A follow up to a post by Easyrider and Duard: Summertime is definately in full effect. Some traders that I trade with who have lost their ass all year trading reversals off of resistance/support have been racking it up recently. Me, catching new trends in breakouts went in to a flat mode until recently when I adjusted to taking smaller profits, being that volatility is contracted. In YM that is. The more time I trade the more I realize that some of the old cliches are true. Especially : adapting to the given environment. Having just one style of trading may not make it if you try this style during times that are not appropriate for it.
Thought Id bring one of my favorite threads back to the top. This trend channel was drawn before the market opened. I dont know why price follows these channels so often (Im still waiting for an explanation) but its definitely worth watching.
Would love to see a few bars consolidate at one of these lines. Consolidate meaning the bar sizes are small and somewhat inside each other. Then a breakout from these contracting bars/trendline will get me in the trade.
Here is an update of the triangle drawn above. And, as usual, my posts are in realtime. I don't say this to sound arrogant, I state this to add to the realness of using trendlines (along with some other technical analysis) The chart attached here is the miniDow.
You have to use cycle trendlines in order to consistently (key word) time any market. They are the primary market timing consideration.
here is a great, great triangle I will play a break, however, cuz of yesterdays large range day, this triangle may have no energy when/if breaking.
only real problem i have with trendlines is that their subjective. I cant specify a particular gradient range or some other feature with which i can distinguish when drawing a trendline. Envelope MA such as Keltners can provide approximately the same use but much less subjective.
http://www.stikky.com/0003-stockcharts/0003-fulldetails.htm great little book that'll teach ya how to do them right.
It all comes back to the price action. If price is respecting a 20sma, then the 20sma could be used to determine a change in price action should the 20sma break with other factors as well. Or, if price action is respecting a Keltner, trendline, pivot point, etc.......... fill in my prior sentence here and it is the same. For me, and for this thread, a trendline is not subjective in that you are simply highlighting an area on the chart where price action is showing support or resistance. Make sense ?