I found the morning fairly standard, and the YM certainly seemed to lead at changes very well for the most part. The middle of the day sucked - not enough volume, and I was not here for the end of the day. Both YM & ES included.
Spydertrader, what do you make of the 15:00 bar today? For me, it was a real tough call. The previous bar certainly broke out on increased blk volume. But the 15:00 goes higher initially and then shoots down and closes basically on the RTL of the down channel. It didnt close back in the channel but it closed on that RTL. I had a hard time deciding what kind of volume this bar showed. Looking at the breakdown on the 1 min chart, the volume of the 15:00 bar shows the volume is predominently red volume. So I took this to mean I need to fan out my prior down channel as I determined this to be an FBO. I shorted into the 15:05 bar one tick off the high and made a nice trade (like 3 pts) but I did notice a lateral forming and I started to think that maybe I shouldnt be fanning out my down channel. That perhaps the 15:00 was indeed a real BO and not an FBO. So I missed the up move at the end of the day as I wasnt sure if what I was seeing was indeed correct. This happens sometimes when I get an unclear BO of a prior trend. Any comments on this scenario that you think would be helpful? Thank you.
No, but you do receive an 'A' for your efforts. The answer you seek does not require complicated thought. Certainly, we can agree that an 'M' day forms almost a mirror image of a 'W' day. In fact, write an 'M' on a piece of paper and place it on top of a mirror. Do you not 'see' a 'W' in the reflection? Therefore, if today represented a 'W' day, what sort of day might form an 'M' day. How might both 'M' and 'W' begin? What similarities exist, and what differences exist? We can also agree that the shape of the 'M' and 'W' track Price. What leads Price? Now, what in the first 15-20 minutes of an 'M' and 'W' day materializes. What, then, does not materialize on non- 'M' or 'W' days? I've provided enough hints that you should find the answer you seek, but if not, I'll lend you a hand before the end of the year. - Spydertrader
The bar to which you refer shows all the classic signs of an Intra-bar Gaussian shift - which seem to give many people trouble. You correctly observed the need to 'fan' out the down channel, but it appears you may have missed the outside bar forming a Point Three in the opposite direction on the prior bar. Whenever we 'see' an Outside Bar, we want to make sure we don't miss a channel. Secondarily, when Volume tells us we have, what appears to be, conflicting signals, we want to make sure we always know where we are. In this specific case, we find ourselves in between two trends - a fanned down, and a newly formed up (brown and green respectively on my chart). O.K. so things appear to be 'conflicting' as we first look, but are they really? If we mentally split the spike bar in two, we can 'see' Price rising on Increasing Black Volume, then pulling back on decreasing red Volume. As you pointed out, price never returns to the Original channel, nor does Price even break the low of the previous bar. So, while we might 'see' the first dominos of change, we never 'see' what must come next. As such, we recognize our 'change' as only temporary, and to be sure, one which probably sits below our current resolution level. When what must come next, doesn't, you have a "what wasn't that?" And in almost all cases, "What wasn't that?" indicates what you thought you had, no longer can be. Time to fix that which you broke, and take immediate action. Hence, "First by accident, then by design." Understand, unless one uses finer tools (in this specific case), missing these sort of Intra-bar changes becomes a common occurrence. What is important however, is not to attempt to catch every one, but rather, to focus on knowing what to do (and immediately doing it) when what you believed you were 'seeing' turns out not to be the case. I hope you find the above information helpful. - spydertrader
Here is my 5-min chart for today. Looking back at previous charts, to determine if the day will be a "W" or "M" day, I have noticed that the tape of the first two bars from the market open seems to indicate the direction of the first leg. For example, if the tape of bars 1 and 2 are down, then it could be a "W" day. If the tape of bars 1 and 2 are up, then it could be an "M" day. this observation is based on a quick, random sample of about 20 charts. I'm sure there is more to it, but I throw this out there FWIW.
Yes, that was helpful. Thanks. I did notice the outside bar on increased vol so I had drawn in an up channel as well. I guess that 15:00 bar just threw me for a loop. Early on in the 15:40 bar, I saw what I felt was defnitive evidence of a continued up move but I lacked the confidence to place a trade because I was all out of sorts during this time. So I sidelined. Good lessons learned
Here is my chart for the day. I've changed the way I chart adjusted pt3 channels. When an up-channel RTL is broken, but price then retraces back to at least the top of the highest tape in the channel (so that no downward 1-2-3 is formed), I break the existing channels and start a new channel from the lowest point of the RTL violation. The old and new channels are then wrapped in a higher-resolution channel (peach colored in my chart) to keep track of the downshift in pace. My description isn't clear, but the chart should clarify. Same goes for down-pt.3 channels as well. I had a hard time reading the high-volatility bars that were jammed together in a stall just before the final upthrust of the day. I guess the only way to mark that is with CCC notation. RT
By year end I will have an answer. This has been a great side project that I have been seeking an answer to. I am having a good time working on it, but I may very well have put more thought into it than necessary. Although, it sure does not hurt to read many charts and see what surfaces. Thanks for all your feedback, keeping it simple and back to charts !