Potential NQ Targets

[dbphoenix]

DB, looking back at the 2009 Trend channel, price ignored the oversold level and broke out of the channel at point A.

Do you now move the upper limit of the trend channel to the last high made around 4110 or does the original channel remain and you consider all action above the channel to be overbought_

Also, do you consider the upper limit as potential support zone? as with ordinary S&R Levels?

The current channel is shown in post #1. If the lower limit of this channel is broken, then we look at the next older channel beginning in late 2012.

Trendlines, trend channels, moving averages and so forth don't provide support or resistance. Find the mean and the distance trades are moving away from it. You'll see better if you don't squash your charts so much.

 

[tupapa]

The current channel is shown in post #1. If the lower limit of this channel is broken, then we look at the next older channel beginning in late 2012.

Trendlines, trend channels, moving averages and so forth don't provide support or resistance. Find the mean and the distance trades are moving away from it. You'll see better if you don't squash your charts so much.

Sorry, I don't think I made my question clear. Regarding the upper limit of the major 2009 trend cannel, does it remain where it was some months ago or is it moved to track the last swing high? (red line on the image attached).

Also, it seems to me that your approach has changed to some degree, I remember when I first read your posts at TL, you used to emphasize the importance of plotting S&R levels in advance, and the importance of waiting for price to reach one of these levels to enter a trade, since it is at S&R, where we find high probability trades (if one did nothing but wait for price to be at one of these levels, he would save himself a great deal of money and pain I believe you once said).

However, in one of your recent posts you even said that there is really no point on identifying S&R for the trader.

Personaly, I still trade in the way I learnt from your TL posts, using S&R and the Caja Bonita concept as I find it gives me a clear structure from which I can understand traders behaviour. Why have you moved away from this? Are you constantly changing your approach in response of changing market conditions? (I know the principles remain)?

 

[dbphoenix]

The original upper limit remains. Moving it upward serves no purpose since it doesn't touch anything.

As for S&R, I've largely abandoned it because (a) so few people understand it and (b) it serves no purpose. Ditto with volume. If one understands trend and the interplay between supply and demand, he'll know what to do and when to do it.

 

[k p]

Hi Db. I wonder if you can make further comments on these channels.

You had mentioned on Friday that the lower channel line was at 3790, but it appears to me that it is at roughly 3760, so we might still have 30 points to go. Is this correct? Perhaps you just eyeballed it quickly when you quoted the earlier figure but I think I have drawn in this current channel properly.

Continuing on, I have also drawn in what looks to be the previous channel that you said would be in play from end of 2012 if we break out the bottom of our current channel. Using a low from the middle of November 2012, the channel outlined by the red and blue lines appears to be this channel.

Its interesting that the upper channel line (red) has already been breached, so if we do in fact break below the current channel low of 3760, is the mean of this red/blue channel our next possible place to turn which appears to be all the way at 3670?

I also find it interesting that between April/May of this year, price bounced off the mean of the red/blue channel, but this then ended up being the low that we used to draw the new and current channel bound by the cyan/fuchsia lines. Anything remarkable about this?

 

[dbphoenix]

I wasn't so much concerned with the exact number as that we were likely headed lower.

As to the mean of the older channel, there's no particular reason why this should be important. That range is old news. If you look at the last bubble, once we broke the July '06 channel, price dropped 350 pts without regard for any previous channels.

I see nothing remarkable about revisiting the mean of the old channel, though there may in fact be something remarkable about it. Price doesn't have to drop all the way to the lower limit. What is more interesting to me is that price spent nearly five weeks riding the upper limit before traders decided to move higher. This as much as the higher low confirmed a new and more acute trend.

It is worth noting that a drop to that mean, which is around 3700, would be a 10% decline. Pros may not pick up on the trend channel or its mean, but they will notice the 10%.

 

[k p]

It is worth noting that a drop to that mean, which is around 3700, would be a 10% decline. Pros may not pick up on the trend channel or its mean, but they will notice the 10%.

Thanks!

I have always wondered how it is that traders seem to move price around the mean, yet most have no idea that they are doing so, and are certainly not putting trades on just because they realize that we have ventured so far away from the mean and now need to return and try for some trades on the other side of the mean. So even though each trader is doing their own thing, collectively, they are all reacting to the mean in some way.

I suppose its like trying to figure out why price is moving up and down. Doing so is impossible to accurately asses nor would it matter, but seeing that there are more sellers than buyers is a fact evidenced by price dropping and something that we can take advantage of.

 

[Gringo]

but seeing that there are more sellers than buyers is a fact evidenced by price dropping and something that we can take advantage of.

Don't want to bother you with this but 'more supply than demand' is a better statement. It could as you know be one large seller unloading. For each sell there's a corresponding buy. When sellers are eager to unload buyers become powerful and lower their bids to get cheaper goods. Price as a result drops.

On a side note you appear to be a bit unhinged (hinge based comments are awesome aren't they?!). Why not take a step back and relax a bit. I have gathered more by just not trading for some time and observing and relaxing. I post less now simply to not get screwed up in the head again. Theory of price based trading is simple enough and already shrunk for us. From your comments it seems even the basics seem to be getting a bit brittle. Gather yourself and come back when you are at ease.

Gringo

 

[k p]

Oh absolutely... I remember saying this very same thing so many months ago because as you point out, with each transaction there is a buyer and a seller. Excellent of you to point out this very important detail!

 

[Gringo]

Oh absolutely... I remember saying this very same thing so many months ago because as you point out, with each transaction there is a buyer and a seller. Excellent of you to point out this very important detail!

Yes, in the chat if I recall correctly. The example I had given was if you have a watch you don't want to sell but the whole world wants to buy. They'll keep raising their bids in hopes of acquiring it. And it will be you, the seller, who'll be in charge not the buyer. So when the price is rising it's the seller who's in charge as the bids keep rising. The demand is greater than supply. And Db just can't help but smile .

 

[k p]

Actually, I don't think I was in chat when you mentioned this.... I was quite a late comer (or rather, you must have said it.. but I wasn't around yet!). But I remember this moment clearly when I was thinking it through for myself and found the post on TL that I made... and it was to emini!

http://www.traderslaboratory.com/forums/wyckoff-forum/18416-putting-all-together-4.html#post192744

Gosh... to think that it was back in May, and here we are 5 months later without exactly stellar results. The important thing though is that although my entries and exits are terrible, the foundations of supply and demand as Db teaches really is how this all works.