This is what I saw today: 1. The first thing that happened before the open was the failure to break the uptrending channel from the premarket, this rapidly became a strong downwave that totally changed the dynamics of the market so I waited for a retracement before trying a short. But this short was short lived and i got out of it 2. and on the long side as soon as I saw demand coming onto the market via a higher low. 2. But buying was not enough to take prices above the 50% mark from the opening downwave so as soon as I got a lower high I took it, 3 but it failed almost immediately so I jumped back in the long side. Here I was in a difficult spot because if buying was not able to mark a higher high i would essentially be dealing with chop and it would have ended my trading morning there. 4. It turned out that demand was enough to make the expected higher high and I kept the trade going for a little longer. 5. There was a break of a last swing low, so I took a third of my position out. 6. There was a reach of the top of the trading channel that formed on the way up and I took another third out. 7. Now I can relax and wait for this to turn into a longer term trade or just be stopped out at BE, I will see about that tomorrow.
No retracement, the movement turned into a reversal and the downtrend returned, as buying dried out at the midpoint of the downtrend channel. The last leg of the long was closed at break even.
Volpri, how do you define a Leg?, I see more than 3 waves there, but I assume a leg for you is different from a wave to me.
1. After inventory data it looked as if demand was going to revert the longer term trend hence the first buy, 2. but it did not and created the opportunity for a short 3. but it failed again on 50% where i had two scenarios a trading channel or a triangle, it turned out to be the latter. 4. So it was just waiting for the triangle to break and take the first ret. the longer term trend is still down at the moment of this post.
Here is an explanation. Hope it helps. When a pattern fails be aware that the probability increases that at least two legs in the unexpected direction will happen. In tight channels one can expect consecutive pattern failures. ..i.e. There may be many successive wedge bottoms or wedge top failures. Triangles are a sideways pattern and the B.O. can be south or north. In addition after a b.o. Many times price will come back a test the apex of the triangle then continue the prev trend in play before the triangle pattern formed or have a reversal after the test of the apex. Therefore, if price has a b.o. of a triangle and then tests the apex pay attention to what happens after the test. You have to gauge the strenght of the b.o. to anticipate if an apex test will happen or not.