Yes, obviously this 3 or 4 day trend is part of a higher time frame trend one way or the other. In this particular instance I'm looking short term. Also, "bars", of any duration, can replace "days".
If you continue this line of thinking, you’ll see the ‘4 points’ of the ten cases of price. By taking the highs and lows of two bar combinations as a starting point, the ‘4 points’ bounded by two parallel lines distinguishes ‘3 moves’. The three moves roughly translates to the broad categories of traders. Missing from your model is the symmetrical opposite trend - offset by one peak. In other words, the 1st move of ‘smart money’ was born in the prior opposite trends ‘dumb money.’ In an ideal world this would couple perfectly with ‘bars’ or the time period those bars represent. If it was so easily seen, then everyone would take advantage of the phenomenon. In observable price action, those moves can translate within a single bar or over the span of multiple bars.
I agree. But what i try to do is just catch the herd then get out, hence my 3 day (bar) exit. I'm totally willing to leave money on the table. The trick is recognizing the catalyst of and acting on the "smart money" move.
Yes , the difficulty is "seeing" the initial 1st bar. What indicator or tell, outside of volume, do you use to recognize such ?
So far we seem to be agreeing that 3 bars could mean 4 and a bar could be of any length. So maybe we could be talking about 5 bars or maybe 6, and maybe consecutive bars could be of different length? I think with so much latitude we could generate any chart pattern known to man plus a few more every week. This isn't a very convincing rule so far.......
Price and Volume are all that's required, which the market provides. Annotations and Logging, that's a trader's role. The easiest to see is the crossover of the trend's right trend line. The more difficult to see is the failure to traverse which happens closer to the left trend line. These occur frequently in opposing clusters all the time. It's really a process to begin. Little tips here and there do not a comprehensive system make. It's the combinations of price and volume in a sequence that creates the signals of continuation or change. To start, search on the 5x5 grid drill. Do the drill by hand, to begin differentiation on one bar. Post the result. The three moves are fractal in nature and can be seen on any timeframe, any market, provided enough liquidity.