The trend lines are a very questionable thing I believe. I have tried different software programs and even printed out the charts myself to draw them manually. Each program renders them differently. For example, prophet renders it differently depending upon the time period. When I hit the "log" button then it turns into linear and everything changes again. Then there is the matter of if I look at it daily, weekly or monthly. The slope of the trend line can change if just moved by one bar or so. Where it should be accurately drawn comes down to subjective opinion. Then we have to get into the probability of price throwing back into the trendline as a supposed "headfake". At the end of the day, the breakage of the trend line really means nothing. There are other variables with meaning, but the trendlines are more or less a coinflip. If price falls, then the coinflip came true and traders will keep believing in a truly flawed way of analyzing stocks. Its kind of if I did a dance outside and it rained. Did my dancing produce the rain? Well, someone will believe it did as long as I was the first to post it on a messageboard.
Previous S/R levels seem to be very strong, however. I pegged a couple pivot lows recently using previous support, one @ 1052.00, then the next @ 1033.00. I'm an ES noob, still mainly sim trading, but had my best ever live trade Friday - 9 pts.
The above posts make three great points. Potential traders are doing one of two things: closing doors or opening doors. Seeing that different bar lengths produce different trendlines can be very informative to a rational person or irrelavant to anther person who is looking for an edge to make money. slower fractals have faster trends that are not observable within them. some people canot tell the difference in a retrace or a reversal at the beginning of either. What hapopens to be the distinguishing factor is the very beginning of the pattern. Once a person knows there are a pair of trendlines, right and left, then then get to see where retrace begins on a LTL and they also get to see that a reversal begins on within the boundaries of the two trend lines. What if a person gets to discover when volatility expands on a trend. The expansion is NEVER on a RTL and it is ALWAYS on a LTL. What is the connection of R, S and pivot points to the two trendlines of a trend? This is how a person always knows if R or S is going to be broken or if price is going to bounce off the R or S. Obviously there are tends on all fractals and on any fractal the faster trends within them are not observable. read the OP's post just above and find out why he is so anxious and fearful . He has good reason to be and thats why he closed the door on learning how trends work. The third item was the raindancing. How would a raindancer view the OP's raindancing? If you can't raindance who cares if it rain after you dance. Better not post any charts with trendlines.
No, the trend lines are not questionable. The problem you have is that you have not discovered a method to read them correctly the same way every time. It does not matter if someone else reads them a different way. What matters is if you can begin to read them in the correct way. How do you know when you achieved this? You will start to make profits over time. This does not mean that every time you read it correctly, you will make money, but after enough times of perfect reading, you will have more wins than losses. This is what it means to be a successful trader if risking 1 to make 1. Of course you can also risk 1 to make 4 but you win% will decrease.
I guess I should explain that I only consider the closing price, so I don't consider an intraday excursion through the trendline to be a break, but only if the price closes below. The way you have described the trendline is the way i like to draw them as well. I also tend to discount the daily trendline when looking for a break in a long standing market move and defer to the weekly instead. Also, everyone has their own idea of just how many points constitutes a significant break. We could all agree however that Fridays move was significant. I think this discussion of trendlines is very useful, because I have seen so many trendlines on ET drawn in a way other than what you have described above, which to my mind is the best way.
Jack, if a sub BBT consists of a minimum of 2 adjacent bars, am I correct to assume that a Traverse would consist of a minimum of 54 bars? (2*3*3*3)
Hi David, There are possibilites when annotating that the non stationary window changes. One of the effects is to remove from consideration sets of bars. The bars are still there but they are not under consideration as the logic handles them. Working up from the foundation your product of 2*3*3*3 does give an answer of 54 mathematically but the number of bars could be less if there outside bars (OB) and SYM's in the consideration. My explanation is probably difficult to fathom, but it looks like 19 bars minimum FTT to FTT for a traverse. BBT 1 would be 3 bars, BBT 2 would be 2 bars and the same for BBT 3. So tape 1 is 7 bars and Tape 2 is 6 bars and the same for Tape 3 thus completing the Traverse. For me 7 + 6 + 6 is 19 bars. Working puzzles is not my cup of tea. Your idea to consider minumums of this or that would be a good drill for people to do, though. Your second question about where are annotators at any point in time Is very significant. Last Friday for me was a spectacular day in terms of an annotator paying attention to business. These are difficult times for the financial industry. So people doing pool extraction from the financial indistries pools have to keep things ship shape. To see a pattern form the simple requirement is to use the three points and an FTT. It is a three bar minimum pattern. Draw a sym of two bars. Make the left bar of the sym an OB. Make the third bar an OB too. Offset it so it is NOT a lateral of three bars. Do a short one and do a long one. You now have a full collection of BBT's that are brief in occurance. I used our mutual vocabulary. And I am not an inventor. I used cases from clean page 2. I also assured that claen page 4 regions were in effect. I ststed a reply using "logic" just as a coder would or a person doing flow sheets would. Lets look at a BBT. It completes. Let it be a long BBT. Next another BBT begins. So we have a long BBT 1; the next BBT from the FTT of BBT 1 must form up as a short if we are going to get point 2 and then point 3 of a tape. This tape began with a BBT 1 which was long. This means that the point 3 value has to be great than point 1 of BBT 1. If it is equal, then whatever point 2 is, it works to form a LATERAL tape. I will call either formation Tape 1 and it is composed of BBT 1 and BBT 2 where BBT 2 goes from pt 1 to pt 2 of the Tape 1 and BBT 2 goes from pt 2 to pt 3 of the Tape 1. The above is working out and a person can trade BBT 1 and BBT 2 fairly accurately. This is true, especially if he is using a leading indicator of end effects on a SUB level. The 2 minute YM serves this purpose quite well for the 5 minute ES. Lets look at what is done when pt 3 of tape 1 goes beyond (below in this example) the value of pt 1. This is a violation of the regions on clean page 4 and this means the potentially long Tape 1 CANNOT HAPPEN. I NOTE THIS VALUE AS A HORIZONTAL RAY ON MY CHART. I observe price appraching pt 3's limit and I especially am cognizant of the PTV volume, the actual volume and the number of seconds left in the ES and YM bars. When and if TAPE 1 FAILS, BBT 1 is useless and I squash it into the last BBT 3 of the prior (believe it or not SHORT TAPE and short BBT). In trading we know SO MUCH about the order of events. At this point, then, the price moving forward is generating an FTT of BBT 3, the last BBT of a prior SHORT tape. To make a long tape short is the great story I am telling. A prior BBT 3 is now being completed and the TAPE 1 was a failure. In effect we are moving the old point 3 forward to the pt 2 of the potential long tape. The pt 2 becomes a new point 3. The RTL is fanned a little and a new cloned LTL is placed geometrically in the correct place. Why did I( do this explanation? Simply because ot applies to all the nested fractal parts. Here is where this technique applies: 1. obviously to Tapes being formed from BBT's 2. drilling down it applies the BBT's being formed from "subs" 3. drilling down it applies to sub's being formed from sub sub's Now lets look the other way. 4. traverses being formed from tapes. This is how I got back to the short TRAVERSE 1 when the long TRAVERSE 2 failed on bar 30 of the 30OCT09 chart (all gapped appropriately). The long traverse 2 of the short channel failed to get traction 5 more times during the rest of 30OCT09. Today we did have a lateral (long biased) after a VE occurred on the Traverse 1 LTL around 1pm nyc time. A VE of the lateral showed how a short>>> lateral>>>long forms a saucer on a given fractal. I try to keep track of the LTL's and RTL's of traverses and the tapes that form them. The short channel we are presently in may not end soon. 5. Channels being formed from traverses. It is very important to deal with point 3 on each of the nested fractals. Point 3 is what determines a container is long or short or rarely lateral. I only replied to this thread to deal with how important it is to poll with a full selection. I responded to you after I checked in today for a moment (I was more checking my vision since it is deteriorating) In this reply, I tried to deal with what is behind your Q's and comments. It is very important to annotate rather than any other seeming short cut. In markets that are introducing severe and complex sentiments, It is extremely important to keep tabs on the onfolding markets. Volume is where the most important record keeping is done. the many nested fractals have different sentiments at a given time. It is very important to stay on the same given trading fractal to do the extraction. The details of this post were presented with respect to how fitting three patterns together to form a slower fractal have many considerations. There is always an order of events on each and every fractal. Keeping each logged by volume annotation or a multi level log is very important.
http://stockcharts.com/h-sc/ui?s=SPY We can also consider the 50 moving average as a sort of trend line. As you can see from the chart, the SPY broke below and was not able to close above this line. While, this is bearish, I did take some longs today, and also a short. Technically, I think the market heads lower, but I will trade my setups for the day.