For sure I will never forget this happened today. I thought I made all mistakes already but now it seems I'm starting again from zero... "Oh well, I just missed the increasing black..". It's the first thing we look at, is it increasing or decreasing? Just hilarious Sorry for wasting you time and the time of others. Ivo
Well, I also expected to fan but not if I had noticed the increasing volume. Increasing black volume with a downtrend still intact only happens on spike bar, lateral BO or steeper RTL break. None of this was the case. Of course what can happen is a shallow upchannel (incr. black) ending with a FTT which forms a point 3 of the downchannel. But that doesn't look like this. Anyone pls correct me if I am wrong. regards, Ivo
You didn't waste my time at all, Ivo. I've learned quite a bit today thanks to your question (and others). I'm now thinking (but not entirely sure) that part of my problem with the 1325 bar context was that I missed the increasing red volume during a retrace right after the FTT of the up channel. And, as was noted, at beginner level I should not have been focusing on decisions within the formation, though determining WMCN is ok.
PWRD has been a solid mover the last few days. Anyone in this one? Id like to see a chart comparison.
YM: 1326 [close of] is up on increasing volume = the trend is up 1328 [close of] as you noted is IBGS, so the trend changed obviously, it is down now. 1330 [close of] forms SYM, continuation of the downtrend that started with IBGS That is why 1332 [close of] goes down on increased red. And ES follows. Notice how its different from 05-16-2008 that has been discussed earlier. On 05-16-2008 ES: 1430 [close of] breaks out of formation. 1435 [close of] forms FBP YM: 1430 [close of] IBGS signaling to go long. 1432 [close of] forms SYM, continuation of the up trend that started with IBGS. 1434 [close of] is formation FBO reminding us to be long. What happens next? YM goes up on incr black volume returning to dominant direction.
At that point you should've been already short. Pennant FBO & increasing red volume cancel each other. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1928738>
Especially during fast pace periods, if you decide to hold pt2 to pt3 you have to watch carefully for other signals, and react. Increasing black volume after the VE of the down channel is such a signal. It's good to hold when pt2 to pt3 is a lateral with not much volatility, but here there was no lateral.
Even decreasing black volume at that point would've been signal of change because it followred a VE down. Exception: flaw level black volume. Decreasing red volume would've been a signal of change too, and would've sent you to finer tools.