Quote from Padawan:
Great question and answer. I also had trouble there.
Here's my answer to the exercise, though it's best not to look until after checking your chart if you had trouble in that spot. Hope ours compare favorably. This reminded me of 14:20/14:25ish area last Thursday (03-20).
Hi all,
I've attached my charts (ES,YM) to address the signals of change prior to the r2R Gaussian.
1120 ES begins the Traverse from RTL to LTL after forming a Point 3 in the dark blue Channel. (Enter)
1125 Increasing Black Volume and the LTL VE(Continuation).
1130 Decreasing black Volume on ES bar with smaller price range as Price struggles to improve. Context is flagging wildly for an anticipated change. 1. ES LTL is where the traverse is anticipated to end. 2. ES Decreasing Volume in P/V relationship.
Change signal comes on the YM bar at 1130 where volume as the peak volume bar 4 bars back with 1/4 of the volatility. Change Signal. (See black arrows on YM). Another one on YM 1134 where price bounces off the LTL on decreasing black volume.
1135-1140 ES retrace with r2R.
1145 - The BO of the SYP on YM on decreasing volume is a problem for me in this context. I remembered Spyder mentioned in the chatroom last month that a bar with small volume and large volatility represents a thin market and thus, a relevant change signal.
So, if you went long here, and YM volume dries up halfway through this bar and the BO fails, What would you do? ohoh.
1. Wash and sideline, since the rationale for entry evaporated? Wait for next signal.
2. Or reverse short to remain on the right side of the market since the signal evaporated? Then reverse long again on increasing black.
2. Hold long and wait to see increasing black volume on the next bars? Reverse short on increasing red.
I find this moment of uncertainty to be discomforting as it leads to overtrading and possible whipsaw while the market sits quiet and makes up it's mind on the few possibilies that exist.
Am I missing something?
Comments appreciated!
