Iterative Refinement

[ivob]

I don't really understand your answer. I am sorry about this.
Are you saing price "had to" go up again at 14:30 because else it would have been rocket up followed by rocket down?

Now here is how I viewed this situation at that moment.

14:20: FTT near RTL. WMCN is increasing red in the next bar
14:25: BO on increasing red. YM shows the same.
14:30-14:35 we get decreasing black. I assumed we were on our way from point 2 to point 3.
14:40: decreasing black. point 3 down must come soon....
14:45: point 3 here??
14:50: What Was That?

The only thing I see is that YM made a point 3 down at 14:48 and the new RTL was broken on the next 2 bars.

So my question is:
Was it wrong to go short somewhere in the 14:25 bar and to expect a point 3 down later on? Of course you have to be out around 14:50 increasing black....

regards,
Ivo

<IMG SRC="http://www.elitetrader.com/vb/attachment.php?s=&postid=1922924">

Quote from Spydertrader:

You annotated a Point Three Up Channel which began as a Traverse. Since this Traverse widened to the Point where it then mirrored the demensions of a channel, one would then expect traverses to, once again, form inside it. Tapes build traverses, and traverses build channels. Once your traverse grew to the size of a channel, you then need a traverse to 'carry' price back across to the other side. The only other option is a 'rocket' (basically a long tape which keeps going). Extremely rare is the case where we see rocket up followed by rocket down.

So, since we know we need a traverse to carry Price back across this new (widened) channel, we must then have an up traverse before we can have a down traverse.

Also, Non-dominant traverses form in two ways: Point Three's and Lateral Movement.

- Spydertrader

 

[Spydertrader]

Quote from ivob:

Now here is how I viewed this situation at that moment.

Start with the Break Out of the Lateral Formation on your chart (which developed on increasing red Volume. What must come next? Did it? What does such an event signal? What does the YM say at this Point in time?

Always know where you are with respect to the "right side" of the market. Where are you? Where does Price sit with respect to the RTL of the Up Channel?

Telling me how you viewed the market, at the time, doesn't allow you to figure out, what you missed in real time.

Bottom line: You assumed the trend had changed due to the Traverse TRL break on increasing red volume. As such, you convinced yourself Price was moving between Points Two and Three. Clearly an easy thing to do, but, now one must look for clues during debrief, missed in real time, in order to learn to avoid repeating the same errors in the future.

HTH

- Spydertrader

 

[cnms2]

You could reverse after the 1425 VE, on 1430's decreasing non-dominant volume. Later, the 1445 had increasing black volume that cancelled the 2 tic IBGS. See attached.

Quote from ivob:

I don't really understand your answer. I am sorry about this.
Are you saing price "had to" go up again at 14:30 because else it would have been rocket up followed by rocket down?

Now here is how I viewed this situation at that moment.

14:20: FTT near RTL. WMCN is increasing red in the next bar
14:25: BO on increasing red. YM shows the same.
14:30-14:35 we get decreasing black. I assumed we were on our way from point 2 to point 3.
14:40: decreasing black. point 3 down must come soon....
14:45: point 3 here??
14:50: What Was That?

The only thing I see is that YM made a point 3 down at 14:48 and the new RTL was broken on the next 2 bars.

So my question is:
Was it wrong to go short somewhere in the 14:25 bar and to expect a point 3 down later on? Of course you have to be out around 14:50 increasing black....

regards,
Ivo

chart

 

[8833broc]

My thoughts or how I viewed the market at 1425

I viewed the 1425 ES bar as a change in sentiment and the market starting a non dominant down move. I don't see anything in ES or YM until the YM 1436 bar when black vol increased and the tapey short YM RTL is broken that provided me with a clue that the seniment is changing again from short to long. Also the 1430 and 1435 ES bars are inside of the ES 1425 bar shadow and within a bigger lateral formation that began around 1240. If I was short at 1435 I had enough reasons to doubt the
short side at the close of the 1436 YM bar and suspect that the sentiment is changing again.

Possibly what I missed in real time is:

1) THe significant of the lateral formation since 1240. The Lateral formation was the non dominant
transverse of the forrest Long channel.

2) The 1425 bar is at the low of the lateral formation and within 2.5 pts from the FORREST RTL.
Is this a trade that I really want to take.

 

[cnms2]

I think the key here is the 1410 lateral formation, that only seemed to be the the Pt2 to Pt3 of the up channel started at 1355.

Actually in the channel 1355/1355/1405, the bar 1410 is a VE. Bar 1415 has decreasing red (non-dominant volume), and after VE this is a good signal to reverse.

The Lateral 1410-1420 doesn't break up, and the fan out channel using 1420 as Pt3 is doubtful (in my opinion).

I see the peak volume of the 1425 as an indication of Pt3 down (EDIT:confirming the Pt3 on the1420 bar), more than an indication of Pt1 to Pt2 traverse down. The 1425 is VE in the channel 1410/1415/1420, then the 1430 bar shows decreasing non-dominat (black) volume, and this is the signal to reverse long.

Chart

Quote from 8833broc:

My thoughts or how I viewed the market at 1425

I viewed the 1425 ES bar as a change in sentiment and the market starting a non dominant down move. I don't see anything in ES or YM until the YM 1436 bar when black vol increased and the tapey short YM RTL is broken that provided me with a clue that the seniment is changing again from short to long. Also the 1430 and 1435 ES bars are inside of the ES 1425 bar shadow and within a bigger lateral formation that began around 1240. If I was short at 1435 I had enough reasons to doubt the
short side at the close of the 1436 YM bar and suspect that the sentiment is changing again.

Possibly what I missed in real time is:

1) THe significant of the lateral formation since 1240. The Lateral formation was the non dominant
transverse of the forrest Long channel.

2) The 1425 bar is at the low of the lateral formation and within 2.5 pts from the FORREST RTL.
Is this a trade that I really want to take.

 

[LittleMac]

I have a quick question about the circled area on my TSL 30 min chart. According to PRV at the time the stock had decreasing to increasing red breaking out of the light green channel. I got short. I held for the next three bars as it continued down slightly and showed decreasing red( which concerned me but it was also right at lunch time). The fourth bar from the BO started with increasing black again and began the neon green up channel. My question is how to view this. It is technically NOT a lateral or a pennant and it IS technically a BO going by the definition of being outside the RTL for more than one price bar. The increased black coming in at the fourth bar says change but what do we label this period before that.

Does it have a technical classification in the system?

Comments appreciated

 

[romanus]

Quote from Spydertrader:

Start with the Break Out of the Lateral Formation on your chart (which developed on increasing red Volume. What must come next

RTL BO on increased read volume followed by price heading lower.

Quote from Spydertrader:

Did it?

No, it did not. Price formed FBP and started moving higher on decreased black volume which signifies a lateral movement.

Quote from Spydertrader:

What does such an event signal?

Channel FBO

Quote from Spydertrader:

What does the YM say at this Point in time?

FBO and price resuming dominant direction

Quote from Spydertrader:

Where are you? Where does Price sit with respect to the RTL of the Up Channel?

After failing to BO the RTL price resumed moving in the dominant direction

Quote from Spydertrader:

… now one must look for clues during debrief, missed in real time…

The specific bar I am having a real hard time with is 1450 [close of] IBGS. That bar is near the RTL of the navy down channel with pt1 on 1415 bar [close of] and pt3 on 1425 bar [close of] (a non dominant traverse of the larger up channel). http://www.elitetrader.com/vb/attachment.php?s=&postid=1922734
Near the RTL on can expect one out of two – either BO or FBO. IBGS is a signal for change. So:
1. As IBGS it says change.
2. As an increased black volume as price travels higher in dominant direction on increased volume it says no change.
3. At the close of 1450 [close of] ES bar (the IBGS in question), the YM shows:
a. FTT followed by retrace back to RTL of the down channel, which says change
b. SYM formation and failure to break out on increased red volume, which says no change.

There is something here that I am interpreting incorrectly. Please help.
YM attached.

 

[Padawan]

Quote from romanus:

RTL BO on increased read volume followed by price heading lower.
No, it did not. Price formed FBP and started moving higher on decreased black volume which signifies a lateral movement.
Channel FBO

FBO and price resuming dominant direction

After failing to BO the RTL price resumed
moving in the dominant direction

The specific bar I am having a real hard time with is 1450 [close of] IBGS. That bar is near the RTL of the navy down channel with pt1 on 1415 bar [close of] and pt3 on 1425 bar [close of] (a non dominant traverse of the larger up channel). http://www.elitetrader.com/vb/attachment.php?s=&postid=1922734
Near the RTL on can expect one out of two – either BO or FBO. IBGS is a signal for change. So:
1. As IBGS it says change.
2. As an increased black volume as price travels higher in dominant direction on increased volume it says no change.
3. At the close of 1450 [close of] ES bar (the IBGS in question), the YM shows:
a. FTT followed by retrace back to RTL of the down channel, which says change
b. SYM formation and failure to break out on increased red volume, which says no change.

There is something here that I am interpreting incorrectly. Please help.
YM attached.

Romanus, 3b - the formation FBO on increasing red volume signals change.

You can find one explanation of this by Spyder here.
http://www.elitetrader.com/vb/showthread.php?s=&postid=1912293&highlight=missed+signal#post1912293

For your # 1, the ES IBGS low reacted off of the 20 SMA.

 

[Padawan]

Quote from LittleMac:

I have a quick question about the circled area on my TSL 30 min chart. According to PRV at the time the stock had decreasing to increasing red breaking out of the light green channel. I got short. I held for the next three bars as it continued down slightly and showed decreasing red( which concerned me but it was also right at lunch time). The fourth bar from the BO started with increasing black again and began the neon green up channel. My question is how to view this. It is technically NOT a lateral or a pennant and it IS technically a BO going by the definition of being outside the RTL for more than one price bar. The increased black coming in at the fourth bar says change but what do we label this period before that.

Does it have a technical classification in the system?

Comments appreciated

LittleMac, good question and I do not know if this is right, but here's my attempt. I would encapsulate that area as a chubby tape that gets fanned (red to yellow to green to blue) all while keeping in mind ticktrade's idea of looking "for where the last traders caught on the wrong side of the market. When I see decreasing volume into that spot I look for an entry..."

http://www.elitetrader.com/vb/showthread.php?s=&postid=1675605&highlight=incredible#post1675605

 

[romanus]

Quote from Padawan:

Romanus, 3b - the formation FBO on increasing red volume signals change.

You can find one explanation of this by Spyder here.
http://www.elitetrader.com/vb/showthread.php?s=&postid=1912293&highlight=missed+signal#post1912293

For your # 1, the ES IBGS low reacted off of the 20 SMA.

Thank you, Padawan. Appreciate that.