Simplicity in TA

Thanks for the charts.

I did glance at the bigger picture but it didn't help me with the scenario I described. Let me explain...

On April 10, price came down and closed on a daily chart trendline, as shown on your chart.

On April 11 the market bounced off that trendline with a gap up. But that still doesn't solve the problem of the conflicting messages between SPY and DIA on my trading timeframe. Do I long the SPY backtest in anticipation that the daily TL bounce will continue? Or do I short the DIA channel limit in anticipation of a gap fill?

That dilemma really messes with my head. It is a lot easier for me to just trade one or the other. If I'm a SPY trader I go long on the backtest and take my hit when it doesn't work out. No big deal and on to the next. Though obviously it would be better to have been a DIA trader on that particular day. :)

It is so tempting to look back in hindsight and think "if I'd been watching the DIA I'd have known resistance was there and I wouldn't have been stopped out!" But I don't think it's that simple and straightforward. Adding the second set of lines changes the decision making process dramatically, at least for me.

If anyone does trade successfully using more than one index on your trade entry timeframe, I'd love to see some examples of how you do it. I can deal with watching both on a daily chart, but on the intraday trading timeframe it's a no go for me!

That blue channel was a minor channel anyway, one that inferred a possible steeper downward acceleration that never happened. When that didn't happen price bounced back into the bigger channel structure of that down move into the daily TL, and I got another SPY channel breakout backtest the next day that worked out very profitably.
 
i watch the spx,es and spy on the tl's and the market profile,also watch the dj transports for confirmation on turns and fakes,early halts before target, blow thru targets,the key word is targets ,if you just trade around supp and res you will make a lot less trades with higher percenatge of winners and your losers will be small since you will know soon if you are wrong..but watching mutiple instruments is a must, the market is sensitive to the euro solvency and its smaller members,if you are not watching these ,expect to be surprised,multiple market awareness is a must,not a choice..as far as your spy dow ques,if you have conflicting signals ,its not a place to put on a trade,high percentage or sit on your hands
 
Those are good points.

I agree that if there are conflicting signals then it's not high percentage and you should definitely stay out. Problem is when I'm looking at too much stuff there are almost always conflicting signals. :)

So you watch TL's on SPX, SPY, and ES? Wow, that would drive me crazy because the lines tend to be in slightly different places on each one.
 
I didn't get time for an update this weekend. I am interested in getting the close for the month as we are on a Doji now and prices often close here.

The last daily ABC pattern has just developed into a bigger daily ABC pattern so the analysis is pretty much a re-run of the last ABC top and this still holds the potential for W2 top and W3 down.

Very clear TL and top horizontal resistance for a simple buy above and sell below.
 

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Is this a correct way to adapt to market movements?

First chart shows a downtrend underway.

On Monday price tries to break below the channel and reverses back inside, backtests it, then good long trade?

On Tuesday price sells off below the channel.
 

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Next chart.

Price sold off below the channel on Tuesday.

Wednesday morning indicates a gap up back inside the channel.

However, I don't know what will happen next. Maybe we'll bounce back and the red channel is holding. Or... maybe that breakdown was the start of a steeper descent. So I draw a purple channel that would encompass that scenario, and see how price reacts to it.

Initially price appears to respect the purple channel, but quickly bounces outside of it, making it seems a steeper decline is not in the cards. It puts in a backtest later on but if you went long on that you'd have been stopped out if you had a tight stop.
 

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On Thursday the bullish scenario unfolds with price breaking out of the bigger down channel.

I now draw a prospective up channel in purple, and on Friday price crashes through it. Then gives a backtest of it for a short trade?

Am I doing it right? :confused: :)
 

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