TL in candlestick charts, question.

Discussion in 'Technical Analysis' started by Optionpro007, Aug 26, 2005.

  1. For the most experienced traders.

    In daily, weekly and monthly charts, trendlines drawn from the bottom and top of the body Vs the top and bottom of the shadows.

    Is there a big difference i.e. to where price is more likely to bounce off/find support-resistance in these longer time frames ?

    Should I avoid trading the body TL and wait for the shadow TL to be touched ?

    Thank you very much for comments or opinions !!
  2. If your going to start analyzing the merits of drawing s/r zones (notice I didn't say trendlines) based upon candlestick bodies or candlestick shadows...

    Those are confirmation tools...

    Not trade signals.

    Simply, you'll be incorrectly using Candlestick S/R Zones if you use them as trade signals without any other confirmation info.

    Another way to say it...they aren't reliable by themselves.

    Candlestick S/R Zones use in comparison to Traditional S/R Levels.

    Could be a good discussion and hopefully not a debate if this thread develops.

  3. Greetings NihabaAshi:

    Good to hear from you, thank you very much for your reply.

    I am aware that TL by themselves are not reliable, as you suggest I use them as part of my trading strategy.

    Reg my question, in your experience, which of the TLs work better in longer time frame charts ?

    I am inclined to say that invariably price will most often go the the shadow based TL.

    What is your opinion ?

    Thanks !

    p.s. In my view S/R zones are not the same as TL in these long term charts. Please correct me if I am wrong.
    The reason I say this is because a 2 or 3 year long TL drawn under the lows of these years to me only show support.

    But I am willing to hear your point of view of course.
  4. Lucrum


    It has been my experience/observation that TL's (drawn at an angle) work best when the TL touches the absolute high or
    low. I also think you'll see more reliable results only using TL's drawn across major or significant swing highs and lows as opposed to every little bump on the chart.

    I have actually gotten to where I focus more on horizontal S/R levels than TL's and for these I draw the horizontal lines across the bodies and not the high and low.
  5. Thank you TL

    Your observations are well received here. You confirmed my theory on basing TL on absolute highs rather than the bodies.

    Those little shadows off S/R levels have cost me more on lost profits than losses so far. I try to only take a position when price is as close to a round number as possible......
    anything else implies just too much risk imo.

    Cheers !!