Real Reasons Behind Market Patterns

NoDoji said:
there's a key level like that daily lower trend line in CL Friday around 92.90
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Hi NoDoji,

Is it possible to post a chart illustrating that daily lower trend line? I've seen quite a number of your five minute and one minute charts but I don't think I have ever seen one of your daily charts.

Thanks.
 
NoDoji said:
I use the classic patterns for locating roadworthy vehicles, vehicles that are more likely than not to get me where I want to go.

I use the environment in my time frame (intraday pit session) as a roadmap for determining if there's a place worth going and if my vehicle is more likely than not to get there before encountering serious obstacles.

Sometimes obstacles arise that weren't on the map and I may decide to stop or reverse the other way to avoid serious damage.

When I see a classic pattern in an environment that tells me the road looks well-paved and it's unlikely any obstacles will arise for at least the next N ticks of travel, I go for a drive.

I know that in a strong downtrend if the pullback is shallow and there's a key level like that daily lower trend line in CL Friday around 92.90, I can very likely drive a long way without obstacles until that point. And every set of eyes looking at the chart sees the same thing: 92.90 is a great value with low risk for buyers, so if I want to buy I'll wait for that bargain price, if I can't stomach that kind of adverse excursion on my long positions I'll sell long before then, and if I want to make money to the short side, I'll sell every pullback until price gets there.
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Very interesting as always, NoD. I didn't know before you use high time-frame levels/structures.

According to the topic of the thread: what do you think drives the price in this case described by you? Technical levels acting as a self-fulfilling prophecy, attracting market participants? And what kind of behavior creates these patterns/levels?
 
I draw trend lines on hourly and daily charts which appear on my intraday charts. I consider those to be key levels in a strong trend and will trade the trend aggressively until price gets there at which point I watch the PA to see if a reversal pattern appears.

When Thursday's CL daily bar low was taken out around the open Friday, I watch the 5-min chart to see if a trend day sets up. The 10:20 ET bar confirms the daily bar break and there was no potential trend reversal signal until the 12:30 ET bar.

The reason price tends to gravitate toward these key levels once a signal is confirmed is because traders who want to initiate a position are looking for the best value and traders who are caught on the wrong side of the action want to cut their losses.
 

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NoDoji said:
If you're concerned about the concepts covered in his book, consider testing your trade ideas via automation. You'll find out very quickly whether you're the only one seeing those bunnies in the clouds.
:rolleyes:
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lol you must f*cking LOVE bunnies.
 
NoDoji said:
I draw trend lines on hourly and daily charts which appear on my intraday charts. I consider those to be key levels in a strong trend and will trade the trend aggressively until price gets there at which point I watch the PA to see if a reversal pattern appears.

When Thursday's CL daily bar low was taken out around the open Friday, I watch the 5-min chart to see if a trend day sets up. The 10:20 ET bar confirms the daily bar break and there was no potential trend reversal signal until the 12:30 ET bar.

The reason price tends to gravitate toward these key levels once a signal is confirmed is because traders who want to initiate a position are looking for the best value and traders who are caught on the wrong side of the action want to cut their losses.
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Great explanation as always, but what are the reasons behind market participant actions in this case? TA pattern itself acting as a self-fulfilling prophecy? Or something else?
 
cornix said:
Great explanation as always, but what are the reasons behind market participant actions in this case? TA pattern itself acting as a self-fulfilling prophecy? Or something else?
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The reasons are that if a certain line in the sand is crossed, technical analysis of similar price action over the past N decades indicates that price will continue moving in the direction of the breach until price gets to, or close to, the next key S/R level in line to be tested. So if you're looking to buy low, you wait for that next level and watch the reaction there to decide whether to buy or not. Chances are pretty good that initiating buyers will sit on the sidelines until that key level is approached, initiating sellers will want to get in close to where the line in the sand was crossed, and longs who don't want to risk the full excursion to that next S level will sell part or possibly all of their position, all of which tends to accelerate the downward momentum.
 
cornix said:
Great explanation as always, but what are the reasons behind market participant actions in this case? TA pattern itself acting as a self-fulfilling prophecy? Or something else?
More...
imagine buying hotdogs for a nickel and selling em for 6 at the stadium, what happens surrounding that 5 95 markup instead of a nickel markup, marketing, they give you a ticket a seat a ballgame 60000 fans and tv crews,cheerleaders halftime shows, without all of that you would find out where you could get them for a nickel and tell the other guy ..something... if they didnt make these trendlines work, give the idiots in the seats something intellectual to feel about themselves,and instead just take all their money at once, the game would be over.... there is no way appl is worth 98 then 103 then 98 in the span of 30 minutes, without all that action ,without moving the ball of yarn, the cat would just sit there
in one word, marketing
 
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