Thanks for the charts.
I did glance at the bigger picture but it didn't help me with the scenario I described. Let me explain...
On April 10, price came down and closed on a daily chart trendline, as shown on your chart.
On April 11 the market bounced off that trendline with a gap up. But that still doesn't solve the problem of the conflicting messages between SPY and DIA on my trading timeframe. Do I long the SPY backtest in anticipation that the daily TL bounce will continue? Or do I short the DIA channel limit in anticipation of a gap fill?
That dilemma really messes with my head. It is a lot easier for me to just trade one or the other. If I'm a SPY trader I go long on the backtest and take my hit when it doesn't work out. No big deal and on to the next. Though obviously it would be better to have been a DIA trader on that particular day.
It is so tempting to look back in hindsight and think "if I'd been watching the DIA I'd have known resistance was there and I wouldn't have been stopped out!" But I don't think it's that simple and straightforward. Adding the second set of lines changes the decision making process dramatically, at least for me.
If anyone does trade successfully using more than one index on your trade entry timeframe, I'd love to see some examples of how you do it. I can deal with watching both on a daily chart, but on the intraday trading timeframe it's a no go for me!
That blue channel was a minor channel anyway, one that inferred a possible steeper downward acceleration that never happened. When that didn't happen price bounced back into the bigger channel structure of that down move into the daily TL, and I got another SPY channel breakout backtest the next day that worked out very profitably.