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Iterative Refinement
- Thread starter Spydertrader
- Start date
Of course, if I were to follow the sequence from yesterday, then increasing black on 15:55 [close of] tells me no permission to seek change exists on 9:35 [close of] bar. In that case:Quote from R/R:
I am well aware of the posts about expecting a lateral after increase in pace but didn't recall seeing the "reverse" logic utilized.
I didn't think that sequence completed either.
(1) my attempt on reverse logic is meaningless, because one does not have a pt3 down yet at 10:10 [close of]
(2) today's order of traverses is beginning to make sense to me.
Quote from romanus:
(1) my attempt on reverse logic is meaningless, because one does not have a pt3 down yet at 10:10 [close of]
(2) today's order of traverses is beginning to make sense to me.
<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=2118522>
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Thank you for the explanation. This particular context seems to be the case where determination whether or not the bar represents dominance or non-dominance is irrelevant for the purposes of differentiating continuation from change.Quote from Spydertrader:
different.jpg
P.S. I got lost in 14:00-15:00 area. Do you consider 15:00 [close of] IBGS bar to be a pt1 or pt3 of an up traverse?
Thank you.
Romanus, not at all, the conversation that ensued was very informative. As always, thanks for the feedback!
Quote from romanus:
Thank you for the explanation. This particular context seems to be the case where determination whether or not the bar represents dominance or non-dominance is irrelevant for the purposes of differentiating continuation from change.
Walk your logic back one step.
One cannot receive permission from the market to seek change unless and until one has a completed the sequences from Point One to Point Two to Point Three.
In this specific example, the market had already established dominance by providing a signal for change (after a completed sequence down) and after moving Price from Point One (change - Bar two), to Point Two on increasing black Volume. Once the market had established dominance, non-dominance is also known. Once the market enters the non-dominance portion of the sequences, one simply must wait for the return to dominance before the sequences can complete. Price breaking out of a Lateral Retrace (Point Two to point Three) often requires two bars to indicate the return to dominance (which completes the sequence).
However, once Price crossed the RTL of a channel on increasing black volume the market has provided the signal required indicating it has returned to dominance.
Note how all this happens within the 10:10 bar prior to its close.
Once the market has established the return to dominance, and once the market has completed its sequences, the market has then also provided permission to seek a signal for change.
Again, prior to the close of the 10:10 ES [close of] Bar, we see Price crossing back over the RTL - creating an FBO in the process.
Remember, as the future moves into the now (in real time and within the forming bar) the trader moves toward 'certainty' with respect to the mode of a particular bar.
With this specific example, we can note the milestones.
Price opens and sits inside the Lateral while Volume shows Actual Volume decreasing (because the bar just opened a few seconds ago) - but with increasing PRV.
As Price breaks out of the Lateral, actual Volume remains less than the previous bar, but PRV remains increasing.
At some Point within the 5 minute Bar actual Volume transitions to increasing over the previous bar. We no longer care about PRV. Price continues to move toward the RTL of the channel.
Later, Price approaches, touches, and then, crosses over the channel RTL, and it does so while Volume shows actual increasing black Volume. At this Point, the trader's mindset shifts from anticipating the arrival of a return to dominance to one where the market has confirmed a return to dominance providing the trader with the permission required to seek a change in mode.
Later still (and prior to the close of the 10:10 bar), Price crosses back over the RTL (and it does so on increasing volume and with a completed sequence in place) providing an FBO. As a result, the trader knows that once the 10:10 bar closes, the market will have transitioned to a state of certainty far different than existed at the open of the bar.
HTH
- Spydertrader