Unless you're playing the PDH/L or the current H/L, you may be better off on days like today in letting the big boys find S/R for you. They're casting out their lines looking to see who bites where, but it's all very tentative. Nothing tempts me yet.
Each day's range for X number of days (I look mostly at the previous 10). I maintain an average of the previous 10 days' range to give myself a daily target. However, there is a relatively consistent minimum to each leg, which is usually half the ADR (not ATR), at least for the first and sometimes the second leg. Currently, for example, the ADR for the NQ is 28. The narrowest range of the last ten days has been 16. Therefore, I'd expect at least 16pts out of the first and/or second move and would be looking to sell at least one contract there. If the leg reaches the ADR (i.e., 28 for now), I'm automatically out, or I set an extremely tight stop there. Range expansions are too rare for me to care about since I end up hoping for them, which, when I was still doing it, meant holding on to what eventually became a BE trade.
Ok, now I understand. I had started to do something similar some time ago,but couldn't get it worked out good enough in my head to continue, your way sounds easer. My thought was to take the 10 day ave. of the opening range, and to compare that to the 10 ADR. to get an idea how to divide up the ADR. Thanks
You'll find that each leg tends to provide diminishing returns, particularly if the first leg reaches the ADR (which is why I generally quit after 1130). If the first leg is only the minimum ADR or 1/2 the ADR, you may get an equivalent move or better in the opposite direction, or even several. More often, however, you end up in a coil and have to wait for a breakout from it.
TS, What do you mean "Adjusting during the day when necessary"? Do you mean marking each new hi/ lo as they happen intra day? What is it that your looking for on other peoples charts? I've only got what I believe to be PRIOR s/r and current floor pivots, and I see how well, or if, any of these lines land in the same zone.
Quote from db on a different thread "Since MAs are trendlines, they act as support or resistance in the same way that trendlines do, i.e., they are strongest when coincident with price S/R." When I read this quote, I for some reason, started thinking about "KIS" (keep it simple). And the more I thought about kis, the more I think that this is a not so good term to use in trading. The part I have a problem with is that the word "keep", seems to imply that trading, S/R, decision making, and so forth, are already simple activities. If they were, we would stop learning. I think that if "keep" was changed to "make", so the phrase read "make it simple", would be of much greater benefit to us all. Also, we need to know what "difficult" is like, before we can work on simple. so when we find ourselves thinking how hard all this is, well, its supposed to be.
I'll draw new trendlines during the day if any of the time frames make important new highs or lows or pivots. For example the attached chart shows 15m all session chart with trendlines drawn based on new intraday action. The new S/R that formed during the day could assist on target areas or reversal areas. I know this seems like very elementary technical analysis but: I am curious to see how people draw their trendlines. Except for major highs/lows, I think it would be interesting to see where people pick their points to draw and how they use these lines as important S/R areas, or targets, or whatever they see. Many traders see the same thing in different ways and hopefully we can learn something from each other.
After studying Wyckoff, I tried to get out of the habit of calling them "trendlines" and call them supply and demand lines instead, though it's proven to be a hard habit to break (plus most people have no idea what you're talking about). The advantage in calling them supply and demand lines rather than trendlines is that you always know which is which. Rather than get into uptrendlines and downtrendlines and channels and so forth, you just call it what it is, i.e., the supply line is drawn across those levels where supply has entered the market and the demand line is drawn across those levels where demand has entered the market. Whether they are lateral or diagonal is immaterial, and the tests for tentative and confirmed are the same. Another advantage is that you always have the pair. In an uptrend, this enables you to pick up on changes in the supply line earlier than you otherwise might. If, for example, it has been parallel but is now angled, then there may be a loss of momentum (you can see this in the Naz from the 12th to the 20th; ditto with the NYSE in approx the same period). Yet another advantage is that you can plot S/D lines within a wider range of S/D lines. For whatever reason, prices will sometimes find R in places that are short of where one would expect to find R based on the supply line that one has drawn. In and of itself, this is nothing to get excited about. But prices may continue to find R short of the primary supply line, but on a line that is parallel to it and inside it. This provides two "levels" of supply line. And all of this of course applies to demand lines and downtrends and so on. In any case, calling them "demand" and "supply" lines reminds me of what I'm looking for - i.e., where are people buying and where are they selling - in addition to the trend. But even here, "trend" refers not just to whether or not price is rising or falling, but whether the price points that people are willing to pay are rising or falling. In this way, I can evaluate a swing point as to whether it represents exhaustion on the part of buyers or overwhelming supply. As far as whether or not price itself is rising or falling, an MA is a perfectly acceptable representation of trend.
TS. It may take me a few post to give you a creditable reply,but I'll do my best. First of all I think it would help everybody who is interested, to make a hierarchy list of S/R. 1. The King, last reaction highs and lows.(l r-h/l )These are horizontal lines. The l r-h/l on a daily chart is stronger than the l r-h/l on a 60 minute, and the ones that you see on the 60 are stronger than that of the 15, and the 15 stronger than the 5 and so on. 2. Daily floor pivots ( I'll be doing some research on weekly floor pivots this weekend) 3. supply/demand lines, the same hierarchy of time applies to s/d lines as last reaction highs/ lows. The more of these lines that are at the same level at the same time, the stronger likely hood of price reacting off these levels