Your first Pinkish Down Channel (in the middle of the morning up trend) has no increasing red Volume after the Point Three. Therefore, we cannot have a channel at that location.
- Spydertrader
Iterative Refinement
- Thread starter Spydertrader
- Start date
Your first Pinkish Down Channel (in the middle of the morning up trend) has no increasing red Volume after the Point Three. Therefore, we cannot have a channel at that location.
- Spydertrader
Which is exactly why I covered my short while it was still positive and then deleted my wrong channel when the R2R didn't come and correctly anticipated one more surge to the real FTT.
If what must come next doesn't...It seems like it was an "M" day after all, but I didn't see volume dropoff in the first 3 bars, so was at least prepared for a strong trend to kick-off the day.
Unfortunately I committed this exact same error (except my channel was purple so there was a little difference there
). I have since recognized the errors of my ways, but at the time I viewed the decreasing black of the 10:30 ES bar as well as the 10:36 bar on the YM closing below the RTL as indication that the up trend was weakening and about to reverse (which the :35 ES bar seemed to confirm). Now I see that that the 10:25 to :40 bars were just widening the up channel and a proper analysis of formations and channel structure (what must come next) would have kept me on the right side of the market.
Pepe (my Portuguese brother
), First it is very nice to see you back and contributing to the journal. I believe we all benefit from your thoughtful questions and comments. (As a side note; they help offset my usually dimwitted post
).This quote is really the focus of my efforts. At this point in time I believe that without having a firm grasp and understanding of the proper sequence of a channel construct as well as the possible variations that can occur within them, I am going to continue to fall for much of the "non-resolution change signals" you referred to above.
When things get murky (like today's 10:15 to 10:45 period I talked about earlier), I have to better analyze "What must come next" in order to be on the right side.
good to see you again.
guava
Spyder,
I was hoping you could clarify something regarding this same time period in the ES. My confusion is in regard to the two FBPs I have annotated in the attached chart.
It appeared to me that these were flaws occuring in the downward retrace. Therefore, I figured the down channel had become dominant, since flaws only occur in the dominant traverse, and was anticipating a BO to the downside.
What am I missing? Are Pennant formations not considered flaws? Should this section be considered a lateral formation of decreasing black volume? Did I miss an overriding signal of change back to the upchannel being dominant?
Any help is appreciated,
-A
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1789511>
I was hoping you could clarify something regarding this same time period in the ES. My confusion is in regard to the two FBPs I have annotated in the attached chart.
It appeared to me that these were flaws occuring in the downward retrace. Therefore, I figured the down channel had become dominant, since flaws only occur in the dominant traverse, and was anticipating a BO to the downside.
What am I missing? Are Pennant formations not considered flaws? Should this section be considered a lateral formation of decreasing black volume? Did I miss an overriding signal of change back to the upchannel being dominant?
Any help is appreciated,
-A
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1789511>
Here is how I understand it. We view them as a formations first and possible flaws second. When the we break out of the formation we can look to see if we can consider a flaw occurring in the direction of breakout.
In both of your examples, price broke up and not down so if you viewed them as flaws then the dominant should be up.
I have attached a snip from 12:15 today that shows a formation and also a flaw (dip) resulting from the BO indicating the new dominant direction
As bi9foot pointed out, we view Pennants as Formations. While it first appeared as we had a Point Three Down Channel forming, we never see increasing red Volume after the Point Three - in order to confirm the channel. As a result, we have no down channel. The signal for change materialized first on the YM - with increasing black Volume.
- Spydertrader
Thanks for both your responses.
I have to admit though, I'm still somewhat confused about when I can recognize a flaw in a retrace as a clue that the dominant trend has changed.
Is it only dips, hitchs and stalls that provide this clue? Therefore, price must exit in the same direction it entered the Pennant Formation in order to have these flaws formed, thereby letting you know that direction is dominant? I'm thinking this is what you both were getting at in your responses, but I wanted to put it in my own words to make sure.
Also are all lateral formations considered flaws or can you enter a lateral formation in a retrace and expect to continue a retrace coming out of the lateral? If so, what about HVS and CCC are these particular lateral formations that are also flaws and change the retrace into a dominant traverse upon exit?
I'm still working my way through the Futures Journal, so if I'm getting ahead of myself in trying to recognize flaws in a retrace as a sign of change just let me know.
Thanks again,
-A
I have to admit though, I'm still somewhat confused about when I can recognize a flaw in a retrace as a clue that the dominant trend has changed.
Is it only dips, hitchs and stalls that provide this clue? Therefore, price must exit in the same direction it entered the Pennant Formation in order to have these flaws formed, thereby letting you know that direction is dominant? I'm thinking this is what you both were getting at in your responses, but I wanted to put it in my own words to make sure.
Also are all lateral formations considered flaws or can you enter a lateral formation in a retrace and expect to continue a retrace coming out of the lateral? If so, what about HVS and CCC are these particular lateral formations that are also flaws and change the retrace into a dominant traverse upon exit?
I'm still working my way through the Futures Journal, so if I'm getting ahead of myself in trying to recognize flaws in a retrace as a sign of change just let me know.
Thanks again,
-A
Atari, as I understand it, a flaw is not a flaw until you have increasing dominant volume to confirm it. In your example, one couldn't have labeled those flaws until there was increasing volume in the dominant direction. If you had increasing red, then those could've possibly been flaws for a down channel (though I'm still working on flaw identification). However, the increasing volume we ended up getting was black. The markings on your chart look like FBP's, and pennants occur in non-doms. Keep in mind that I'm also learning and wrote this to try to help you and to see if my understanding is correct. Hope this helps.