Iterative Refinement

Hey Padawan,

Thanks for the input. Just to clarify, my last post is no longer directly relating to the chart I posted. I'm pretty sure I understand the reason why those pennants never materialized into flaws. Part of the post was to get confirmation I'm understanding correctly why they were not flaws. I'm also trying to get further information regarding when these flaws do occur in a situation that changes the dominant trend.

As an example, in regard to my chart if price had moved down out of one of those FBPs on increased volume, but at a lower volume then the first bar of the pennant. Thereby providing volume sufficient for the BO of the pennant but still showing a gaussian formation of decreasing overall red volume that would seem to confirm retrace. Do we now have a confirmed flaw that makes the downtrend dominant even though we do not yet have increasing overall red volume?

In then also I wanted further clarification of laterals as possible flaws in these situations.
 
Quote from Atari:

Hey Padawan,

As an example, in regard to my chart if price had moved down out of one of those FBPs on increased volume, but at a lower volume then the first bar of the pennant. Thereby providing volume sufficient for the BO of the pennant but still showing a gaussian formation of decreasing overall red volume that would seem to confirm retrace. Do we now have a confirmed flaw that makes the downtrend dominant even though we do not yet have increasing overall red volume?
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Yes that would be a flaw indicating the new dominant direction as down.
 
Maybe this helps.

A flaw starts out just as a FTT. So at first you may think it is one, later on you know it's not for example based on PRV or other characteristics such as lateral movement (decr black + decr red)

If price moves inside the previous bar I think pennant. Of course this depends on the context. For example if we just had VE I may think FTT and take action even though it is also a pennant.

Spyder made some good posts about flaws and internal formations.

- Hitch & stall
- Dip, HVS, CCC
- Pennants & Lateral formations
- Flaws and PRV
- How to spot formations in real time? (pennants & laterals)

regards,
Ivo


Quote from Atari:

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
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Quote from Atari:

Hey Padawan,

Thanks for the input. Just to clarify, my last post is no longer directly relating to the chart I posted. I'm pretty sure I understand the reason why those pennants never materialized into flaws. Part of the post was to get confirmation I'm understanding correctly why they were not flaws. I'm also trying to get further information regarding when these flaws do occur in a situation that changes the dominant trend.

As an example, in regard to my chart if price had moved down out of one of those FBPs on increased volume, but at a lower volume then the first bar of the pennant. Thereby providing volume sufficient for the BO of the pennant but still showing a gaussian formation of decreasing overall red volume that would seem to confirm retrace. Do we now have a confirmed flaw that makes the downtrend dominant even though we do not yet have increasing overall red volume?

In then also I wanted further clarification of laterals as possible flaws in these situations.
More...

Atari, I THINK this is an example of a flaw in the non-dom (making it the new dom). You can see that Spyder had marked the gaussian annotation so I'm not sure if it has anything to do with the flaw. May just be an example of red to red in a lat.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=113310&perpage=6&pagenumber=10
 
Quote from ljyoung:

Clearly, we had a non-monotonic dropoff. Clearly we did not have a montonic dropoff. Let's see what happens (vide supra) and I promise not to craft a heiroglyphical "M".
Truth be, as I've said already, I don't care what happens. I'm content simply to record it.

lj
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While I don't know if the dropoff should be monotonic or not, Spydertrader did not say that you cannot have an "M" or "W" day when there isn't a dropoff.
 
A suggestion for those interested. Keep reading the Futures Journal chapter by chapter, you will have many "AHA" moments, subtle things which you missed in the past will STARE at you in the FACE :D

Here's another quiz for those interested.

What FOLLOWS and FTT ?

1.

2.

3.



:)
 
Quote from callmate:

A suggestion for those interested. Keep reading the Futures Journal chapter by chapter, you will have many "AHA" moments, subtle things which you missed in the past will STARE at you in the FACE :D

Here's another quiz for those interested.

What FOLLOWS and FTT ?

1.

2.

3.



:)
More...

1. another FTT
2. a BO
3. a FBO

edit: and you are right, rereading the journal(s) will give one lots of AHA moments, meaning you get to another level :)
But, the best AHA moments come from the housekeeping part. After trading hours reviewing what you have done, and especially what went wrong, and why. (so you won't make the same errors again)
 
Thanks for the links. I'll study them and see if I can get a better grasp on recognizing flaws in retraces as a sign of change for the dominant traverse.

-A
 
Quote from innersky:

While I don't know if the dropoff should be monotonic or not, Spydertrader did not say that you cannot have an "M" or "W" day when there isn't a dropoff.
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I haven't researched this particular point but if you've looked into this and found what you've stated above, then that's neat, but I don't know whether Spyder would agree.

lj
 
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