Xspurt, As I stated early on trendlines are not always science, there's an art aspect as well. In this case I cloned the trendline to a lower swing low than the one between my two points because that was largely noise and this lower swing low is clearly of importance. You can experiment with cloning a trendline to successive swing lows, for example, and see if you like that approach. It works, too. There's a case to be made for adjusting trendlines but I want to see pierces, this is where entries and exits come from. Even if a trendline is pierced I will hesitate to adjust it unless the newly created swing is of fairly major size. The other consideration is that a channel only works for so long (ie not very long) and you want to be on board at its inception. By the time you adjust your channel everyone in the world is aware of what's going on and the game is over. Yes I do use levels, but probably not in the conventional sense. I will introduce those ideas shortly. metal
Glad you like the posts, B. I try not to take counter-trend signals unless they're like what NoDoji described in one of his posts. That is, for example, if a larger time frame chart (like the 60min) is in an up trend and I have a 5min downtrend, then I would consider a counter-trend long entry off the 5min copied trendline, the one running under price. As soon as you get a HH, you start drawing an UTL. The last short was about 11:00 and by the 14:00 HH I wasn't looking for shorts anymore, especially since the last short didn't hit the target before price reversed. I didn't draw it but from that point on I was looking for longs. Hope that answers your question. metal
Metal, great trade, great charts and many thanks for one of the best threads on ET. I've become a rabid channel surfer! ADD: Just saw your last post. I'm a "her"
Very right, NoDoji. So far I've agreed with everything you've said here. lol. I'm glad the info is helpful. metal
afto, The initial trendline is everything. Once price responds to it you have some very valuable information. Is it being rejected or followed? If rejected you take your small stop and look for the next trade. If it's being followed you have a potential winner. The cloned trendline is much less useful in this respect.
Channels should not be readjusted for two very important reasons. #1 You want to see the breakout failures #2 After these failures, occur, now "heads" you want to see the shoulders. Shoulders holding represent continuation, shoulders breaking represent potential reversal. Little vague but you gotta do your homework to make good sense out of it. Crazy A
Metal, please elaborate on that last statement? How is the cloned TL less useful since it's the TL that completes our "Channel", and is a guideline for Profits, yes? <lost
What I meant was that the initial trendline sets the stage for the whole trade. If price doesn't respect it then there is no case for the cloned one. But of course once things are rolling we'll need it for the exit.
I've been placing equidistant channel lines during periods of consolidation following strong trending moves. This was amazingly useful today when an apparent bear flag channel broke upside and price headed straight to the next line. There was a pullback to the 20-bar EMA on the 5-min chart, where it took me two attempts to get long. My first long entry was so perfect I felt like a trading goddess. It ran about 15 ticks and I assumed it would just keep going, so I moved my stop to b/e. Came back to my stop, ticked me out and took off again. It was quite sneaky, you can't even see it on a 1-min chart, only on a tick chart. No matter, because after running 30+ ticks without me on board, it came all the way back to my initial entry level again and stopped at support. Quadruple support is good enough for me and I got right back in. This time the move was solid. The levels I wanted to see break out to keep me in the trade were: > Previous resistance in the 98.40's > Previous support in the 98.90's prior to the huge sell off, which coincided nicely with the secondary channel line as price got there. > The upper channel line of a new channel drawn following support at the 20 EMA (darker lines on the chart) > Pre-selloff resistance near 99.70, which ended up coinciding with the tertiary channel line All levels were reached and broken through. However, I got antsy when price found initial resistance @ 99.49, those .50's and .00's can be strong. I exited off that R level. (Re-entry tactic to follow.)