Simplicity in TA

Quote from dv4632:

Ok, Tuesday's FTSE action was not a big move. Tried to go up but couldn't hold it and ended up closing near it's lows with an inverted hammer candle.

So the short still looks good, right?

Thanks again.
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FTSE gives a SHORT signal - you trade the signal and get out of the way until there is an opposing signal. Don't ask if there is no signal. Wait for the signal.

Keep in mind this pattern has a pull back before the drop.

The Dow daily is oversold but any bounce is into a weakening daily cycle and the weekly chart wants down. Context looks like a failed bounce setting up Dow daily but the weekly can steam roll it down. Wait for the signal.

The FTSE pattern break took out the weekly up trend line because it was the weaker market. The Dow still has to meet this line and that is where the equivalent Dow signal will be set up.

Then if the Dow signals down I will be looking for the pull back and real move down.

Remember: election year means do everything that can be done to support the market. Corrective waves are complex.

Weekends are when I have a chance to do more in depth analysis.
 
Downtrend from the 2007 high:

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Yes it's a possibility. Here is how I'd draw your B/o line (pink). The problem with the pink line is the 3rd reaction point (last double top) is a bit loose last time and the same goes for the way PA is sitting on it now. I want something cleaner with less space between decision points to give better quality decisions.

This makes it a a trappy zone with 3 levels (your pink, my red and white) and until the top white one is taken out I want to play the whips as the FTSE shape suggests a false break up (redraw the wedge to keel all bars inside). The oversold daily gave us an up day as expected from my last post and now it looks messy.

The red is a hard reaction level and the white is the break out and I prefer these to the pink as it doesn't have a clear 3rd reaction point imo.

This is a whippy area with the 4hr close to completing the up cycle so it will want down soon while the daily would be better off if we could get a bit higher. Meanwhile the weekly is wanting down so we need to get a break out to negate that and take us into trend up. The weekly close will hopefully clarify.
 

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FSC does not snap trendlines drawn towards the highs and lows of bars, therefore, the inconsistency and inaccuracy obtained when drawing them renders most projections useless.

Crazy A
 
Quote from Xspurt:



This makes it a a trappy zone with 3 levels (your pink, my red and white) and until the top white one is taken out I want to play the whips as the FTSE shape suggests a false break up (redraw the wedge to keel all bars inside). The oversold daily gave us an up day as expected from my last post and now it looks messy.

The red is a hard reaction level and the white is the break out
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Not much to comment on. The up signal on the daily is still in play with the only other daily signal being a continuation hold long signal.

Coming into the weekly white horizontal resistance the daily cycle has started down so once again I will be looking to take a reversal short signal if it appears or continue to hold long if no reversal signal is given.

The job figures were very encouraging and lifted the markets... just a pity 1.2m were dropped off the jobless count. As I wrote, this is a year when the massage oil will be needed to keep Obama looking good and traders better be nimble to stay in the game.
 

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As we nudge into the major resistance (white horizontal on last chart) with the daily cycle in a weak phase there is the chance of an Engulfing signal.

A month or so back (on a different thread) I was amazed to discover that a number of ET'ers had misunderstood what an Engulfing Candle is. Even after I posted this link they still misunderstood what an Engulfer is...

http://www.candlestickforum.com/PPF/Parameters/12_61_/candlestick.asp

So I highlighted the formula but just got called an idiot...

The formula is relatively simple;
(O1>C1) and (O O1). Defined as the open of yesterday is greater than the close of yesterday. And the open today is less than the close of yesterday, And the close of today is greater than the open of yesterday.

It was the wicks that was throwing people off the correct view and the result was missing an Engulfer signal which can be one of the strongest signals when it is in context and ending a quality move.

One veteran believed there are no candle signals on range charts and this was rooted in not understanding the Engulfing signal. No Engulfers = no proper signals in his mind.

I've been using range bars for well over 10 years and the Candles don't actually know they are range - they think they are measuring movement so a signal on range is the same as tick, time or volume, but that is an aside. I use range intraday every day and the candle signals are the same high quality as any other chart.

I thought I'd mention this so if I refer to an Engulfer as I have done in the past, readers of this thread will understand what the real beast looks like and not miss out on what can be a glorious reversal signal.

Engulfers and Failed Engulfers are powerful signals. Failures are a big topic for another time and place but basically a failure is the last throw of the dice by the weak hands.
 
Hi Xpurt, I forgot to ask this last weekend...

What would the people who went short the FTSE when it broke down from the rising wedge have done when price broke out again last week? Stopped out or reversed to long?

London is on a breakout bar, long over the top and short below the last bar.

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The FTSE behaves as expected...
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chart: http://www.elitetrader.com/vb/attachment.php?s=&postid=3432300


Another question:
You said to redraw the rising wedge on the FTSE and that its shape suggests a false break up. Could you explain why it suggests false break up? Thanks.
 
Quote from Xspurt:

The formula is relatively simple;
(O1>C1) and (O O1). Defined as the open of yesterday is greater than the close of yesterday. And the open today is less than the close of yesterday, And the close of today is greater than the open of yesterday.
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So basically, a bullish engulfing candle is an up candle, which follows a down candle, where the body of the engulfing candle engulfs the prior day's BODY. No mention of highs or lows. Right?
 
Quote from JoshDance:

So basically, a bullish engulfing candle is an up candle, which follows a down candle, where the body of the engulfing candle engulfs the prior day's BODY. No mention of highs or lows. Right?
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and then it's a possible reverse of uptrend if thats what we were in or vice versa
 
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