Forums > Main > response to: A simple price action approach, for beginers

 Jun 15th, 2011, 01:10 AM #13 traitor786     Join Date: Jan 2011 Location: montreal Posts: 803 1. Making Channels A) In a downtrend, first draw a top line connecting the highs (TL, or trend line). Then draw a bottom line that is parallel to the top line (this is called copying). This line encompasses all the lows. *** B) In a uptrend, we first make the bottom line and then copy (make a parallel line) to the top. *** {We are assuming we only need 1 low point at the bottom} C) A channel by definition is 2 parallel lines that encompass most or all of a trend. **** D) Channels need to be adjusted from time to time. **** E) Channels can be changed and expanded. F) A channel can be expanded if TL’s are penetrated ****It should be noted that others use a more complex way to do this involving finding a swing low in the center of a trend line to identify where the bottom TL lies. Also, this system seems to have certain rules as to when a TL can be adjusted. This system needs to be clarified**** G) Once a channel is broken, we can make a new channel. We can go deep into the old channel to find points that support our new channel*** ***if the points in the old Channel don't connect with point in the new channel can we simply ignor points within the old channel*** H) It seems like not everyone sees the same trend lines. I) Trends do reverse. Think of resistance or support as a sand wall, as it keeps getting hit, the wall starts to crack and eventually will break." as stated by oraclewizard77 2 RESISTANCE AND SUPPORT. A. Support can become resistance. This resistance/support line is identified by a horizontal line taken from the bottom of the previous apparent low or top of the apparent high 3 TRIANGLES A) Trend lines are drawn to connect highs and lows during a horizontal consolidation. These lines are not parallel. In this case we have a triangular formation. B) Examples of a triangle are: "wide symmetrical triangle formation" a wide triangle the has its center line horizontal. More to come as we come across them. C) Whenever possible, we use non-parallel lines to make a triangle instead of a channel ***Is this correct and Does this apply only for horizontal trends?*** D) Triangle formation mean that a break out will occur. Unlike channels, we have an idea as to were it will break. (Before the lines converge) E) Break outs coming out from a triangle are more strong then ones that come out of a channel*** *** Is this true and is there a way to know how big the break out will be F) If we see that there is a fail to hit a TL of a triangle. It shows a weakness in price to move in that direction. *** *** Is this weekness on its own enough to short in a down trend? G) If a Wide Symmetric Triangle occurs during a downtrend chances are it will break resistance and fall H) To better time and judge a entry point, we can look at a 1 min chart. In the one minute chart we can see if price was not able to cross a 20 day moving average (20 EMA) The 20 EMA acts as resistance and support, We should wait to see it retested. *** **** Is this a rule only for triangles? Or is it a general rule that can used for any trend? If so this should be in a different category. I) By viewing what is going on inside a triangle we can make an assumption about where the break out will occur. 3. GENERAL A) When we have an indication of price movement that may not be a strong indicator we can look for another weak indicator to confirm our move by looking at a 1 minute chart. POINTS OF ENTRY A) If you don't adjust your Channel, short in a downtrend. When price just cross's the channel and comes back in. There is no need to wait for another bar, as soon as it crosses in you can short. B) If you do adjust your trend line, then short whenever price touches the top of a channel in a down trend and price is seen going back down. C) Keep shorting every time this happens until we hit the lower part of the trend line. D) We only short in downtrends and only go long in uptrends {is this corrcet} E) 2 If the open and close are not outside the channel it is not a place to enter*** ** This may only apply for people that don’t adjust there channels right away. *** If there is a close out side the channel but the open is in the channel would this be a good place to short? Quote
Jun 16th, 2011, 12:39 PM   #15
killingtheta

Join Date: Jul 2010
Posts: 41
If you don't mind, I would like to share a pattern that I have been coming across over and over and over again while I have been backtesting. My backtest consists of entering with the trend on minor retracements. Preferably a pullback to the 20EMA. I believe Al Brooks describes this in his book, but I did not understand it until I saw a post with a chart by NoDoji in Metals thread. At some point hopefully soon, I will have completed a thorough backtest for this pattern and will be able to give specifics as to what the expected outcome for this trade is. For now, it works more times than it doesn't.
NoDoji pointed this out on page 69 of "A simple price action approach" and describes it pretty well. It involves a failure of a test of s/r and a breakout of a triangle drawn by trendlines.
Here is an attachment for a trade I took using this method today.
With any luck, we can get Nodoji to comment.
Attached Images
 es 09-11 (5 min) 6_16_2011.jpg (131.7 KB, 146 views)
Quote
 Jun 16th, 2011, 12:55 PM #16 traitor786     Join Date: Jan 2011 Location: montreal Posts: 803 ok well what i see is a buy in an uptrend after price hits support of a channel.. is there any other indication to buy besides the a bounce off support ? Quote
 Jun 16th, 2011, 02:02 PM #17 IanMacQuaide     Join Date: Feb 2007 Posts: 1,872 traitor, are you using a 5 min chart for all of this? Quote
Jun 17th, 2011, 03:26 AM   #18
traitor786

Join Date: Jan 2011
Location: montreal
Posts: 803
Quote:
 Quote from killingtheta: If you don't mind, I would like to share a pattern that I have been coming across over and over and over again while I have been backtesting. My backtest consists of entering with the trend on minor retracements. Preferably a pullback to the 20EMA. I believe Al Brooks describes this in his book, but I did not understand it until I saw a post with a chart by NoDoji in Metals thread. At some point hopefully soon, I will have completed a thorough backtest for this pattern and will be able to give specifics as to what the expected outcome for this trade is. For now, it works more times than it doesn't. NoDoji pointed this out on page 69 of "A simple price action approach" and describes it pretty well. It involves a failure of a test of s/r and a breakout of a triangle drawn by trendlines. Here is an attachment for a trade I took using this method today. With any luck, we can get Nodoji to comment.
Yes I really like this chart. what are your thoughts on it ?
Quote