Learning to read Price Action with P&F Charting

ok now another question about the horizontal/vertical projections i read the articles from the traders laboratory for determining objectives using the horizontal/vertical projection method and i find it ingenious BUT i realize that no real world example will be perfect so first of all if you are trading from 3 box reversal chart would you determine your HPP(horizontal price projection) from the 3 box chart or a 1 box chart.

Lets use LDK (3box/highlow) as an example in this chart if i use the 3 box reversal there seems to be major support at the $30 level with the exception of when the market as a whole was weak in January so if I go one box above the $30 level (as they did in that article) and count the boxes of the formation i get 20-21 boxes and if i add that i get a HPP of $51-$52.

IS this the correct way of using this method or am i doing something wrong?

here is the chart http://stockcharts.com/def/servlet/...hart=ldk,pltadanrbo[pa][d][f1!3!!!2!20]&pnf=y
 
Quote from pnf.guy:

Dentist: You said "eurodollar deposit rates are showing that interest rates in euroland are going up a tad.hence the chart is looking very bullsih.any comments".??

I'm kind of confused by that statement could you clarify if you have the time. Are you talking about the Eurodollar instrument that trades on the cme. When you say interest rates in the E.U. are you refering to the bund,bobl, or schatz. The instrument that is designed to track the movements in policy by the E.C.B. Or finally are just commenting on the Eur/Usd currency cross.

My take on Eur/Usd if that is what your are talking about is that its right at a pivotal point in both the short term and long term.

I see short term resistance at 1.5825 If that is breached it may continue the uptrend and breakout of the 1.6000 level. I personally would like to get long on a long term basis at 1.4900 so I'm hoping for a down leg here before it breaks the 1.6000 level.
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pnf guy
sorrry about the delay in replying.just been watching the monaco grand prix.on television.lewis did it
now back to eurusd
crude oil up by 33% in euro in the last 6 weeks.the ecb determined to keep the lid on inflation.the 3 month euribor deposit rate is breaking out on the chart.they are pricing in aggressive rate hikes.this is the dec 2009 implied yiield.the eurusd interest rate differential is widening.200bp spread and the european yield curve is steepening.hence bearish on euro fixed income
this is not my own research.pm me and i will email.
hence,the res area should get blasted away quickly
if you trade fx then you must always watch the fixed income market for clues.a nice way to look at this is the 2 year schatz /10 year bund spread on a p/f chart.this is a market overveiw like nyse bullish %
 
pnf guy
i dont trade fx.but i do keep a vey watchful eye on fixed income,particularly the spreads on shrt and long term government bonds.mainly 2 year and 10 year.i think these are the main lead indecators for the fx market
 
Quote from staffpro:

ok now another question about the horizontal/vertical projections i read the articles from the traders laboratory for determining objectives using the horizontal/vertical projection method and i find it ingenious BUT i realize that no real world example will be perfect so first of all if you are trading from 3 box reversal chart would you determine your HPP(horizontal price projection) from the 3 box chart or a 1 box chart.

Lets use LDK (3box/highlow) as an example in this chart if i use the 3 box reversal there seems to be major support at the $30 level with the exception of when the market as a whole was weak in January so if I go one box above the $30 level (as they did in that article) and count the boxes of the formation i get 20-21 boxes and if i add that i get a HPP of $51-$52.

IS this the correct way of using this method or am i doing something wrong?

here is the chart http://stockcharts.com/def/servlet/...hart=ldk,pltadanrbo[pa][d][f1!3!!!2!20]&pnf=y
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ok and in addition to my other question, i was wondering for swing trading would it be better to use maybe one box reversal charts?

for me at least it is easier to see horizontal formations and it just seems that on a 3box chart the gains or losses :) seem to take weeks- to months (depends on stock) to materialize.

thanks again love this thread and this method thanks HG, Dent007 and pnf and all the others that i forgot who contributed to this thread!!
 
1 box reversal chart do tell you more about what is actually going on.however the 45 degree trendlines are broken more often so are not reaally so important.but still draw them.all patterns will be wider than the 3 box.youre analysis in the end should be done with both 1 and 3 reversals
 
Quote from flyinglead:

Bullseye Broker
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Altria Group (MO) spun off Philip Morris International (PM) on March 31st.

MO used to trade at ~70, after the split it was approximately MO 20 , PM 50.
 
Hello to all, and allow me to thank you all for great thread, and of course special thanks to the man that started it all, HG!

I have been following the thread for a while now. And i feel very lucky to have found it. I actually trade the forex,-( that's mostly why i never tried to participate in the thread until today)- and when i tried the P&F, found it to be of great help. But i'm a little confused about a few things, and i'd appreciate any help from you guys, and of course from you HG.

I trade intraday charts, mainly hourly, and m30. Now i know that time in theory is irrelevant in P&F, but when i started using them i found that they are based on the high, open, close, or the low prices. So in my case they are based on the OCHL of each hour. So, again the chart differs notably from one time frame to another. What is confusing to me is that if i use High prices in my chart, i find that the chart ignores the low swings, and if i use Low prices, then my chart ignores the high swings. and the same for close and open prices. Very often these swings are very wide, and cannot be ignored, or considered market noise!

I attached two screen shots of the chart i'm using, one with the chart based on High, and the other one based on the low.
You can see the difference between the high swing and the low swing, and they are both taken at the same time.

What would you advise me?
 

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