If you don't mind I would alter the above by including the following: ...but the W at the bottom has a higher probability rate than the M a the top, providing it is in a bull trend on long term charts. The opposite would apply when in a bear phase again on long term charts. Correct?
During a bear phase Double Tops will obviously perform better than in bullish phases. However, out of the box the Double Bottom is just much more reliable than a Double Top. Outside of rectangle formations at support and resistance, I can't think of a pattern that can touch the Double Bottom as far as accuracy and risk vs reward, provided.....that you wait for that middle swing close confirmation. Anek
Would you say based on your experience that waiting for your type of confirmation offers better win rate in comparison to taking a shot at it at a lower level, which offers better risk reward? I know it's a tough one to answer, I suppose you favour safety aspect over risk reward. I am normally in earlier than you would be as I enter using histogram's centreline kiss after a double/triple divergence, whereas you would enter upon price actually taking out and locking above resistance level.
Waiting for confirmation (a close) in just about everything increases my accuracy in most plays. Wicks are evil, closing bars are the ones that really matter. For instance.... I'll give you an example of manipulation. Take NQ for instance. Resistance is at 2150, you are long from the low 40s and 2150 is just a brick wall not breaking. You could simply buy *at market* right at 2150 just a few cars creating an "illusion" of a resistance breakout to obtain a better fill for your heavier position (the 40s). When it reality, the volume was never there. In the end the chart will just produce a wick and possibly a shooting star formation.... I do this all the time to fool those on the lookout, but then again, you don't want others to do the same to you, so you must wait for that closing bar to increase accuracy. Close/Confirmation is everything. Anek
Appreciated, I didn't mean to delete the rest for inappropriateness,not at all, simply to highlight the above statement and its importance. It's that CLOSE which leads to CONFIRMATION of either positive or negative that is imperative for entry making decision. Methods vary, but the above statement remains being just as viable in any method used. I use histogram for almost 100% of my trade decisions and the reason I like rising dips below the centreline is because that leads to shorts being confronted with an inevitable conclusion - looks like longs are getting a grip on price action and I might be losing my profit unless I cover my position at least partially. And to me a close at centreline after 2-3 rising dips IS confirmation that price is very likely to bounce in the direction of histograms rising trendline, as shorts sure as hell also see it as well as I do.
J, Yes, I see your logic. BTW, I'm looking for charts of non microscopic size that have M formations at the bottom and W formations at the top. If you happen to see one please let me know, appreciated. Anek
Money, Ya I saw that one today. BTW, the M at the bottom is usually rejected or never completes at all, giving you a heads up on a solid upside move. Anek
Do me a favour and throw a MACD + histogram on that chart, thank you! Histogram really does work as a compass on many occasions.