Is there a rule of thumb for this?

HPT · Aug 5, 2008

Quote from The Swordsman:

It truly all depends on the price action that led up to it. You gauge that and you'll be able to see if it will hold or if price will break through.
More...

what he said.

Ansare · Aug 5, 2008

Quote from jack hershey:

It is true that when a trend approaches S or R, the market does deal with the situation.

For most people the values of S or R are considered horizontal lines. This may or may not be true. But ir doesn't matter.

If you take one other case similar to your Q's, you have most cases in hand. Add the midday lull to your two cases.

Several noted people have called these cases by the name "consolidation". Earlier, historically speaking, the term "box" was also used.

As you see, the thread is tooling along and you are not getting pragmatic high utility answers.

Lets treat this like a problem in science. We can look at it as a problem and systematically add information to the problem and step by step recuce the unknowns until we reach a certain answer for all three cases. An answer is only "good enough" if we know before the limit is reached what the outcome will be. In this way we have time to act in a timely way to profit from the certain answer.

1. draw the envelope of price.

Generally you get a lateral channel, or a channel that has a very low bias. For R the bias is upward; for S the bias is downward; and for midday you get a CCC. the successive C's stand for congestion (lateral), Convergence (cone x section) and Centering (pennant, 1 of 3 kinds).

2. Graph the PA within the envalope of price.

All of this is obviosly tradable as linked trades. A price action trader uses 3BR's at the occurance of the envelope of step1. Then PA fails when we get to the answer to your Q's.

SCT trading uses the traverse envelopes within the step 1 envelope of price and trades 1 bar ahead of the 3BR and at the opposite end of the bar to an advantage of the height of the bars (volatility of the testing pace. This trading is an answer to the BO of R and S since SCT holds through BO"s anyway and is on the right side of the BO.

NB: For PA and SCT the prior trade to the BO is significant AND this is the SOURCE of your QUESTION. PA traders who are not alert (low skills, see PA journal) will not take the 3BR because it is NOT on the envelope away from the R. THIS IS BECAUSE THE PRICE FAILED TO TRAVERSE TO THE "INSIDE" LINE OF THE LATERAL CHANNEL FORMING THE ENVELOPE. An advanced beginner in SCT trades traverse's and RECOGNIZES THE ftt OF THE TRAVERSE ON A NON DOMINANT TRAVERSE.

BO's of channels on any fractal when nesting of channels is done, occur on non dominant traverse (retraces (pullbacks)) and the Sentiment of the market has changed during the overlap of the old and new channel.

When R or S is tested SUCCESSFULLY the BO of a leteral channel is NOT a BO of a channel trend line. This is a counterintuitive moment in a trader's life. For those who have skills in channel trading, they recognize that a successful test of R or S is a VOLATILITY EXPANSION of the lateral channel. PA traders have no chance of recognizing this. they cannot recognize whether a 3BR is going from Dominant to Non dominant or vice a versa.

3. To make it possible to know ahead of time whether the test of R or S is going to succeed you need to have volume on your display. We are discussing success and a LTL volatility expansion past R This means a higher volume and probably a pace increase, both of which are shown on volume where the volume SHAPE IS ANNOTATED as well as the 6 pace levels of the market (on a non stationary window basis).

4 In PA trading it is common for new practitioners to do the following on successful testing of R and S. Prior to the successful test there is a failure. At this point a 3BR occurs (See SusanaDT trade failures specifically when she takes a trade against her rules) and the trader is trading a "retrace" (non dominant traverse. The FTT of the retrace (non dominant traverse occurs) and the PA trader has no way to recognize this. A bar passes and here the pt 2 of the new traverse is set. Then the price moves to a new bar and the pt 3 of the traverse is being sought. A PA trader and an SCT trader are now on opposite trades. (As I say this description does not afford the usual PA tradser to see the formation I just described). Next the R is successfully broken and VOLUME ACCELERATES as it increases. For PA traders they set a stop and it is then hit and they are out of the trade in about 2 or 3 bars. THE SCT trader holds as the VE occurs and then he annotates the resumption of the trend that preceded the "consolidation" forming the lateral channel.

Suumary for successful test

All traders can trade consolidation. A good PA trader will catch the 3BR at FTT of the retrace form R or S. For SCT it is business as usual while tradeing traverses. volume is the "tell" in R and S testing. Without it you get answers that are "numerical and fly by the seat of the pants as you see from the posts.

So why doesn't a PA trader post a pragmatic answer for successful test on R and S? Just ask and they will tell you.

Failure of testing.

5. We can pick up on the traverse (retrace) from the R or S.

Volume was falling during this non dominant traverse. and price is moving away from R or S. The lateral line of the "inside" envelope is being approached. This line is "equivalent to a trendline (RTL) in channel trading. Both PA and SCT hold as a BO (true trend BO occurs). At this point your second Q is answered and from R or S the trader has been in the trade and they hold through BO. This is the only time PA is front running a channel BO and it is by the accident of using a 3BR off R or S and holding through the BO.

Confirmation of the test failure comes now by a real shot of volume and a probable pace change. A volume chart is needed to see this.

6. To wrap up you need to deal with the failure od the failure. If After the BO, you have an FBO (in the Hershey original jargon), you treat as usual. For PA traders, you usually miss this trade since FBO's are not recognizable in PA trading. If you used TS's you win on stop out; if not not you stop is beyond the R or S (message: use TS's)

To do this with indicators and DOM, T&S and tic charts is easy too. It is especially easy with Stretch/Squeeze.

Good inquiry. I hope my post reveals to you that you and others have a lot on the table to find answers for. It is not so much just the tsting of R and S stuff, but it is more about having a general understanding of how markets work. It is a wake up call in a sense; try to get away from gimmicks and artificial rule sets like 3BR's which are lagging "indicators".
More...

Jack -- thank you for taking the time to post such a lengthy response. Frankly, a lot of it is over my head and will require additional readings.

By the way, I know you take a lot of grief here, but your willingness to help speaks volumes--to me at least.

Thank you.

Ansare

Ivanovich · Aug 5, 2008

Man of a thousand aliases, I deleted the exact same post on the other thread. As far as I'm concerned, you're entitled to post your disagreement with any individual you want, just don't spam it.

Thanks.

-Ivan

pulsescan · Aug 5, 2008

Quote from Ansare:

If there is, I've missed and would appreciate any input.

Is there an accepted/expected number of times price can smack up against major resistance (or, of course, bounce off major support before you "know" it won't break through?

Thanks,

Ansare
More...

No there is not.

However, a rule of thumb is that the more it touches it without breaking through.......the greater the break out!!!!!!!!!

Pa(b)st Prime · Aug 8, 2008

Quote from Ansare:

OK, obviously I didn't state the question very well. Let's take another shot:

What do you look for when price has been pinging S or R numerous times that tells you "we are getting close to a breakthough" or "it could do this until the end of time and not make it..."
More...

Why not just sell it off the res and cover or even flip long above it?

Bighog is exactly correct. It's just probabilities. You're going to miss shots (have losers).

I found this quote by Phil Mickelson at the PGA yesterday to be interesting:

âThe challenge with the pin placements is that if you want to try to make up ground and fire at the pin, you're not always afforded the opportunity to do that on the next hole. You might have to wait two or three holes to try to make pars before you're able to get that shot back that you just lost.â

Log in or Sign up

Is there a rule of thumb for this?

HPT

Ansare

Ivanovich

pulsescan

Pa(b)st Prime

Resources

Members