Simplicity in TA
- Thread starter Xspurt
- Start date
Good questions Dv.
The old rule when trading the indices is to look across all the main indices for clues. Is one leading - are they running together etc.? There used to be an opportunity for arbitrage but now with computers and the global nature of the markets what happens in one index impacts others on the far side of the globe within seconds.
What changes is the amplitude of the move making them look like they are independent of each other but now you can trade one off the other.
So for someone with a bit of savvy trading the FTSE they would keep a very close eye on what is happening on the Dow and especially so at key levels.
When the Dow was falling and I was saying the 4hr was oversold and due to reverse the FTSE trader would be watching that like a hawk and taking advantage of the reversal which in turn rolled into the daily reversal as there was no sell signal.
If however they were not alert to the Dow or they are only trading EoD signals then here is the way to read this.
On the attached chart the pink base is the old wedge I posted and the sell was the break of the low of the red candle resting on the pink wedge base. The white oval shows the sell.
Remember this formation usually has a pull back and if we get an early reversal it tends to indicate a failure and the need to redraw the wedge.
If we missed the Dow 4hr warning then the next candle after the sell candle shows a big tail where the buyers tried to take the FTSE up. This is our big alert and we need to see who wins the inside bar battle (marked by arrows). Below the lows is a great continuation signal and above the high is the inside bar buy signal.
The result is a break even reversal long signal and we can redraw the wedge to accommodate the PA.
I'll deal with the false break up next.
My reasoning relates to the weakness I saw coming into the Dow that would possibly reverse at resistance and the fact the FTSE was also running into a potential bull trap.
What happened since is PA on both indices has indeed stalled at resistance. To see my reasoning on the FTSE we need to zoom out and look at the weekly chart.
The low before the lowest low can have powerful relationships to future S&R and I have drawn this in blue. In addition there is an aggressive (faint) weekly resistance meeting here so we have a key level on the weekly that is perfect for a bull trap.
With the major red resistance above we could easily spike into it so a close watch is needed.
A Marubozu is a candle that has little or no wicks and is considered very bullish if it's green (marked on chart attached).
A Marubozu that breaks a prior high is even more bullish.
It was in this bullish context that I was saying the daily was showing weakness which won't make much sense to anyone reading the Marubozu on my last post as it looked like it was going to attack the resistance with force.
In the thee days since the Marubozu bullish close the Dow has only managed to close 14 points higher due to the weakening daily cycle and is virtually touching resistance now.
There is no sell yet so we await the outcome at this pop or drop level.
Hey X,
Couple of questions Sir â if youâre inclined to share
Regarding candles
Whatâs your view on the relationship of tails to bodies
==================
Regarding Channels (specifically 3 posts above this)
When / what makes you decide to strike another line (modify a wedge) ⦠or maybe even completely redraw your channel (if you do)
And you may have already posted these and I just missed them
Thanks
RN
Couple of questions Sir â if youâre inclined to share
Regarding candles
Whatâs your view on the relationship of tails to bodies
==================
Regarding Channels (specifically 3 posts above this)
When / what makes you decide to strike another line (modify a wedge) ⦠or maybe even completely redraw your channel (if you do)
And you may have already posted these and I just missed them
Thanks
RN
New Post 02-09-12 04:33 AM
Hi RN, always a pleasure.
I have three sets of rules for that but it's a bit too advanced/complicated for here and I'm short of time.
Over the weekend I'll get them to you.
I have one for trading against Bots intraday, and for any time frame one for zoning and one for catching early entries.
Best regards,
X
