pr0crast

In case this seems arbitrary or counter intuitive, since gaussians are supposed to define the channel -- not the other way around, this statement reflects the often inexact nature of our 5 minute market lens and the need to account for that rather than blindly go by what the chart says. If you use your imagination to look into the 5m bar and think through what happened, and where the dominant volume was, your gaussians will match your trend lines.

Look at the range, open, and close of each of those bars on decreasing volume. The range is getting smaller, and the close is getting lower and lower on the bar. In other words, the 2m bars are becoming less and less "black" as the balance between buyers and sellers shifts. If you were looking at 30 second bars, you'd probably see a B2R2B2R2B2R2B-ftt-2R2R. Not that you should look at 30 second bars... but the price action is telling a story. Looking at 5m ES bars, you see the same thing play out all the time.

The people here can get a little touchy Thanks for posing an extremely interesting question. Though volume is always useful, I have found it useful in oddly different ways depending on the instrument being traded (i.e. tick volume on Forex). This tells me that there is a fundamental difference in what's going on, but I don't really know what. I guess I don't really care either, but it's interesting to think about. Something to ponder: Despite the fact that there are arbitrage systems out there keeping the cash and futures in line, you can admit that there are traders of ALL TYPES on the ES, trading for entirely different reasons and using different techniques. This means that there are all kinds of orders floating that may or may not be paying explicit attention to the cash index. When price MUST pass through an area because an arbitrage opportunity, it has to pass through those floating orders. That prints as "volume". If we see a lot of that, we know which direction the market is moving in, resistance be damned. Thankfully, the market tends to move in waves, which creates opportunities if you are confident in its current direction.

I'm partway through this thread, so excuse me if this has been covered, but if any other contributors to the thread have or would like to start a chat room to discuss critique execution, please PM me.

Bars 65-68 show a lot of strength. On 65, you've got a high volume bar closing in the middle, followed by sideways movement in 66/67. You get your increasing black on 68. Time to move up. Bar 69 was a little weak in the volume department -- for a breakout we would have needed to see an increase. As the buyers dry up, sellers take over again, but find support -- giving you a point 3. This movement fails to sustain itself on the next bar though, suggesting again that there's no follow through here. The bar 72 FTT is confirmed and the channel starts to roll over. If you haven't exited by 74, you're exiting/reversing for sure at 76.

My problem with this is anticipating a BO/FBO based on trendlines drawn from bars 39, 40, and 41, which have a collective range of what, a point and a half? In my mind, as bars 45 and 46 are heading lower, we're looking for our "point 3" -- waiting for the market to double back and verify that "yep, enough sellers are gone now, buyers are in control" so we can draw our up channel. Anticipating an FBO here is in my mind a classic example of "looking too hard at the chart". Later, on bar 55-56, we have increasing volume, but there is clearly a lot of supply/resistance here judging by the increased volume and the bars closing near the middle. I would be more likely to expect a BO after an FTT here.

Good timing... I've been lurking here for a little while after a multi-year hiatus. Weird to think that people still watch those videos... Those were made a lifetime ago. Personally, being in the leaves (trading tapes, labeling every hitch/dip/etc) psyched me out, so I strived to simplify and use what made intuitive sense to me. That's what I've had the most success with personally, but take that with a grain of salt because my trading record is very short -- my work has a way of keeping me too busy to trade. Lately, I've tried to carve out a little time in the AM for trading and I'm hoping to spend more time here. I've been thrilled to discover that some of the other stuff in these forums that is price/volume related (like VSA) actually backs up / further explains a lot of what folks are doing here, adding context/confidence/understanding to the basics of p/v/channels/ftts. Quite a different environment than EliteTrader. My attitude towards Spyder's futures threads here and at ET is that his training and exercises put you in front of a chart, paying close attention, for enough hours that you will eventually figure out how to trade. Last I checked he doesn't lay out an exact method for entries/exits -- just shows you how to read what you're seeing and keep your head in the game. It might be a mistake to treat this as a method for trading when really it is a method for learning how to trade.