the one you've chosen.
These are problematic because you're entering inside what's becoming a range. So, the risks are that price will bounce back and forth while you're caught in this game of Keep Away or price will actually rally and you lose money. However, if price instead breaks down through the bottom, you're already in while latecomers propel you into profit.
So how much risk are you willing to assume, how involved is your ego, and how light-footed are you?
Even though this is hindsight, you'll notice that buyers reach 54 differently the second time than the first. The first is straight up. The second hesitates for four minutes before reaching for 54 and failing immediately. This behavior might give the trader that little extra bit of courage to assume the risk and take the trade. He must be willing, however, to accept the possibility that he might be wrong and exit the trade without feeling as though he screwed up. Caca pasa.
Thanks both to niko for voicing the question and DbPhoenix for the detailed response. I find each day reveals more that I do not or did not know. I'm spending the rest of the week observing and formulating a fresh draft of my trading plan. This is going to inclde a re-ordering of my work schedule to allow me to observe/plan/trade the morning hours everyday.
Theoretically, yes. But 2pts just isn't worth the trouble for me. The fact that I use a 1m chart when I'm daytrading doesn't mean that I shoot for itty-bitty gains. The 1m chart simply enables me to see what's going on. I still have the larger moves in my sights.
Of course everyone has his own goals and his own style. But I much prefer managing a trade than entering and exiting and entering and exiting and entering and exiting. That's why I look for excuses to stay in while counseling beginners or traders with fear issues to get out at the first sign of trouble. Once one is tuned in to trader behavior, it's much easier to shrug off all the little burps and farts that occur along the way.
3040 turned out to be as important yesterday as it was the day before. We've climbed back above it, slightly above the May high, and are working out way toward moving back above Monday's high.
However, we're still out of the June-July trend channel and 30pts away from a new high. Those trading daily and 60m bars probably don't care about any of this (see my "quintych" chart from yesterday afternoon), but those trading shorter bar intervals may be on pins and needles.
I've entertained the idea that the NQ is in the process of a trend change, just as I did several months ago since then as now the NDX has lagged badly for quite some time. But then there was that spectacular catch-up in April. Even so, the NDX still lags, and it seems more reasonable to me that we move sideways or at least at a much less dramatic angle than suddenly shoot for 3400.
So who the hell knows? If we can get past 60, I'd look for an attempt at last week's high. If buyers don't have it, then another visit to yesterday's low. The NY open should provide a major clue.
I should also point out that 60 is the midpoint of the decline from last week's high to yesterday's low.
However, we're still out of the June-July trend channel and 30pts away from a new high. Those trading daily and 60m bars probably don't care about any of this (see my "quintych" chart from yesterday afternoon), but those trading shorter bar intervals may be on pins and needles.
I've entertained the idea that the NQ is in the process of a trend change, just as I did several months ago since then as now the NDX has lagged badly for quite some time. But then there was that spectacular catch-up in April. Even so, the NDX still lags, and it seems more reasonable to me that we move sideways or at least at a much less dramatic angle than suddenly shoot for 3400.
So who the hell knows? If we can get past 60, I'd look for an attempt at last week's high. If buyers don't have it, then another visit to yesterday's low. The NY open should provide a major clue.
I should also point out that 60 is the midpoint of the decline from last week's high to yesterday's low.
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