Quote from The Swordsman:
Any comments on this scenario that you think would be helpful?
The bar to which you refer shows all the classic signs of an Intra-bar Gaussian shift - which seem to give many people trouble. You correctly observed the need to 'fan' out the down channel, but it appears you may have missed the outside bar forming a Point Three in the opposite direction on the prior bar. Whenever we 'see' an Outside Bar, we want to make sure we don't miss a channel. Secondarily, when Volume tells us we have, what appears to be, conflicting signals, we want to make sure we always know where we are. In this
specific case, we find ourselves in between two trends - a fanned down, and a newly formed up (brown and green respectively on my chart).
O.K. so things appear to be 'conflicting' as we first look, but are they
really? If we mentally split the spike bar in two, we can 'see' Price rising on Increasing Black Volume, then pulling back on decreasing red Volume. As you pointed out, price never returns to the Original channel, nor does Price even break the low of the previous bar. So, while we might 'see' the first dominos of change, we
never 'see' what
must come next. As such, we recognize our 'change' as only temporary, and to be sure, one which probably sits
below our current resolution level. When what
must come next,
doesn't, you have a "what wasn't that?"
And in almost all cases, "What wasn't that?" indicates what you thought you had, no longer can be. Time to fix that which you broke, and take immediate action.
Hence, "First by accident, then by design."
Understand, unless one uses finer tools (in this
specific case), missing these sort of Intra-bar changes becomes a common occurrence. What is important however, is not to attempt to catch every one, but rather, to focus on knowing what to do (and immediately doing it) when what you believed you were 'seeing' turns out not to be the case.
I hope you find the above information helpful.
- spydertrader
