It's a good beginnig, but keep practicing and in time you'll get better at this. Also, you have to be aware not only of the channels forming in your trading time frame (fractal), but at least one larger and one smaller time frame. If you start with the larger time frame (frames), then the smaller time frame (frames) channels will make more sense, and you'll draw them more accurately, even at the right edge of the chart. By the way, if your charting program has an option to expand the right side of the chart with a blank area, use it. It will allow you to extend your drawn channels into the future, and you'll observe later those extensions filled by the price (if you draw them correctly).
http://tinyurl.com/fpr78 Others have drawn nice tl's and channels, another pov: One thing to remember is that tl's, like all support/resistance, are areas of supply and demand, not actually the thin little lines we draw on a chart. Richard Wyckoff started drawing tl's in the early part of the last century so he was certainly one of the first. In an uptrending channel, the lower tl is the demand line, the upper the supply line. Following the bo of a consolidation or reversal, he started the tl at the first significant pullback as judged via the price action. Note on your chart at point Y there is a very wide spread closing on the low that retraces to around the classic 50% level, which does not follow-thru as there is a rally to a new high. As that new high is hit the initial up tl, the demand line, is drawn from X to Y. A possible parallel channel line, the supply line, could be drawn at Z. Note from Y to A, the completed channel, there are 3 more minor up legs, each which could have its own tl if one wishes to draw them, w/the pullbacks at 1 and 2 separating them. At some point between Y, 1 & 2 it seems reasonable to draw another, more urgent supply line according to Wyckoff criteria, defining a channel w/in the channel if one cares to. Now compare the momentum following Y, following 1, and then following 2, where price breaks the mid-channel supply line significantly for the first time on one of the widest spreads since Z, closing on the high, and makes it almost all the way back to the larger supply line on the next bar as it becomes overbought on a long-legged doji making absolutely no price progress on the close, a possible climatic condition. Following A there is at first a shallow retracement, but then at B another very wide spread, a shallow test of A at the high, this one closing on the low and back to the demand line. This immediately followed by one of the widest spreads on the chart thus far, closing on the low, wiping out the channel demand line w/great ease. This latest price action, relative to the trend, is what Wyckoff called a "change of character". We don't know yet if this is distribution or re-accumulation, whether the mkt will reverse or resume the trend, but we do know that something important has occurred in this trend. At D there is a very positive test/spring of C on a wide spread closing near the high, but it does not follow-thru. The bar at E only approaches the up tl, as that support becomes resistance, and following this weak test at E and F there is a sharp drop on wide spreads, breaking support at C and back to Z for an almost perfect 50% retracement of the X to A uptrend. As of this chart, there is a very nice rally back to near the top of the trading-range. One point I'm trying to make is that tl's are in a sense artificial; if you wish, as Wyckoff points out, you can draw them everywhere, just like you can draw horizontal s/r everywhere. You have to find the most significant points of the price action, the rallies and reactions where crucial supply and demand is being played out, in order to define the trend that you can trade. Your "lines" may or may not evolve as the trend develops, they may work beautifully, they may not work at all, but they should give you a framework to judge price behavior. H
"The draft handout: Channels for Building Wealth; a Background Paper for IBD MeetUp Tucson, 136 pages, dated 12 MAR 2006, published and copyrighted by Adobe Llamingos of the Saxby Foundation. is a better solution" Where can I get a copy of this ?
Yeah! Difficult to backtest though. With a sufficient doses belief in NLP, it may make you feel happy in the market. Will you make money with it? You probably will end up help paying for the profits of those few nimble sceptics.
More volume than ES? That sounds very important to me... I wonder how tradeable it is during USA hours... Does it have more volume then? Does that make for more better of a trending vehicle since it has more volume?
Thanks for the reply cmaxb... I didn't realize the Bund could be bigger than ES. Don't know why... Also didn't realize that it would have more volume during US hours. Agree about the liquidity aspect and the long trading hours. Ten euro's per tick sounds good. And 300 euro margins sounds great too. (Don't know who you are trading with that gives you such low margins)... I am going to have to look more deeply into the Bund. Didn't Paul Rotter trade the Bund? Or still does?
hcour, not to get off the topic of my own thread, lol, but how can I tell a pullback from a reversal by just looking at the chart (candles) with only a volume indicator? - nathan