Iterative Refinement

[romanus]

Quote from Padawan:

This is a very good question.

Let's pretend I am back in May of '07, when the formations have not been discovered yet , and the admirable quality of their BO's (which mean not much unless followed by more increasing volume on the next bar for a trend to change) is still not in our tool set.
And I thought this red bar was pt1 to pt2 following an FTT. And all that decreasing black with price going higher cold also mean non dominant traverse in down channel. But look at YM : http://i276.photobucket.com/albums/kk20/ROMANUS42008/YM06-085_15_20082Min.png
I would feel very uncomfortable being short in the face of all that increasing black volume

 

[R/R]

Quote from Padawan:

This is a very good question. Something I struggle with.

An example of one bar change and price moving from pt2 to pt 3 in a formation? Since next bar is pennant then forming lateral we look to YM and see return to incr. black at 12:22?

that is certainly the sweep you would make.

We can only expect +B on the one bar(32) that BO the Lateral formation because we are traversing in the non-dominant direction (retracing the short trend channel). Until we put in a valid pt3 long I don't see how we can get signs of continuation in this direction unless we are breaking out of formations. We did this with the pennant BO bar 35 which also gave us a pt 3 long of a traverse channel.

 

[Spydertrader]

Quote from R/R:

But how can this be with out WMCN (increasing volume) immediately after the Lateral Formation BO to confirm the change of trend?

Perhaps, you could post a chart showing exactly what troubles you? My chart shows increasing black Volume followed by more increasing black volume - which indicates a change in trend - referring to the Lateral Formation BO.

- Spydertrader

 

[bi9foot]

Here is an example of where I was wrong in my MADA this afternoon making decisions at end of bar.

Not sure if a different context would have given me a different outcome.

Basically was looking for a point 3 down. Got the point 3 on increasing red bar which also resulted in the FBO of the formation.

The FBO signaled change.

 

[Padawan]

Thanks, Romanus and R/R. I can see both of your perspectives clearly and they align nicely. These little situations (BO without more increasing volume) get me all the time because the context recognition skills are still under construction.

Maybe we can try another one? The 1325 bar (close of bar) breaks out of FTP on increasing red, giving us new pt3 down and peaking volume. Peaking volume signals change, but we also just got a pennant BO down on increasing red and a new point 3. We need more increasing red down, but we may also anticipate that we won't get it due to the peaking volume.

Next bar, 1330, does not give us more increasing red after the pennant BO. Instead, we get sym pennant on decreasing black with what looks like flaw level volume. Because 1330 occurs after the formation BO and didn't give us more increasing red volume, we expect the trend to change. Because 1330 occurs after peaking volume, decreasing black back toward the RTL appears as confirmation of change on the previous bar. And because 1330 looks like flaw level volume we anticipate continuation. So, it looks like we need more info and we're in a pennant then forming lateral anyway and look to YM.

YM is in lateral and a pennant (within the lateral) at 1330. Volume signals DU. 1328 Bar was IBGS. End of bar decision at 1330???

 

[R/R]

Quote from Spydertrader:

Perhaps, you could post a chart showing exactly what troubles you? My chart shows increasing black Volume followed by more increasing black volume - which indicates a change in trend - referring to the Lateral Formation BO.

- Spydertrader

here's my chart with the area circled. Shows decreasing volume after the BO bar. Also note Lateral movement preceding the Lateral Formation but its not annotated.

What troubles me is the concept of not expecting the normal pt1-2-3 sequence after an FTT, Formation BO, RTL BO without "X" amount of continuing confirmation of the new trend.

I am probably taking what you said yesterday too literally in it's application.

 

[R/R]

Quote from Padawan: ...

two quick things for now: I don't understand your application of "Peaking" volume here and there are two trends duking it out right there and this needs to be recognized.

 

[Padawan]

Quote from R/R:

two quick things for now: I don't understand your application of "Peaking" volume here and there are two trends duking it out right there and this needs to be recognized.

I understand. Could you tell me your volume for the 1325 and 1330 bars (bar closes)? I have 32,166 for 1325, and 10,623 for 1330. Yours looks different. Thanks.

 

[R/R]

Quote from Padawan:

I understand. Could you tell me your volume for the 1325 and 1330 bars (bar closes)? I have 32,166 for 1325, and 10,623 for 1330. Yours looks different. Thanks.

1325 = 13,868, 1330 = 10,623 using IB data, but forcing period refreshes.

 

[Mr_Black]

point 3 up....