Registered: Dec 2008
10-29-12 07:10 AM
Quote from NoDoji:
The best way to define a strong trend objectively is to look at as many after-the-fact examples of what you consider a "strong trend" in your selected trading time frame and note as many markers (price patterns, indicators) as you can that occur during that strong trending price run. You should find certain markers that occur across all the examples. These become your strong trend identifiers.
I've found that the one marker that occurs in strong trends in both my 5-min intraday time frame and my daily swing trading time frame is a failure of price to close below a 20-period EMA before resuming. In extremely strong trends, price may not even pull all the way back to a 20EMA before resuming.
I've also found that the price action leading into the start of strong trends is usually a break out of a period of low volume consolidation with no retrace into the consolidation zone or a significant gap up through previous resistance or gap down through previous support with no retrace into the gap zone.
Since you never know for sure if either of these conditions will trigger a trend, much less a strong trend, you must do what all traders do on a regular basis: Assume the risk, be prepared to take a loss at the price where the breakout would be considered a failure, and let the winner run until the trend puts in a clear reversal signal in your trading time frame.
Simply a somewhat different view
I like to see where in a consolidation area a battle ensued
I like to see trapped traders either on the long side
, or short
I like to see where shorts and longs fought for control and blood was exacted
iow I like to see pressure build up
So that when it eventually bursts and it always does it bursts with a big boom (meaning = with move traders are scrambling to get in
the other side exiting with their asses scorching)
The other way a strong move occurs is when one side is conspicuously absent
I can always rest assured either of these types of moves will go big
To eyeball the magnitude of a move (I hate the term trend) lets say its an UM in this instance;
Draw a diagonal line @ 45 degree up angle
Above it = is strong/ growing stronger
On it = is nominal
Below it = is weak/ weakening
Reverse above for a DM
Mkt likes 50% levels
45 degrees is half way (50%) between dead flat, and straight up to the fn moon
Or half way between dead flat and straight to hell (holloween humor as it were)