Quote from Pepe:
I understand that we must fan our channels when we have Decreasing Volume, but I was a bit surprised to see that we do that even if we have Increasing Volume. I thought that if we have a RTL BO with increasing volume, we have a change in Trend. No subjectiveness here imho
Correct. Nothing subjective at all. Now, what is different about this particular situation described above compared to all the other situations where one does not fan on increasing Volume? Your two guesses didn't catch the big difference.
Your Pink highlights broke in the same differection as the orginal moves on the FBO's
No. These are not the three possibilties to which I refer. Think. What could happen with a BO. Begin with the open, and finish with the close of a bar forming after a Pennant which begins to break out. What can happen next. Three possibilities exist.
Not at all, but what you describe does represent an option. However, if one knows what can happen, and has a plan in place to handle what does happen, then no need for freak out exists.
I didn't say I 'knew' the lateral would break up. I said one can see the dominos falling. Just becuase the dominos begin to fall, doesn't mean the sequence will unfold exactly as one plans. At some point when things do not unfold as one expects, one says, "What wasn't that?" In this particular case, no such question needed asking.
Now, does anything on the chart indicate Price was preparing to head down? Of course not. This requires no additional toolset other than Price to determine continuation or change in this particular area (based on one's resolution). The 'change' sequence never materialized, and what do we call a lack of change? Continuation.
Quote from dkm:
I must confess, this statement has shaken my confidence considerably. I am currently using only es, ym, prv and channels, not having yet reached anything like consistency in my abilities to anticipate correctly the direction of price movement. The suggestion that fanning a channel is "optional" on the appearance of an rtl bo on increasing volume is bewildering.
You've seen the examples many times, but simply do not realize it. In fact, the same question had been asked in this Journal once before (or possibly in a chat conversation posted to the Journal). Again, what differences exist in this example compared to other examples where one would never think of fanning?
When first learning to use the YM, I recommend only heading over to use it as a tool when ES sits on or near the extremes (RTL or LTL). As one obtains more experience, one can add additional points of change (such as formation BO's).
- Spydertrader