Iterative Refinement

[romanus]

ES 06-08 6-10

 

[treeline]

YM

 

[treeline]

Log

 

[TIKITRADER]

ES M8 daily Chart June 10/2008

Daily bar made a LL and a LH on the slightest decrease in volume.
Daily bar has just touched touched the left trendline.

Range of daily bar today = 20 points.

Volume today = 99% of the total volume from yesterday.

Daily bar range = 95% of the range from yesterday.

Close of daily bar = 46% of the range today.

 

[TIKITRADER]

Taking the low of March 17 and that it is an FTT of a major down channel,
also taking the high of May, a point 1 and two can be placed here to anticipate the possibility of an up channel.

Unless the March 17th low is taken out and invalidates this possible channel.
A dashed channel was added to this screenshot with a point 1 and point 2 placed.

Daily charts will continue to be posted without these annotations.


Any and all feedback welcome.

 

[romanus]

Top Ten Properties of Channels I overlooked in a rush to start ‘pushing the buttons’:

1. Quote from Spydertrader:

The market 'fanned' out on the way down, so it had to do the same on the way up.

Illustration here.

2. Quote from Spydertrader:

Just as letters build words, and words build sentences, so too, do tapes build traverses and traverses build channels.

Illustration here.

3. Quote from Spydertrader:

If you drawn a channel (tape, traverse, etc.) of a certain slope and width, you'll need another equal (and opposite) channel (tape, traverse, etc.) of similar slope and width to form the next higher fractal.

The sequence is illustrated here.

4. Quote from makosgu:

As time passes, you will notice that regardless of the fractal, the channels will have a characteristic volatility. This is the killer that allows you to zone the place where your point 2 and 3 will occur as soon as you have your point 1. There are a myriad of things that you simply become aware of and establish as truths.

Illustrated here.

5. Quote from Spydertrader:

The steeper the channel we have, the less likely the channel will remain intact (Price fails to exit the RTL) for any length of time (steep channels do not last very long). Sure, exceptions exist (…), but in general, you'll make the same observation time and time again. The longer a channel remains intact (without a RTL break) the more likely we expect to see the sequence of Point Three, VE / Flaw, FTT materialize. Since 'fanned' (out) channels normally represent a point in time where the market is "rolling over (or under)" so to speak, we do not expect these types of channels to last very long either. Again, exceptions do exist, but in general, you'll see the same observations.

As such, we see the following: Whether or not Price follows the expected sequence of Point Three, VE / Flaw, FTT depends not on the type of channel, but rather, occurs as a function of time. The longer a channel remains intact, the greater the likelihood our anticipated sequence matches reality. The shorter the time involved with a channel remaining intact, the less likely we expect to see the anticipated sequence match reality.

Would appreciate any feedback, comments and more importantly additions to the Top Ten list.

 

[LittleMac]

ZUMZ seems to be stuck in the lateral. No change or signal today as I thought.

 

[cnms2]

In my experience this (EDIT: I refer especially to your illustration, and your interpretation of Spydertrader's words) happens only occasionally, and mostly inside some kind of lateral or slow slope move.

In general, I'd say that in the same chanel dominant traverses are steeper and narrower than non-dominant ones. Also, dominant traverses successively become less steep, while non-dominant ones become steeper.

Quote from romanus:

...
3. Quote from Spydertrader:

If you drawn a channel (tape, traverse, etc.) of a certain slope and width, you'll need another equal (and opposite) channel (tape, traverse, etc.) of similar slope and width to form the next higher fractal.

The sequence is illustrated here.
...

 

[cnms2]

This is a great post I've recently revisited:

Quote from Spydertrader:

Trading Breakouts on decreasing Volume doesn't place oneself on the right side of the market very often. However, if PRV indicated increasing Volume (at the time of BO), then one must go with PRV in order to correctly anticipate a breakout. However, if at some point within the bar, one knows Volume cannot make it to increasing actual Volume, then a reverse (not exit) is in order.

Again, the goal here is to 'see' the signal and maintain a position on the right side of the market. Once accomplished, the same logic - applied to a finer tool set - allows the trader to 'carve' the turns more closely. For now, focus entirely on 'seeing' the correct signal and knowing the right side.

- Spydertrader

 

[cnms2]

Last year I've posted some constant-volume charts here, but I think that those observations are applicable to time based charts too.

Quote from cnms2:

In my experience this happens only occasionally, and mostly inside some kind of lateral or slow slope move.

In general, I'd say that in the same chanel dominant traverses are steeper and narrower than non-dominant ones. Also, dominant traverses successively become less steep, while non-dominant ones become steeper.