What is the rationale behind trendlines?

[pinabetal]

Trend lines are very valuable to me as they show you where market makers have built inventory. They also clearly show where a significant portion of traders placed their stops. If you go on any social media where retail traders congregate you will see they love to play trendlines. Given the majority of this group of traders lose money consistently why would you want to make decision in the same way as them. If you think logically its the same thing as expecting a vegetarian to know how to cook a good steak.

The reality of trendlines is that they sometimes work and they sometimes dont. Just the same as fibonacci, moving averages, stochastics etc. Some of the time any of these tools will work, other times they wont, that's the hook for the trader to get them locked in to gamblers fallacy.

What is actually happening is you are being gamed.

Unclear. You appear to use trendlines then you appear to be against them? Yes,it is a game. A game of wits and skill. Like any game you sometimes lose and you sometimes win regardless of the tools you use. Casinos certainly lose, but on average, they gonna win or be put out of business. The good thing about price action is that it shows, to some degree, what all the players are doing. Their reasons and motivations for the most part are unknown and cannot be known. Too many participants.

 

[pinabetal]

i frankly do not buy this explanation


why?

i like "limiting" in a sense that Support/Resistance prevent price from going further

for a while i did considered trendlines as sort of the Support/Resistance... but then i changed my mind

break out of the trendlines is significant, but no these are no Support or Resistance .

trendlines are just the borders of the trend, not the limitations of it...

the way to properly draw them greatly depends of the definition of the trend.

that definition of the trend is a foundation of any trading method

i commend you for looking for the causes.. as some one said "real knowledge is the knowledge of causes, not the effects"

but i think personally in trading its a waste of time

 

[pinabetal]

I would beg to differ. Most breakouts of channels in either direction fail and price promptly gets pulled back into the channel. That indicates support and or resistance. All channels are trendlines. Therefore trends do imply support and resistance UNTIL a sustainable B.O. on either side succeeds and a new trend is established.

 

[propwarrior]

Unclear. You appear to use trendlines then you appear to be against them?

I use them to the extent that I note where other people have likely entered and where they are likely to have put their stop. I do not enter a trade when price hits a trendline as I said sometimes they work sometimes they dont.

 

[pinabetal]

I use them to the extent that I note where other people have likely entered and where they are likely to have put their stop. I do not enter a trade when price hits a trendline as I said sometimes they work sometimes they dont.

Ok

 

[qxr1011]

That indicates support and or resistance.

It depends of the definition of the support/resistance. Can you provide your definition?

 

[pinabetal]

It depends of the definition of the support/resistance. Can you provide your definition?

In general whatever creates a ceiling is resistance. Whatever creates a floor is support. There are several ideas...concepts..imaginations about why or what or how ceilings or floors are created. Some may be valid...some not..That ceiling or that floor can be horizontal or diagonal. For instance, in the case of a normal symmetrical triangle they are both diagonal and are reducing down to a tighter and tighter range. All triangles are a range of sort and all have ceilings and floors and most B.O. fail until one succeeds. Most B.O. attempts will get pulled back into the range. When a B.O. does succeed price will many times then come back to near the apex and then after that have either a continuation of the previous trend or a reversal and a new trend start. Price is always in a channel..sideways..diagonal...and those channels can be big or tight and horizontal..wedge..ascending/descending/symmetrical/contracting/expanding triangles. They all have ceilings and floors with resistance and support areas.

 

[qxr1011]

thank you

In general whatever creates a ceiling is resistance. Whatever creates a floor is support

then how one defines the ceiling or the floor?

any single spike up is a ceiling? any spike down is a floor?

or two spikes thru which one draws a line? or three?

what defines the contour of the ceiling?

but more importan when the term support resistance is used it imho assumes that there are counter (buying or selling) forces in play at that price that prevent the price from going further

do not you think that to assume that there are forces behind each reversal is too optimistic?

what if there is just an exhaustion in buying o selling?... followed by the fall of rise or prolonged sideways movement

is it reasonable to call those areas support or resistance if in realty there is no support or no resistance behind them ?

what i am trying to tell is that there are areas where price stops or reverses itself without any support resistance... one of-course can draw a line through that points and call it a ceiling/floor (another word for support resistance

but the problem with that line is - it does not hold... it's not supposed to...

Some may be valid...some not..

then how to define validity?

That ceiling or that floor can be horizontal or diagonal

i think it can only be horizontal (as i said at that price), and one can see how much implications starts form disallowing the angled S/R...

from here your example of the triangle is not an example of angled support an resistance
but of a horizontal one in the bigger time frames when the spikes throw which you draw you angled lines in the smaller time frame are insignificant shadows of bars in the bigger time frame in the attempt to the penetrate 2 horizontal support and resistance

Price is always in a channel..sideways..diagonal...and those channels can be big or tight and horizontal..wedge..ascending/descending/symmetrical/contracting/expanding triangles

understood but in light what i said earlier not all channels are within support resistance

 

[pinabetal]

thank you




then how one defines the ceiling or the floor?

any single spike up is a ceiling? any spike down is a floor?

or two spikes thru which one draws a line? or three?

what defines the contour of the ceiling?

but more importan when the term support resistance is used it imho assumes that there are counter (buying or selling) forces in play at that price that prevent the price from going further

do not you think that to assume that there are forces behind each reversal is too optimistic?

what if there is just an exhaustion in buying o selling?... followed by the fall of rise or prolonged sideways movement

is it reasonable to call those areas support or resistance if in realty there is no support or no resistance behind them ?

what i am trying to tell is that there are areas where price stops or reverses itself without any support resistance... one of-course can draw a line through that points and call it a ceiling/floor (another word for support resistance

but the problem with that line is - it does not hold... it's not supposed to...



then how to define validity?



i think it can only be horizontal (as i said at that price), and one can see how much implications starts form disallowing the angled S/R...

from here your example of the triangle is not an example of angled support an resistance
but of a horizontal one in the bigger time frames when the spikes throw which you draw you angled lines in the smaller time frame are insignificant shadows of bars in the bigger time frame in the attempt to the penetrate 2 horizontal support and resistance



understood but in light what i said earlier not all channels are within support resistance

I think you misunderstood me. I did not say all channels ...triangles are "in support or resistance" rather they all contain support/resistance nevertheless a triangle on a 5 minute chart (which contains support ..resistance) may be within a horizontal support resistance in a bigger time frame.

 

[pinabetal]

thank you




then how one defines the ceiling or the loor

any single spike up is a ceiling? any spike down is a floor?

or two spikes thru which one draws a line? or three?

what defines the contour of the ceiling?

but more importan when the term support resistance is used it imho assumes that there are counter (buying or selling) forces in play at that price that prevent the price from going further

do not you think that to assume that there are forces behind each reversal is too optimistic?

what if there is just an exhaustion in buying o selling?... followed by the fall of rise or prolonged sideways movement

is it reasonable to call those areas support or resistance if in realty there is no support or no resistance behind them ?

what i am trying to tell is that there are areas where price stops or reverses itself without any support resistance... one of-course can draw a line through that points and call it a ceiling/floor (another word for support resistance

but the problem with that line is - it does not hold... it's not supposed to...



then how to define validity?



i think it can only be horizontal (as i said at that price), and one can see how much implications starts form disallowing the angled S/R...

from here your example of the triangle is not an example of angled support an resistance
but of a horizontal one in the bigger time frames when the spikes throw which you draw you angled lines in the smaller time frame are insignificant shadows of bars in the bigger time frame in the attempt to the penetrate 2 horizontal support and resistance



understood but in light what i said earlier not all channels are within support resistance

thank you




then how one defines the ceiling or the floor?

any single spike up is a ceiling? any spike down is a floor?

or two spikes thru which one draws a line? or three?

what defines the contour of the ceiling?

but more importan when the term support resistance is used it imho assumes that there are counter (buying or selling) forces in play at that price that prevent the price from going further

do not you think that to assume that there are forces behind each reversal is too optimistic?

what if there is just an exhaustion in buying o selling?... followed by the fall of rise or prolonged sideways movement

is it reasonable to call those areas support or resistance if in realty there is no support or no resistance behind them ?

what i am trying to tell is that there are areas where price stops or reverses itself without any support resistance... one of-course can draw a line through that points and call it a ceiling/floor (another word for support resistance

but the problem with that line is - it does not hold... it's not supposed to...



then how to define validity?



i think it can only be horizontal (as i said at that price), and one can see how much implications starts form disallowing the angled S/R...

from here your example of the triangle is not an example of angled support an resistance
but of a horizontal one in the bigger time frames when the spikes throw which you draw you angled lines in the smaller time frame are insignificant shadows of bars in the bigger time frame in the attempt to the penetrate 2 horizontal support and resistance



understood but in light what i said earlier not all channels are within support resistance