%%%%%%%%%%%%%%%%%%%%%%%%%%%%% Castro3;16; S&R are areas, may or may not be exact numbers; would not assume anything off 1 day of data; An elite trader pictured s&r as a chain link fence; its also can be like moving averages. Also can be like fib numbers , fib retrace or pictured as a speed bump on a road. Jack Schwager top trading books help; Alan Farleys Master Swing Trader has excellant charts & s & r. ============================================= -------------------------------------------------------------------------------- In a multitude of counsellers there is safety. Solomon,trader king
Below is a post by dbphoenix. I am not an advocate of his views because I have other different views which I advocate for. His comments below on trendlines and his personal reasoning process need to be considered by applying your reasoning approach to them. I noted below his inserted post, the questions that I feel need to be raised by anyone considering what he profers. With regard to the first paragraph. 1. Does anything (drawing tendlines in this specific case) have to be done the same way by everyone to make that item (trendlines provide support or resistance) provide quality information? 2. Is there every any possibility that trendlines ever show support or resistance? The second paragraph discusses "direction" "strengths" of trends. 3. How does a trend line show the strength of a trend? If it didn't what does? 4. How does a trendline show a trend strength is "lessening"? 5. How does a trendline show a trend strength is "changing"? 6. How does a trendline show a trend strength is "reversing"? 7. What do you think "Thats sufficient" could possibly mean? When you give consideration to these questions you wind up with a mess. Secondly, you have on your hands the task of finding out where the answers to the questions do reside. I relate S and R to channels. Channels do involve trend lines but the part of channels that determine S and R is not the trendline part of the channel. The strength of a trend is not determined by the "right" side of the trend. All of the trend (as determined by both it's bounds) determines the character and performance and duration of a trend. Do not let yourself wind up in a mess as a consequence of not getting the job done properly.
That's only part of it, which is why so many novices, particularly CANSLIMers, buy new highs and find themselves buying tops. As soon as you've got a downtick after a new high, you've got potential resistance. To think that there's clear sailing simply because there's a new high is naive since so many traders fade these very breakouts. Locating potential S/R is only a very preliminary first step. One must then learn to become sensitive to buying and selling pressure and changes in balance between them.
Great post. for the questions put forth 1. Does anything (drawing tendlines in this specific case) have to be done the same way by everyone to make that item (trendlines provide support or resistance) provide quality information? No, but the more people draw it the same way the more you have self-fulfilling prophecies playing out. 2. Is there every any possibility that trendlines ever show support or resistance? When looking back in hindsight, trendlines do seem to show support or resistance (a trick of the eye?) but when trading live i would not depend on them. The second paragraph discusses "direction" "strengths" of trends. 3. How does a trend line show the strength of a trend? If it didn't what does? If the price action hits the trendline and bounces back towards the direction the trendline points to, that can be interpreted as the trend having strength. Momentum analysis is great at showing trend strength 4. How does a trendline show a trend strength is "lessening"? The price action hits and passes through the trend line repeatedly. Either the trend strength is lessening or the trendline itself was not constructed properly and needs to be readjusted. 5. How does a trendline show a trend strength is "changing"? Hard to answer, its easier to use chart formations/patterns + momentum analysis to see trend strenght 'changing' than with trendlines. 6. How does a trendline show a trend strength is "reversing"? Price action breaks the trendline and stays below it, topping (or bottoming) out.
How about this: Q One interesting side note was the correllation between s1 and tomorrow's open was .999184 and the correllation between r1 and tomorrow's open was .999174. These might have some value at predicting whether tomorrow will start as an up or down day UQ http://www.elitetrader.com/vb/showthread.php?s=&threadid=14794
color=red]As a person "grows", he has several major steps to climb up to get to expertise. Each step is a hard won experience that is "earned". "Earning" stuff occurs as payments in time are made. You do not "earn" with "failure" payments. you earn after failure by debriefing and thoroughly coming to provisional understandings of the alternatives to failure that you create. A while back I suggested making 100 copy sets of many days of 5 min charts. A master set of 100 copies of a series of days, each one on a separate sheet, is a resourse for debriefing. You can make copies of the master set many many times. One of the learning steps is channels. Once you have drawn all the channels on a set of 100 copies foe a series of 10 to 20 days (more than an IT period), you will find that you are consistent and you do not have a "mess' on your hands as does dbphoenix. the most important single thing you "earn" is "knowing" that you can "believe" in channels. This earned belief is, in fact, a descrete stand alone complete precept that you "trust". You actually have laid aside the consideration of whether or not channels "work". Channels do work. Channels make money as the job they do to work. This is a Be Do Have thing. Life is not done as: Get a tutu. Learn to dance. Be a ballerina. When you sit and look at a stage and see ballerinas performing, all of them went through Be Do Have and not Have Do Be. Balerinas are born. They Be. Channels BE. channels work, you see. Get it. Just get it. You begin with yourself for everything there is. You ARE it. By doing repeatedly, thoughtfully, incessantly. You get to DO. At some point, your DOing displaces all the crap you have as baggage from wherever. You get to HAVING. You move to a place where the precept you BE is DONE enough that you HAVE it as a truth, belief and whay you trust. You HAVE it. What you are going to experience soon is that you can draw at the beginning of a trend, a channel. It will be something you draw right away ASAP and it is correct. You will see the channel "filled". As time passes the channel is made use of by the price. This is not the silly stuff of going back after all has happened and drawing in some dumb lines all over the place. One of the neat clues that comes up for you is the "new point 3". Every channel that you draw for any of the market paces, begins with the first traverse of the channel from right to left. Then it goes to the other side (left to right). This is when and where you arrive at "new point 3". You now can draw the "trend line" through points 1 and 3. Point 2 at the end of the first narrow travrse is the point where the "left" channel line is drawn parallel to the "trend line" (the "right" channel line).[/color]
It's too bad that Jack has such a meager understanding of demand and supply. If he understood the concept more thoroughly, he'd realize that his notion of trend is far more of a mess than anything I've ever presented. Jack would do well to study the true masters. But that would mean getting back in touch with reality.
Depending on your time frames there are different supports and resistance you may come across. If your scalping or taking the play for a trend move etc. You can look at pivots also as a factor. YHOO P=28.22 S1=27.55 S2=27.14 R1=28.63 R2=29.30 Yhoo bases on a daily range of 1.24 per day. Tradertechniques.com has realtime fib and pivot points in real time for free. You can also adjust for wide or smaller time frame. Hope that may give you a start.
I post here from the orientation of making money. The P, V relation works for me as a cogent decription for making money. I use simple ways to monitor the market based upon the P, V relation. I trade equities as a position trader and futures indexes intraday on the 5 min fractal. I am simply a student of the market and what it teaches. It hasn't changed in 50 years. The advent of the PC makes it more convenient and more convenient for increaseing the money velocities attainable.