I have better idea. Why don't we discuss a corkscrew formation. It works the following way. Draw a flag formation and then attach to it its mirror image. If the price follows this mirror pattern then you are in a "clock wise corkscrew" formation. If the price breaks out of that mirror pattern then you are in a "counter clock corkscrew" formation. This simple pattern is very reliable and could be verified by drawing these patterns on any bar chart. There are two exceptions though: If the price is outside of one of the corkscrew formations then draw another one that is twice the size of your original flag. Let us call it a "Champaign" corkscrew formation. This new pattern will indicate a volatility break out and will signify a possible price reversal. Another exception I call a 'corkscrew with a handle". This formation can be observed in a slowly trending market where the price movement (ATR) is less then the size of a screw. Those patterns can be used to predict a possible fundamental disturbance in a company environment including the CEO resignation or an accounting fraud. Using those patterns is also more productive if you use a logarithmic scale on your chart in which case your trendlines( the ones you use to draw the flags) are more like spirals or whirlpools. Using the corkscrew formations though you can "unwind" those spirals quite easily. Overall its a wonderful and reliable tool to predict major events in stocks, commodities, futures, currencies, indexes, options (including exotics and binaries) as well as moments of unstable mental behavior of a company management. I have just finished my fundamental work on these formations where I conclusively proved that FEDs recommendations are 98% correlated with the "corkscrew patterns" observed in DIA. Cheers
dude if you do not acknowledge that flags frequently form after thrusting moves you have not really spent any time engaged with the market directly. You have not seen large orders at support refreshing and you have not seen larger orders that wont go away even though you expected the move to continue creating resistance in the book. You may be good with computer analysis. But you have not been intimate with the market. Cheers to you as well. By the way you might want to see the feds work regarding techinical analysis and the currency markets. They concluded support and resistance is real.
I hope you don't mind my harmless joke. After all, important part is that flags work for you. It does not matter whether anyone else believes in them or not. If you are a religious man then your faith is only important to you and should not be questioned by anyone else. As well as anyone else should develop his/her own system of beliefs and openly present it. P.S. I do admire your trading style though as well as your wiliness to share your knowledge. Happy trading.
Maestro -- It is not whether my faith is important to me or not. It just stuns me when educated people declare something to not exist when they not prove it. By the way if you opened up some charts you could find find hundreds of examples of flags after thrusting moves within a few minutes.
Oh by the way for fun. I got short off my imaginary trendline on qlgc. Covered for a profit about where it broke the trendline to the upside. Then lo and behold a flag appeared after the thrusting move on the 3 min chart and it retested the low.
Flags happen and you can spot them in real-time, at least I do. http://www.trade-ideas.com/View.php?O=3c00000000000000_3d_0&WN=Flag+Patterns+in+Real-Time
maestro/jem... Interesting points. You both bring up something really important that I only realized as of late. Icarus also mentions it and it is about awareness. If one does not recognize a trendline/channel then it will not work for them and thus vice versa. There is an absolute crapload that I never before had been aware of that I have been screamed at to LOOK at for the longest (ie. volume being one such item). You see some here who say they draw there trendlines once they have 2 points and then the extend them into the future region of the chart. Considerations are then given to points at which the containers fails to contain the price action. Accordingly action is then taken if it hasn't already been...
A very good point! Such knowledge is assumed but does not necessarily exist thus trendlines are also assumed (subjectively) but do not exist objectively. That was my point exactly.
maestro please explain how a lines through the highs or lows of daily chart are subjective. The slope of the line may change due to scaling. But the highs themselves do not change. By the way that is why Gann guys like to square their charts. So they can compare slopes of moves. Now what do you think happens when you have a step up buyer in a stock. so first the buyer buys at 20 then 20.5 then 21 etc. Do you think that buyer is make believe. Have you ever spoken with fund mangers. Did you know they sometimes gun their positions into the close of quarters. Do you think they might get bonuses for performance. Or is this also made up. All day long people are playing games. Those games include trendlines and flags. I just do not know how in the world you can say these things do not exist when you can see and interact with the orders at these points.
At first look Advanced Get's Gann Box may just seem to be 'so many trendlines some of them are bound to hit prices'. What intrigues me is how closely the Price Movement follows the pre-drawn 'matrix' and how that same Gann Box remains usable as the price movement progresses.