Iterative Refinement

[ivob]

For sure I will never forget this happened today.
I thought I made all mistakes already but now it seems I'm starting again from zero...

"Oh well, I just missed the increasing black..".
It's the first thing we look at, is it increasing or decreasing? Just hilarious Sorry for wasting you time and the time of others.

Ivo

Quote from Spydertrader:

Nah. Everybody makes errors from time to time. Even me. Nothing stupid about it. Learn from it because you will see this again.

- Spydertrader

 

[ivob]

Well, I also expected to fan but not if I had noticed the increasing volume.

Increasing black volume with a downtrend still intact only happens on spike bar, lateral BO or steeper RTL break. None of this was the case.

Of course what can happen is a shallow upchannel (incr. black) ending with a FTT which forms a point 3 of the downchannel. But that doesn't look like this. Anyone pls correct me if I am wrong.

regards,
Ivo

Quote from dkm:

Despite all the times I have seen increasing volume between pt2 and pt3, I still don't think this aspect has truly sunken in. I saw the change at 15:40 and even saw the incr vol that followed but with pt1 and pt2 on the same bar and the rtl bo on decr vol, I was convinced we needed to fan to pt3. I have some homework to do........

Thanks.

 

[Padawan]

Quote from ivob:

For sure I will never forget this happened today.
I thought I made all mistakes already but now it seems I'm starting again from zero...

"Oh well, I just missed the increasing black..".
It's the first thing we look at, is it increasing or decreasing? Just hilarious Sorry for wasting you time and the time of others.

Ivo

You didn't waste my time at all, Ivo. I've learned quite a bit today thanks to your question (and others). I'm now thinking (but not entirely sure) that part of my problem with the 1325 bar context was that I missed the increasing red volume during a retrace right after the FTT of the up channel. And, as was noted, at beginner level I should not have been focusing on decisions within the formation, though determining WMCN is ok.

 

[LittleMac]

PWRD has been a solid mover the last few days. Anyone in this one? Id like to see a chart comparison.

 

[romanus]

Quote from Padawan:

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???

YM:
1326 [close of] is up on increasing volume = the trend is up
1328 [close of] as you noted is IBGS, so the trend changed obviously, it is down now.
1330 [close of] forms SYM, continuation of the downtrend that started with IBGS
That is why 1332 [close of] goes down on increased red. And ES follows.

Notice how its different from 05-16-2008 that has been discussed earlier. On 05-16-2008
ES: 1430 [close of] breaks out of formation. 1435 [close of] forms FBP

YM: 1430 [close of] IBGS signaling to go long. 1432 [close of] forms SYM, continuation of the up trend that started with IBGS. 1434 [close of] is formation FBO reminding us to be long. What happens next? YM goes up on incr black volume returning to dominant direction.

 

[cnms2]

At that point you should've been already short. Pennant FBO & increasing red volume cancel each other.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1928738>

Quote from dkm:

ES 20080520

A couple of questions:

1. I saw the 13:35 (close) bar as a Long signal due to incr red vol and FBO of the sym. YM at 13:34 showed LL on decr red vol, supporting the long. Was this a valid L signal? ...

 

[cnms2]

Especially during fast pace periods, if you decide to hold pt2 to pt3 you have to watch carefully for other signals, and react. Increasing black volume after the VE of the down channel is such a signal.

It's good to hold when pt2 to pt3 is a lateral with not much volatility, but here there was no lateral.

Quote from dkm:

It tells me I am going from pt2 to p3

 

[cnms2]

Even decreasing black volume at that point would've been signal of change because it followred a VE down. Exception: flaw level black volume. Decreasing red volume would've been a signal of change too, and would've sent you to finer tools.

Quote from ivob:

... Okay, so had it been 5000 contracts less then you would have expected the point 3 down?

regards,
Ivo

 

[Padawan]

Quote from romanus:

YM:
1326 [close of] is up on increasing volume = the trend is up
1328 [close of] as you noted is IBGS, so the trend changed obviously, it is down now.
1330 [close of] forms SYM, continuation of the downtrend that started with IBGS
That is why 1332 [close of] goes down on increased red. And ES follows.

Notice how its different from 05-16-2008 that has been discussed earlier. On 05-16-2008
ES: 1430 [close of] breaks out of formation. 1435 [close of] forms FBP

YM: 1430 [close of] IBGS signaling to go long. 1432 [close of] forms SYM, continuation of the up trend that started with IBGS. 1434 [close of] is formation FBO reminding us to be long. What happens next? YM goes up on incr black volume returning to dominant direction.

Thank you, Romanus.

 

[romanus]

Quote from cnms2:

Even decreasing black volume at that point would've been signal of change because it followred a VE down. Exception: flaw level black volume. Decreasing red volume would've been a signal of change too, and would've sent you to finer tools.

I don't follow. 1540 [close of] is a VE of the down channel?