Quote from Pr0crast:
Your pink RTL (my orange) was broken on increasing black volume. Thus your red channel (my dotted channel) is just a fanned out version of your pink channel using a recycled PT3, which I thought was only done when the RTL breaks on DECR volume.
Walk with me a moment (push your chair back from your monitor) as I try to have you 'see' through my eyes and look at the Big Picture. If you look at your chart, you appear to have two forests coming together to form a 'V' shape (Orange Down and Blue Up Channels). Now, I see absolutely nothing incorrect or wrong with such a view, but I subscribe to a slightly different viewpoint when it comes to 'tops' and 'bottoms' of trends. For me, the market doesn't 'stop' and 'start' so much as it rolls through a turn. This is just the way I view things. To place it in perspective, we often hear traders speak about the transition of one trend to another trend in terms of, "the market
rolling over."
While true, the channel to which you refer (My Red and Your Dotted Grey) appear as any other 'fanned' channel, the difference resides in the context. When Price breaks through an RTL on
decreasing Volume, the market has told us the current channel is
incorrect. As such, one
must draw a 'fanned' channel in an effort to insure Gaussians match the correct channel.
When Price breaks an RTL on
increasing Volume, the market has said, "While the previous channel
was correct, the current trend has
changed." In such an environment, the next question becomes, 'How much has the trend changed?" In our particular example, I view the period of time within the red (your grey) channel as the market transitioning from Dominant Down to Dominant Up.
I view the market in such a fashion when we have a recent High (New Point Three of the Red [Your Grey] Channel) which fails to 'take out' the previous recent High (Previous Point Three of your Orange Channel and my Point One of the Red Channel). To me, the market (at this point) simply finds itself "rolling through a turn," rather than, stopping one trend, and then, starting another.
Again, I attach no level of 'correctness' to either 'view' of the market.
Both viewpoints obviously work, and we ultimately arrive at the same place, through
slightly different routes. Continue to use whichever 'view' you feel best allows you to 'see' the changes taking place.
I hope you find the above information helpful.
- Spydertrader
