Iterative Refinement

Quote from Spydertrader:

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1931012>
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Spydertrader is it the third way? (V up P lateral) The bar before the FTT ?:)
 
Quote from Atari:

Great, this is definitely one of the first things that must be considered with this bar. The ES shows us coming out of a retrace and heading back down on spike peak level volume, then closing well off its lows (in fact it closes back within the shadow of the 10:25 bar). If I'm only looking at the ES for my signals, this is a change signal that would be hard to ignore.

The 10:32 YM bar makes the spike, peak level volume even more clear. As an aside, note that this bar is also a BO of a Lateral Formation. What is different about the context here that makes needing to see more increasing volume following a Lateral BO not really relevant to our decision process?

In addition to looking for signs of change, we need to consider reasons to hold. Bi9foot pointed out that we had not had a flaw or VE something we want to keep in mind. Also, the 10:34 YM bar, which provides a signal for change by not continuing down on increasing volume, also has flaw like volume levels letting us know that this change might be short lived and better to hold through. However, there is an additional context provided by the YM that gives even a stronger reason to hold. What about how we entered into the 10:32 YM bar would change how we view price movement in this bar (thereby changing our expectations)?

-A
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Atari, excellent. Sorry it's taken a while to back to you. Thanks for the drill and the response. This is really eye-opening.

Looking back, the previous bar at 1030 was an OB and a pennant BO on increasing volume. Then we got more increasing red (which broke the lat movement) at 1032 signifying the trend was down. Additionally, the previous traverse down looks like a steep or accelerated channel, providing more assurance that we just put in a wider channel point 3 at 10:32 and next need to look for a VE or flaw.

So, I think the BO of the lateral is not really relevant because we have to consider the channel sequences as well. The 1032 bar was not part of a pt 2 to point 3 move of an up channel on temporarily increasing red (we know this, in part, because it took out the low at 1018). It was not a break of an accelerated up channel for a couple of reasons, and it was not a spike bar. Instead, the lateral BO was the move from the point 3 into the channel.

Trying to think through the sequences is really helpful. Thanks again.
 
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