To be sure it can be in the eye of the beholder. Right where i started the gray range box is right where believed the channel was starting to morph into a range. So 20 or so bars later we are at the point where I would identify and call it a range and use range tactics. I see the channel getting flatter prior to my entry bar. To me that is the transition from channel to range. And that observation was confirmed many bars later after my entry and the session dragged on.
Yes it could be drawn higher up. But it would be the most logical thing to do? Nevertheless, you can have ranges within ranges. I see them quite often.
And based upon the bars my premise was I would see a push at least as high as the top of the range box. Yes, it was an extrapolated range box extended out.
Another side to this or shall I say another way to look at it is bear channels are bull flags (on a higher TF and the likely resolution is a BO north of the channel that will become a successful BO.) The channel has been going on for quite some time. Every BO attempt top or bottom has failed. The bull bar before my entry bar was the biggest bull bar in over 45 bars. At some point a BO of a channel will succeed. Of all the previous attempts this one was the most likely to succeed. We got that larger bull bar closing right at the top of the channel and closing on it’s high. I could delete my gray range and trade it as a successful BO of a bear channel. It doesn’t matter which way I trade it. I drew the box in to help me see if there was a transition into a range. My eyes...brain...perceived there was (which was proven out afterwards) and so I traded it like a range trade from the middle. However, I could have traded it as a successful BO of a bear channel and done the same trade.
Trading discretionary is subjective. Your last two low points on your lines and the sideways action right after those points is where my eyes can detect a flattening of the channel hence a good time to draw a range. The top and the bottom of the range should the logical width of say DT’s and DB’s. Where I drew the top and the bottom of the range made the most logical sense to me. It is important to identify when I think a possible range is beginning because I need 15 to 20 bars after that to then call it a range and use range tactics. Since I traded it as a range I needed to use range techniques for my entries and exits. If I would have traded it as a channel I would use channel BO techniques. But I didn’t trade it as a channel. In this case it was probably coincidence that both were right there together and either could have been used.
Remember, I go by larger context...market phase...individual bars...MA’s related to price...relationship of bars to other bars to determine buying selling pressures.....gaps..time gone by....size of bars...sequence of bars....open and closes of bars...and sometimes different TF’s. Finally, I look at all this in the immediate patterns that are forming or that have formed. Then I look for specific setups based on all of the above.
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