I'm still not great exiting trades quickly. A lot of this is because I'm not proficient with the software yet. I'm trying to follow the rules its just when I see the line break it seems like I'm losing an extra point before I actually get out of the position. Not a huge deal but something I definitely want to take care of. Today's price action was interesting. We were in a range since Sunday's open which we finally broke out of at around 5:30. Once the market opened we had a spike bar up and we formed a double-top on the hourly as the 3602 was quickly rejected. However buyers supported the market right around the previous swing low (I labeled the DTDB). Price quickly shot up past the previous swing high but the speed at which this occurred made it suspect. Sellers we willing to step in around 3610 but price again found some support at the 50% mark of the last swing. Rather than making a new push up however - price formed a little with a couple of lower lows and higher highs. Price made it below the 50% level indicating some weakness but buyers supported the market before a new swing low could be put in. We had one last push up ibut a smaller range formed a little lower than the previous one. At this point a hinge could be seen with price revolving around the 50% level. Price drifted out of the range, tested the median of the range and slowly cascaded lower before finding minimal support at the lower hinge (demand line) and then busting through. The victory was short lived however. Buyers supported the market one more time at 3586 before price came back and tested the median of the hinge. Enough people finally got the message, price moved lower, made a lower swing high and fell into the close. I did take one bad trade in sim in the first range. For some reason I got long before price made a new swing high. Just a brain fart and not me trying to front run a move (at least consciously). You definitely had to be nimble today to keep your scratches/small winners/losers where the should be. Even though I was poor with this I only had a few small losers and the winners made up the difference and then some. I've also included an hourly chart with an updated picture of where we are. We can see that the most recent supply line has been broken. However, price made it above the previous swing high and even with repeated efforts was not able to hold gains. There is nothing decisive yet on the part of the buyers. We may continue to move back up until we reach the median of the channel or we might accelerate out of the channel all together. On the daily (not show) its looks more bearish. Price closed right on the level of the trend channel which makes 3 days where buyers have been unconvincing. If buyers can't get above 3602 and hold some gains it looks like we might be moving on from this channel after 9 months.
I find the regularity of these channels very interesting, particularly since the means are respected as well. Ordinarily I advise against getting into the micro stuff, but it's hard not to notice all this. If you open up your chart, you'll find yet another channel from today's high to today's low, also very regular. You don't even need to draw anything. What all of this means I have no idea. I guess we'll find out tomorrow.
I saw that one too but I thought it might be overkill. Everything is being well respected so its hard not to draw them. I even drew a new down sloping one on the hourly which assumes that today's high is a swing high and that median line is showing some good interaction with price. I've been meaning to ask you about something I've been thinking about. This morning the run from 86 to 610 happened quite quickly and then the price action stayed within the boundaries of this swing until nearly 1. I see this kind of thing on different time frames and I've started to call them "controlling swings". (I don't know where this term came from but I doubt I invented it). I'm not sure this is something that can be traded but it seems to warn of a two-way day (or longer depending on the time frame). I'm not really interested in deviating from SLA but when you come across something that makes you go "hmmm" is there any point in tracking it or testing it if they probably won't lead to any setups? At best it is likely to be an indication to stand aside which now that I've written it down might be more valuable that a trade setup. I'd appreciate your thoughts. Not related but I should have mentioned in my summary above that I missed the good entry on the DTDB bounce. I need a lot more practice in real time when price goes vertical. I understand where the entry is but it goes by fast and once its missed it feels like the rocket has taken off.
Well, mean reversion has been the order of the day, which accounts for both these pretty channels and all the frigging hinges. I don't see much point in tracking it or testing it. It is what it is. But making money off of it involves combining the SLA and AMT, and that's not a task for someone who's new to them. Perhaps more useful would be to combine the two in obvious ways. For example, if you had plotted the channels in your prep and noted that the upsurge to 11 happened to touch one, you could have entered your short earlier. If you had done so, you may have been motivated to stay in via AMT during that first rebound in your gray box and just stuck with it until you got some evidence of reversal using both. Granted this may be too much at this point, but they do work together, and using both will prevent a lot of the in-and-out that occurs during ranging days.
I think your probably right that it's too much at this point. Once SLA becomes a little more fluid I can start worrying more about AMT. If you do decide to expand your newest pdf further it is definitely AMT that I'm not fully in tune with. The SLA part is coming along well and I'm getting the use of channels and mean revision there but the box concept - while easy to understand - can be hard to see. Sometimes there are nice clean ranges but most of the time price is a lot more sloppy and the evolution and interaction of these ranges - where a median line becomes the top or bottom of another range etc. - can confuse me and leave me with too many S/R levels to be useful. I've been digging through some of your older posts on this but somehow diagonal stuff is just easier for me to see. Thanks again.
One of the reasons why I moved on past S&R was that too many people had too much trouble understanding it. Consequently, their charts were covered by lines that had little to no usefulness. The key to a range is the same as the key to a channel: the mean. If you can find the mean, the limits can be flexible. This is not the kind of thing a struggling trader wants to hear, but it's the reality. It's also the reason why "breakouts" so often fail. A breakout has to break out OF something. And if the something has no clearly defined limit, then the breakout becomes too mushy to be relied on.
Quick update this morning. Not much has changed on the hourly. Price has been slowly moving higher. We are approaching both the mean of the small up channel and potential overhead resistance. On the minute chart we can see price is at the mid point of the hinge from yesterday with already one strong rejection off that level. We'll see is sellers keep stepping up here.
One thing I neglected to mention - if you look at the hourly chart I've posted everyone else seems to be using the point marked in the grey oval as their swing high for drawing their channel and I'm not sure why?