When is a trend no longer trending? Is a 50% retracement still considered a bullish trend? What's the definitive rule on this? thanks
Old fashioned TA says higher highs, higher lows is up trend, also volume higher on the up waves than down waves, sometimes you can draw a straight line under the lows, or they bounce off the 50 SMA. This all depends on time frame, of course. There are no definitive rules in trading, however, other than a sale occurs when two parties agree on present price. The Market would seize up with no transactions if everyone agreed on future price.
Depends on your timeframe and the character of the channel. Are you talking about a multi-year trend or a half-hour trend? Generally if a trendline has been broken and price fails to make a higher high, then the trend has changed. If price drops below the last swing low, then the trend has reversed. Do you have an example?
I leaned that when a trend line breaks, price pulls back to (or toward) it and price then turns back in the direction of the break and makes a lower low/higher high, that is the signal for the end of the previously defined* trend. * Defining a trend requires a bar interval (weekly, daily, hourly, 5-min, etc. or range/tick equivalents) and a time window (last N years, months, weeks, days, hours, minutes, etc.) The market is unlimited so you have to create a framework within which to work if you're trading directionally and using graphic representations of price action.
What ever rules you used to identify a trend...use the exact same rules to tell you when a trend appears in the opposite direction. Therefore, always consider the trend still active until a new trend shows up in the opposite direction.
The closest major swing low on NFLX looks like 325..? Fair to say this is still "bullish"? My problem is I see things as a "snow ball effect" in terms of trends. Meaning everything gets moving on smaller time frames and develop into big trends. How do we know this isn't a full blown reversal? It's EASY to see in hind sight, I guess the best move is trade with the trend, in this case the daily/weekly charts which are bullish..so go long..
Well, you can focus on (1) the theory and philosophy of trends or you can focus on (2) your money. I vote for (2). All movements begin with a transaction, a tick. These transactions "snowball" into larger moves, but that need not concern you. Regardless of what interval you use -- tick, 1m, 7m, 23m, 15hr, 10d, 48w -- they're all tick charts. The only difference is the size of the bundle. Therefore, you have to decide what interval you want to trade and over what timeframe you want to trade it. If you want to trade a daily chart over a five-year timeframe, then that's what you should do. This chart shows an uptrend which was interrupted by a pullback. This in and of itself is of no concern. In fact, you should look forward to these pullbacks since they give those who didn't have a chance to participate in the upmove to do so. That they were eager to jump in is evident by the continued upmove thereafter. Unfortunately, the upmove ran into trouble, and those who bought the pullback and thereafter are left up in the air. They panicked and dumped what they just bought. This, absent news, contributed to that "cascade" effect. On the other hand, those who bought all the way up to the pullback are doing just fine. In fact, if price holds at the line you've drawn, they may just buy more. On the third hand, if price doesn't hold at that line, then not so much. Therefore, much depends on when you bought. If you're looking trouble in the face, best to exit and look for another opportunity to enter. If trouble isn't so near, then wait and see what happens if and when price gets to your line. Price hasn't even had a chance to test the old high, much less make a new one. It may end up just going sideways, in which case you'll have to decide how patient you want to be. Unless you're underwater, there's nothing to be afraid of. Just let it play out. If you are underwater, sell it tomorrow.
There are differences between this latest pullback and the previous pullbacks: 1) The LTL break was significant (the last one was a slight overshoot that quickly rebounded) 2) Previous Resistance did not hold as Support When this happens in the intraday trends I trade, I wait for clarity, which means additional confirmation before going long.
This implies you're a swing trader or long term trader...planning to hold positions days, weeks or months.