Question about chart posted (2)

C

ChrisMMM

In this chart, the ES is forming a sym triangle. Again you would expect the breakout to be on the side that the origional trend was. So you would expect that it to be on the downside.

I know that volume is not being shown here but when it breakouts you can see the volume spike. So what I did (on my play money account) was I went short on the pullback, (or at least what I thought was) when it starts to come up thinking that it would go back down.

Well that wasn't the case. I asked the guys in the chat and they said that after it breaks out there is a test. Well I've entered on many pullbacks and been successfull. How can you tell that this pull back is going to fail?
 

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With the benefit of hindsight, a few things should be obviously apparent. (1) The downmove from 1441 to 1432 took 8 "bars" of time. If the market was going to breakdown farther, it should have retraced no more than 8 bars of time on the chart before rolling over to downtrend lower and make new lows for the session. (2) A 50% or 62% retracement of the move from 1441 to 1432 would have been a low-risk short-sale initiation trade. It seems your "Gann Stuff" on the chart is upside down. (3) From a Market Profile perspective, when a market stabilizes after making a thrust, you might be better off waiting for the market to settle down and make a well-defined breakout before hoping that the eventual breakout is to the downside.
 
Quote from ChrisMMM:

In this chart, the ES is forming a sym triangle. Again you would expect the breakout to be on the side that the origional trend was. So you would expect that it to be on the downside.

I know that volume is not being shown here but when it breakouts you can see the volume spike. So what I did (on my play money account) was I went short on the pullback, (or at least what I thought was) when it starts to come up thinking that it would go back down.

Well that wasn't the case. I asked the guys in the chat and they said that after it breaks out there is a test. Well I've entered on many pullbacks and been successfull. How can you tell that this pull back is going to fail?
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Sounds like you're very much into pattern and prediction, which would account for much of the confusion.

In order to understand what's going on with a so-called "symmetrical triangle", you must understand why it forms. Price reaches a certain point, then begins making lower highs and higher lows. The "swings" from one point to another get shorter, and price works its way toward a state of equilibrium. This can be quiet or it can be noisy. But the whole point of the triangle is this working toward equilibrium after a period where price was in a sustained uptrend or downtrend.

So, will price move up afterward or down? You have no way of knowing, regardless of what the chatroom members say. If buyers are still in charge, it'll move up. If they're exhausted, it won't. Or it'll fall. You have to be prepared for either. And both.

You may find the older name for the triangle to be more meaningful: "coil". Buyers and sellers are working their way toward a move of some sort, and all that energy is coiling, getting ready to spring. When it does, you want to have an open mind, ready to move in whatever direction is called for.

LC
 
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