Tom just told me you were posting here. I am following NQ as well now, so will be posting here from tomorrow on.
No problem. But I would argue that volume IS behavior, NOT an "indicator". There are 5 datum on every bar... OHLCV. When used with price, volume is a confirmation or negation data point of price, and the associated behaviors. In any case, as one of the 5 data points of any given bar, it is not an indicator. Trade On!
I agree, though one can just as easily draw conclusions from the volume associated with a line chart. Which is why I separated out volume from the comment on indicators, in this case Fib. Even so, explaining volume has proven to be too much of a distraction from the main event, i.e., price movement. If price after all has made a dbl top or a lower high at resistance, the volume is immaterial. Reversals can occur just as easily on low volume as high. And it's worth remembering that before the 90s there was little or no reliable intraday volume data, which is a major reason why P&F was so popular. Volume analysis was relegated primarily to daily and weekly charts.
For the most part I agree. But what comes to mind is if a tree falls in the forest and no one is around, does it make a sound? If price is marked as x and there is zero volume at that price what does that mean? Is Fib and all mainstream tools and indicators causing behavior? Anyway. Good point about P&F. I still use P&F for softs, but only for swing. Back then, the costs were prohibitive to get data more frequently than daily/weekly/monthly. I remember subscribing to a chart service... a 3/8 thick "book" with all the d/w/m futures charts sent direct to my snailmailbox each and every week! Nice work on this thread. Trade On!
As for price point, tell that to the OTC derivatives makers. Tell that to FASB. Tell that to Lehman, AIG, and all the other fails and bail-out recipients. Under YOUR explanation, macro and micro environment variables, as well as time have no influence on price, therefore no influence on behavior. Now there's a scenario for a null hypothesis test! As for causation, I remind you that price action to include pattern recognition is not exempt. Human chartists that perceive and automation designed to deceive are equal . No reason to look at chart patterns I guess. I'll leave your thread now. I'm selling a piece of Fine Art. Last time a like-piece traded at auction was in 2011 for $5300. I'll be happy (and somewhat lucky) with $4000 in todays market although the data point is $5300! Maybe I should throw in a free trip to Paris, complete with a free breakfast to get a higher price. Nah, it won't matter. Trade On!
The basic difference between our analysis of markets is this... You believe behavior follows price. (price creates the pattern) I believe behavior IS price. (behavior creates the price which creates the pattern) In the markets both are accurate. But certainly different. As for Fib... I thought it was about mainstream tools and indicators. Pattern recognition of course fits there, whether we like it or not. Good trades to you.
Price is the result of a completed transaction. The transaction is the result of certain behaviors on the part of a buyer and a seller, e.g., negotiation, since any particular object or service or whatever is worth only what a potential buyer is willing to pay for it. These transactions can create what a trader or traders might perceive as patterns. Patterns are secondary to the behaviors that create them. The behaviors are an element of the transaction. The patterns are in the mind of the trader. Therefore, certain trader behaviors result in a transaction which results in a print which may or may not create what a trader or traders may or may not perceive as a pattern. But whether traders perceive a pattern or not, the transaction resulted in an agreed-upon price which exists independently of anyone who was not part of the transaction. Unless there's some special reason to continue with this, let's stop.