I like your style RedTank, you don't say this will happen, you accept that you are a mortal and prepare yourself to react upon special market behavior, good stuff. Perhaps you should consider your own thread as Xspurt seem to have one style and you seem to have another, not even even sure why you are here lol why dont you create your own topic? No disrespect, just don't find the compatibility.
Simplicity in TA
- Thread starter Xspurt
- Start date
I'd be disappointed if you start up your own thread RedTank but your work is certainly good enough to do so and I'd happily give a free transfer from some of my "fans"
But if you do stick around some of my immortal status might rub off on you so there's an added incentive.I know you hate to predict but perhaps that is in relation to this set up because as soon as we enter a trade we predict the direction and have a positive expectancy. The thing I am no good at is preparing for the unexpected because as much as I listed everything that could happen, well it was just unexpected. The unexpected is a shock if, for example you get caught in a flashcrash and in those rare occasions there might not be much we can do. But I find most of the time shocks and fakes are warned about in advance in a different TF and offer great trading opportunities.
The last examples I gave was the fake break up on the FTSE wedge and then the bullish daily move up on the FTSE to set up the swing down. Then shorting into a predicted strong up wave prepares the trader for the earliest reverse response and hold rather than reacting to a shock reversal.
It's just different styles but I think every TA'er predicts for the role of TA is to quantify probabilities and establish risk reward ratios. If we can't predict a direction when we click the mouse and have some idea of how far it is going then we are flying by the seat of our pants. How far ahead and how precise that prediction is is what differentiates the immortals and the mere mortals in some eyes. For me, it's as simple as how I like to play the game: prediction, evidence of a working strategy, response. From that point of view I don't think we are far apart.
I'd be interested in seeing how you translate your ideas into trades. Can you show how you take the trade and in what time frame in this example as it unfolds?
ELEPHANTS FOOTPRINTS
So we have a perfect bearish Elliot Wave intraday pattern after a big timeframe wedge break down which is one huge warning that often precedes a major move down. I was expecting an ABC pattern regardless of Elliot and the perfection of Elliot here makes it worth getting as much information as possible to validate the pattern in other ways.
I often fade Elliot Wave patterns (the last one I did was predicting a C failure on a 10min chart live with a student on a stock he was holding) so I need to dig as much as possible into this.
The bigger backdrop in earlier posts was that the monthly charts have triggered short but the weekly were overdue a pop up (and remember I stated the bar was not closed to confirm). This sets up a prefect conflict that offers great short term trading volatility that can morph from a negative view into a positive pattern and it is tradable throughout..
After predicting and calling the High, the sideways pattern, the major swing reversal down, the pop or drop level bottom and the ABC up wave I now want to zero in on this conflict zone and see if it is possible to get a read on the probability of a bear move event.
One of the clues for moving into a very bearish view was the elephant in the volume pane and once again we see the elephant has returned and both times it was as PA hit resistance.
There was a major vol warning on the low Pop OR Drop Level but it looks insignificant because of the massive elephant footprints either side.
Simply put, Smart Money reversed the top, bought the low and here they are again. Someone is going to need an elephant gun to beat this and in election year that is what often happens. The problem is ammo is getting low as a few elephants are appearing elsewhere.
Got to build this picture up a bit more later. (Note this is the 4 hr chart and remember previous comments)
So we have a perfect bearish Elliot Wave intraday pattern after a big timeframe wedge break down which is one huge warning that often precedes a major move down. I was expecting an ABC pattern regardless of Elliot and the perfection of Elliot here makes it worth getting as much information as possible to validate the pattern in other ways.
I often fade Elliot Wave patterns (the last one I did was predicting a C failure on a 10min chart live with a student on a stock he was holding) so I need to dig as much as possible into this.
The bigger backdrop in earlier posts was that the monthly charts have triggered short but the weekly were overdue a pop up (and remember I stated the bar was not closed to confirm). This sets up a prefect conflict that offers great short term trading volatility that can morph from a negative view into a positive pattern and it is tradable throughout..
After predicting and calling the High, the sideways pattern, the major swing reversal down, the pop or drop level bottom and the ABC up wave I now want to zero in on this conflict zone and see if it is possible to get a read on the probability of a bear move event.
One of the clues for moving into a very bearish view was the elephant in the volume pane and once again we see the elephant has returned and both times it was as PA hit resistance.
There was a major vol warning on the low Pop OR Drop Level but it looks insignificant because of the massive elephant footprints either side.
Simply put, Smart Money reversed the top, bought the low and here they are again. Someone is going to need an elephant gun to beat this and in election year that is what often happens. The problem is ammo is getting low as a few elephants are appearing elsewhere.
Got to build this picture up a bit more later. (Note this is the 4 hr chart and remember previous comments)
Quote from dv4632:
Red's SPY chart looks different from what I've been seeing on SPX, so I compared the two.
Interesting the SPX is still above the trendline, while SPY is below it...
I can only guess this must have something to do with dividend adjustments or something similar.
The SPX has slightly different price action at the trendline, I just get better reads from broken trendlines than unbroken ones so chose SPY in this case. Nevertheless it's still the same, a bear flag, that also happens to be the right wing of an incomplete head and shoulders, the consolidation is the pennant.
When price consolidates at the trendline touch that's usually a stop hunt waiting to happen, vs say quick snap from it.
Price is suggesting that we will break it, get the second leg of the bear flag, and complete the head and shoulders right side to begin the fight at the neck line. That's what is expected, the unexpected would be the bear flag failing and taking the right shoulder that's currently acting as resistance. As a trader you must prepare yourself for both scenarios.
This is why price is consolidating at this area, its between a rock and a hard place, once one side gives up, it will begin to trend, and the easy money will come. Price is constantly moving from states of consolidation to trending states and vice versa, when one side has won, it will begin to trend, and that's when you put your money to work, when technical damage has occured.
Either way, spx or spy, lines are just rulers, tools, alerting you of areas to pay attention to and apply your reading techniques.
First and foremost I am a daytrader but if I'm trading forex or a future, sometimes I become a short term swing trader, I do not use indicators, they mean nothing to me, there is no better indicator to me than price, volume and lines, don't mean to disrespect those that do, I'm sure there are many out there that use them successfully, I just come from the school that there is nothing faster than price, so why settle for something slower.
At night I do my homework, make sure, I have discovered all the key patterns and price action events of the recent past so I can prepare myself in the morning for potential special activity in any of the instruments I follow. Mostly liquid 24 hour based stuff, US index futures, Forex Pairs, some commodities, etc.
Before the market opens I revisit my charts and annotations and determine what the overnight session did to my studies in the different instruments I monitor. How and where we could be opening in relation to my annotations is imperative to me, sometimes there is nothing going on, which leads to dangerous trading, aka many small losses, death by a thousand stops, so if there's nothing going on, I do a lot of sitting on hands.
I mostly look for technical damage in different timeframes or determine if we could be pinning price to an important support/resistance area. I'm also on the lookout for potential breakout failures, which as you said, are very potent confirmation tools, in fact, they are one of my favorite price action based signals. I like to spot developing patterns before they have completed by using old patterns to confirm them.
At the same time I also pay attention to various market statistics that could enhance my reads, for instance I know the probability of outside bars, inside bars, etc. Pay attention to time of the day, etc.
As far as intraday signals, I search for exceptional pin bars, obvious volume exhaustion, action around key areas in my different timeframes, and last but not least virgin backtests of patterns lines. I mostly use tools to confirm tools. I'm also a very big fan of using failures or fakeouts to confirm support or resistance failing holding or breaking in other patterns. Like to see a pattern failure allowing me to confirm an opposite one developing, things of that nature.
The market usually has a bearish and a bullish pattern facing each other, which is why price spends more time consolidating rather than trending, when one of them has indeed failed, a trend usually develops, and that's where I like to begin risking money. It's important for me to determine when a side is hurting badly as this is usually what leads price to conviction, and subsequently, myself.
I don't believe in trading secrets, I only believe in trader's skills, therefore, I have absolutely no problem sharing my knowledge with those willing to listen and do the hard work.
I've realized I've taken more time than I had originally intended and as you well know time is the most precious commodity therefore I will lay low for a while and allow your good thread and work to carry on.
I wanted to look closer at that last elephant and see when, where and why they attacked the market.
Smart money tends to come in early and exits early. I can get very tight reversals with tiny stops and usually know when to let trades run but these guys are faster than me.
I often see them on a tiny 3 range chart and follow their lead for they have already decided when is the perfect place to hit the market hard. What you won't see on the Dom is the essential left side chart relationship.
Dropping down to the 10 min chart you can see that if the 1st 10 mins is red or green there is a strong chance that the day will end that way and 12975 level is a shark pool.
The last time we took out the 975 it was on massive volume yet the next bar had zero follow thru which is not a good sign for longs and we closed the day on the low of that red candle following the big push.
This tends to be typical of a scalp followed by distirubtion.
Watch any break of the 12975 and especially so if in the 1st 10 mins.
Smart money tends to come in early and exits early. I can get very tight reversals with tiny stops and usually know when to let trades run but these guys are faster than me.
I often see them on a tiny 3 range chart and follow their lead for they have already decided when is the perfect place to hit the market hard. What you won't see on the Dom is the essential left side chart relationship.
Dropping down to the 10 min chart you can see that if the 1st 10 mins is red or green there is a strong chance that the day will end that way and 12975 level is a shark pool.
The last time we took out the 975 it was on massive volume yet the next bar had zero follow thru which is not a good sign for longs and we closed the day on the low of that red candle following the big push.
This tends to be typical of a scalp followed by distirubtion.
Watch any break of the 12975 and especially so if in the 1st 10 mins.
We are coming to the close of the monthly chart one day after this weeks close and the SPX looks to me like a fake monthly break up, but the story is not complete til the bar is closed. That means we have to look at this coming weeks weekly close to see is it running with or against the monthly.
The DOW monthly has a good tail offering hope to the longs but unless it can show something more positive this is a dangerous formation. The monthly Nasdaq is on an inside bar and it too is looking very toppy.
In a nutshell, the monthly and weekly charts across the indices are a bit out of sync. and that makes things messy - choppy. But choppy on that timeframe can be delicious in the lower TF's.
CONCLUSION
On the big scale I was expecting a push down and an ABC up based on time and not Elliot. I'm not really into Elliot as I have better tools but when I see 5 Waves down displaying perfect Pattern, Time & Ratio followed by a great ABC correction, and this is after a monthly wedge break out - the red flags are out.
The push down is Wave 1, the ABC correction is W2 and if we break 12700 then W3 is in with Wave3 of the expected 5 waves down being the big one (i.e. the 3rd wave of the 3rd wave).
We had an elephant in the volume with a failure to follow through which raises a red flag.
We have great intraday structures and levels to trade making life pretty easy to take advantage of chop in bigger TF's.
To make this bear move work out we need to resolve some major cycle conflicts. The weekly is setting up a very strong push up against the monthly which is attempting to form a bear top.
Here's the key: the daily is wanting down and with the red flags mentioned has the potential to trash the weekly cycle and close the monthly down for a serious move down.
To kill off this weekly up move we need potent downside action and if that is not happening then we will once again be counter to a big up move.
Before this last swing top I said I was expecting a complex move before the real move and all the more so in an election year and with Central Bank interventions. If we have a weekly swing up that would set up that complexity.
ACTION
The next 6 trading days could be very interesting. Either we have a strong daily push down to swamp the weekly cycle and roll it over making the monthly the boss down, or we are counter for a strong weekly cycle up against the monthly turning it positive. It looks to be all in the strength of the move and if we break 12700. At the end of the week we will see better how the monthly chart reads.
I am expecting Daily down to start the ball rolling with the TL down as the guide. If that TL down is broken then the downside is in question and we'd need a double top at 13135 to keep shorts in the game or the weekly up is the boss.
The DOW monthly has a good tail offering hope to the longs but unless it can show something more positive this is a dangerous formation. The monthly Nasdaq is on an inside bar and it too is looking very toppy.
In a nutshell, the monthly and weekly charts across the indices are a bit out of sync. and that makes things messy - choppy. But choppy on that timeframe can be delicious in the lower TF's.
CONCLUSION
On the big scale I was expecting a push down and an ABC up based on time and not Elliot. I'm not really into Elliot as I have better tools but when I see 5 Waves down displaying perfect Pattern, Time & Ratio followed by a great ABC correction, and this is after a monthly wedge break out - the red flags are out.
The push down is Wave 1, the ABC correction is W2 and if we break 12700 then W3 is in with Wave3 of the expected 5 waves down being the big one (i.e. the 3rd wave of the 3rd wave).
We had an elephant in the volume with a failure to follow through which raises a red flag.
We have great intraday structures and levels to trade making life pretty easy to take advantage of chop in bigger TF's.
To make this bear move work out we need to resolve some major cycle conflicts. The weekly is setting up a very strong push up against the monthly which is attempting to form a bear top.
Here's the key: the daily is wanting down and with the red flags mentioned has the potential to trash the weekly cycle and close the monthly down for a serious move down.
To kill off this weekly up move we need potent downside action and if that is not happening then we will once again be counter to a big up move.
Before this last swing top I said I was expecting a complex move before the real move and all the more so in an election year and with Central Bank interventions. If we have a weekly swing up that would set up that complexity.
ACTION
The next 6 trading days could be very interesting. Either we have a strong daily push down to swamp the weekly cycle and roll it over making the monthly the boss down, or we are counter for a strong weekly cycle up against the monthly turning it positive. It looks to be all in the strength of the move and if we break 12700. At the end of the week we will see better how the monthly chart reads.
I am expecting Daily down to start the ball rolling with the TL down as the guide. If that TL down is broken then the downside is in question and we'd need a double top at 13135 to keep shorts in the game or the weekly up is the boss.