Iterative Refinement

I knew to hold my short position even though price was moving against me. I saw the pennant in the ES and then had permission to look at the Dow. The Dow then broke out of the pennant and it was continuation with the short. Because I do not have the skill sets for SCT I previously would have made the mistake of covering my position and then looking for a new entry. Learning how to deal w/ pennant formations has been very helpful to me in recent weeks.
 

Attachments

Quote from Spydertrader:

1. Stop exiting when you have a Pennant. I do not know how or why you picked up such a habit, but it needs to end immediately.

2. Review the recently described 'ET Chat Room Log' - specifically where Pennants and Laterals are discussed.

- Spydertrader
More...

Thanks for the reply. I guess I'm taking literally the formations doc someone posted that says if you're in a pennant or a lateral formation, you should not be trading, should be sidelined (unless you're at expert level).

But it seems the concept of pennant is we usually see decreasing volume , which indicates change, which indicates exit ? Obviously I've got a misperception here.

Is there a url to the chat room log ??

Thanks again for your help.
 
Quote from Avi 8:

Both, I am sure you have seen competing channels where ONE bar could be either a pt3 up OR down.
More...

I don't see it like this. I don't look at a point in a way that it can be either a point 3 up or a point 3 down. The action after BO is hold (unless something happens which it did)

For example: On BO (to the upside) on increasing volume I would always look for a point 3 up, or an attempt to make a point 3 up. If this attempt fails I would reverse, of course realizing then this would be another point 3 down considering the context.

According to my observation price will at least always try to make a point 3 up (after BO on increasing volume in a downchannel). Sometimes this attempt can only be seen on YM (or YM shows an FTT)

I look at it in a way the sequence failed so we have another sequence. I would look for a point 3 up or a failure to make a point 3 up. CNMS2 said to look for the tape to be broken and reverse if the tape break doesn't materialise, it's the same thing.

The good thing about a failed point 3 or an FTT is that it happens before the increase in volume. Price tried to make the point 3 up somewhere in the 10:25 ES bar. (YM actually showed a FTT followed by BO at that moment, check attachment: blue channel, an FTT in a non dominant traverse)

So we end up with the same result but from a slightly different perspective.

regards,
Ivo
 

Attachments

Another example of a failed point 3 (but also a FTT), just moments ago.

checkout the arrows.

ES: we expect point 3 up (11:30) because we had BO of the downchannel. It fails on the next bar (11:35). We see a breakout of the pennant and it fails. We do have some higer volume just because of the pennant breakout. I was not sure about the FTT so look at YM.

Same moment YM: also breakout of pennant but no continuation on the next bar (11:36) which is a requirement for price to continue to go up. Next bars are decreasing red. YM shows FTT as well.

Note: the FTT on ES is near RTL so we need decreasing black plus increasing red quickly on the next bar which happened at 11:40 (can be seen on ES 1 minute). It's not visible on my snapshot because I took it before.

regards,
Ivo

<IMG SRC="http://www.elitetrader.com/vb/attachment.php?s=&postid=1802609">
 

Attachments

Quote from ivob:



For example: On BO (to the upside) on increasing volume I would always look for a point 3 up, or an attempt to make a point 3 up.
More...

Ivo, if a point 3 materializes within a channel before the BO, do you still expect to see a/another point three after the BO?
 
Quote from northchuck1:

...
Is there a url to the chat room log ??

Thanks again for your help.
More...
Tums posted edited versions of the two chat sessions. The first was 1/29 and second was 2/1.
Look back in the journal for these.

edit: you can also go to the ET Chat page and request today's log. Then edit the date in the log url to any date you want.
 
Quote from Padawan:

Ivo, if a point 3 materializes within a channel before the BO, do you still expect to see a/another point three after the BO?
More...

No, not necessarily, but if you see one you can trade it.

regards,
Ivo
 
Just when I thought gaussians were falling into place, I ran into severe problems diagnosing a tenured stock, HANS.
I thought this morning it looked promising with a possible breakout of downward RTL. However, I am not sold on my gaussians and it is probably too late for the stock today, but I sure would like to know where I am messing up. Comments welcome and appreciated.:confused:
 

Attachments

You must log in or register to reply here.
Back
Top