If You Can Draw A Straight Line . . .

Discussion in 'Journals' started by dbphoenix, Jun 28, 2013.

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  1. Redneck

    Redneck

    Cleaned up view
     
    #41     Jun 30, 2013
  2. dbphoenix

    dbphoenix

    Fib makes me shudder. What would be your result if you drew a simple regression line?
     
    #42     Jun 30, 2013
  3. Redneck

    Redneck

    I don't use standard fibs - for anything...

    I used them here to simply show folks how to draw a consistent 50% line - within a channel

    eta, I don't use regression lines either

    RN
     
    #43     Jun 30, 2013
  4. temuco

    temuco

    Dear dbphoenix, are the investing.com charts the very ones you trade from, or are you using them for illustrative purposes here, but you trade from some other chart/platform?

    Great journal, by the way!
     
    #44     Jun 30, 2013
  5. dbphoenix

    dbphoenix

    When I returned to beginnerville after my sabbatical, I found a great many wannabees spending (wasting?) a great deal of money on nonessential (useless?) stuff (the vendor rackets are absolutely booming). So I decided to show them how one could learn to understand price movement and even how to trade it by using freely-available charting sources: no software, no expensive trading platforms, no subscriptions, no fees. Granted the free sources may not be exactly "rigorous", but they're good enough. They don't even have to be real time if one is only studying, or even simming. The only disadvantage I've found has been that there are no free, real-time tick charts (well, I did find one, but it spent so much time buffering that the aggravation just wasn't worth it).

    So, yes, they are in large part for purposes of illustration. Though they are perfectly fine for the task, particularly since one should be using an absolutely clean chart anyway.
     
    #45     Jul 1, 2013
  6. dbphoenix

    dbphoenix

    So. Here we are. 2 hours before the NY open and a very busy overnite. Since the impulse after the Sunday re-open was up, I thought the line of least resistance might be up, but I sure didn't expect buyers to be able to push it all the way up to 28. And even tho it dropped back down to 12, buyers were able to push it back toward 26, unfortunately -- for buyers -- a lower high.

    Given that we're past that trend channel midpoint that I referred to last night, I wouldn't be surprised to see price work its way up toward the top of the channel, which is now at 40. If it doesn't make it there today, the target will be slightly lower tomorrow given the diagonal. And the trend channel midline may not provide support after all. But traders clearly were bored with lying around 2900 and sought something more profitable toward the upper extremes, which is what auction market theory is all about, after all.

    In any case, we're holding at the top of those two efforts on the 27th and 28th to break 20, just below the midpoint of that 28-to-12 range created during the overnight. Price may feint out of one side then reverse to take off in the other, which would be typical for this type of dynamic. But these feints aren't a requirement, so one must be prepared to jump on what appears to be a breakout because it might actually be one. On the other hand, he also must be prepared for the possible feint so that he can SAR (stop and reverse) if need be, which should not be a problem if he can keep his ego out of it.

    Having said all that, I'd still bet on the line of least resistance being up, at least to the top of the trend channel. Sellers may be allowing buyers to push it up that far -- and may even be participating in the buying themselves -- in order to get a better price when they start unloading what they have.

    A pleasant and tidy scenario. Whether or not it turns out to be true remains to be seen. We don't have long to wait. And whether you're observing or simming, remember that your charts should be absolutely clean: no MAs, no ZigZags, no envelopes, no channels, no bands, no clouds, no Fibs, no Pivot Points, no whatever else the vendors have come up with. Just you and price. Alone. Naked. Ready for whatever fate has in store.
     
    #46     Jul 1, 2013
  7. you forgot one..no trend lines either...now that's naked
     
    #47     Jul 1, 2013
  8. dbphoenix

    dbphoenix

    Only what's in the trader's head :)

    Of course, one could abandon charts altogether since they are only a means of illustration and trade off a T&S window. But that's a bit much for beginners.
     
    #48     Jul 1, 2013
  9. dbphoenix

    dbphoenix

    A half-hour before the NY open and an interesting development. Or at least it might be.

    Price has been forming what the pattern people call a "symmetrical triangle" or a "coil". The symmetrical triangle part is sort of a duh, but "coil" pretty accurately describes what traders have been doing.

    The coil represents -- or can -- an energy compression. The difference between what sellers are seeking as value and what buyers are seeking as value gets narrower and narrower. If this doesn't go on too long, this compression will result in a substantial and sometimes explosive move out of this coil ("coil" implies a readying to spring).

    As you can see, buyers have been able to push price up to the upper limit of the coil. Sellers can be expected to push it down toward the lower limit (this is all part of the exploration process to "feel each other out").

    [​IMG]

    What matters, of course, is not the "pattern" per se but the trader behavior that's causing it. Play the behavior, not the pattern, and you are far more likely to end up on the correct side.

    If price has not broken out to one side or the other by the time the coil is nearly complete, it is more likely to do little more than dribble out the end and move sideways until somebody gives somebody a hot foot and price takes off again into parts unknown. This listlessness occurs because traders have given up their efforts to make something happen, for whatever reason, and are focusing instead on their danish. Why they've given up is less important than the fact of it, and that can be determined by the price movement. Or lack of it.
     
    #49     Jul 1, 2013
  10. dbphoenix

    dbphoenix

    Buyers pressing the upper limits again.

    Good luck, if you're trading. Take lots of notes if you're not.
     
    #50     Jul 1, 2013
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