Son of If You Can Draw a Straight Line . . .
- Thread starter dbphoenix
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Regarding today´s trades, that second long doesn't seem prudent, at least not the holding part of it. Given the fact that you were at R, you could have gotten a BO to the downside and be left in pretty bad shape.
But I assume you are seeing things in volume that help you take that decision. Not sure if it still part of this thread subject though. Perhaps you should open a journal with your findings about REVs, they seem pretty interesting.
Heroic,
It seems to me that you are getting a bit confused about the reversals. The reversals take place at the edge of of a trading range. The small consolidations or swing points you see during a trend aren't the correct areas to be looking for reversals.
You can actually look for reversals in the small congestions as well, but bear in mind, that a reversal off of a bottom or top, within that mini-trading-range, is expected to go to the other end of the same min-trading-range. If price moves beyond this congestion, then it's a new breakout, and you no longer are playing reversals.
Identify larger trading ranges and then you can play reversals better, but not every price consolidation is ripe for s/r analysis, especially if you are looking for a larger trend.
The S/R material is beginning to negate the hard work you had put into the straight line trading. Are you looking for tests when you are going long or short on lower volume? If that's the case we'll need to have some more discussions regarding what you're attempting to do and what signals the price is giving. You also don't seem to understand the relationship between a test and a retracement. I don't want to be too harsh with you but you've come very close and losing your footing here isn't something too desirable.
Gringo
It seems to me that you are getting a bit confused about the reversals. The reversals take place at the edge of of a trading range. The small consolidations or swing points you see during a trend aren't the correct areas to be looking for reversals.
You can actually look for reversals in the small congestions as well, but bear in mind, that a reversal off of a bottom or top, within that mini-trading-range, is expected to go to the other end of the same min-trading-range. If price moves beyond this congestion, then it's a new breakout, and you no longer are playing reversals.
Identify larger trading ranges and then you can play reversals better, but not every price consolidation is ripe for s/r analysis, especially if you are looking for a larger trend.
The S/R material is beginning to negate the hard work you had put into the straight line trading. Are you looking for tests when you are going long or short on lower volume? If that's the case we'll need to have some more discussions regarding what you're attempting to do and what signals the price is giving. You also don't seem to understand the relationship between a test and a retracement. I don't want to be too harsh with you but you've come very close and losing your footing here isn't something too desirable.
Gringo
Thanks for the feedback guys. I really appreciate it. Allow me to respond so that we can continue to learn together.
@Gringo
Perhaps I have been getting confused with my terminology. I have been attempting to enter when price fails to continue in one direction. My intent is to hold the position upon confirmation of the failure to continue. Let me elaborate on what I'm thinking.
Every retracement of a dominant movement occurs on low volume. After the last dominant movement in a certain direction, say downward, a lower volume up-ward movement will occur as usual. When price "reverses," as I've been calling it, this upwards 'retracement' on lower volume will be followed by continued upward movement on rising volume, instead of a continuation downward on increased volume. With the increasing volume along with continued price improvement, we get confirmation that it wasn't another retracement, but rather the beginning of a movement in the opposite direction.
At least, that's what I've been getting from the material. Perhaps I have a misunderstanding, but it appears to be coherent with market behavior thus far. I do agree that it is much more prevalent and obvious when price hits a prominent Support or Resistance area, but I see the same effect occur everywhere, constantly. I've attached the section of DB's image which demonstrates this phenomenon.
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@niko
I agree with you that the second long was not good. Upon dominant downward volume I was planning on exiting, but the movement leveled out without any more strength about 3 points below when I entered. Still a mistake on my part though, I agree. However, I don't see what Resistance you're referring to for the 2nd long. Price just came down from 16, I didn't perceive any Resistance to it traveling back upwards.
On regards as to the subject matter of this thread, thank you for the reminder. I've been very interested in all of this material I've been going through and it has definitely been bleeding into my posts here. I apologize for inducing any confusion or distraction. I will scale things back to a discussion of straight line entries based off S/R context to avoid straying off-topic.
@Gringo
Perhaps I have been getting confused with my terminology. I have been attempting to enter when price fails to continue in one direction. My intent is to hold the position upon confirmation of the failure to continue. Let me elaborate on what I'm thinking.
Every retracement of a dominant movement occurs on low volume. After the last dominant movement in a certain direction, say downward, a lower volume up-ward movement will occur as usual. When price "reverses," as I've been calling it, this upwards 'retracement' on lower volume will be followed by continued upward movement on rising volume, instead of a continuation downward on increased volume. With the increasing volume along with continued price improvement, we get confirmation that it wasn't another retracement, but rather the beginning of a movement in the opposite direction.
At least, that's what I've been getting from the material. Perhaps I have a misunderstanding, but it appears to be coherent with market behavior thus far. I do agree that it is much more prevalent and obvious when price hits a prominent Support or Resistance area, but I see the same effect occur everywhere, constantly. I've attached the section of DB's image which demonstrates this phenomenon.
---
@niko
I agree with you that the second long was not good. Upon dominant downward volume I was planning on exiting, but the movement leveled out without any more strength about 3 points below when I entered. Still a mistake on my part though, I agree. However, I don't see what Resistance you're referring to for the 2nd long. Price just came down from 16, I didn't perceive any Resistance to it traveling back upwards.
On regards as to the subject matter of this thread, thank you for the reminder. I've been very interested in all of this material I've been going through and it has definitely been bleeding into my posts here. I apologize for inducing any confusion or distraction. I will scale things back to a discussion of straight line entries based off S/R context to avoid straying off-topic.
Yes, I suppose you're right and a downside BO could have happened, although it didn't seem like the most probable occurrence. Expected some push back from the support at the time since it hadn't even been tested in a few days' time.
I'd like to think if a BO did occur, the fall-out would have been violent enough that even if I reversed at -5 points the short would have put me back into the green.
I would be more alert to a possible BO the next time traders drill the support than I was this morning at 10:00.
To elaborate, I've had this blue channel drawn in for several days now, and have posted it once or twice this past week.
If you keep that in mind when price hits the RTL around ~3510 at 10:00 this morning, you can clearly see the support come into play. LOLR clearly becomes up even before you have your Supply Line break.
I was looking at QQQ, and was asking why would it not fall? I then came here, and found out that indeed there are people who were long today.
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