Pattern Recognition at S/R

[drsushi 10]

I started this thread at Soul's request. He will be posting some charts. As always, feel free to contribute.

 

 

David

[Soultrader 12]

Hi,

 

Can you please address in this thread what you want explained? Thanks

[drsushi 10]

You had said you use MP levels as areas to read price and look for patterns that give you indication as to what type of day we will have, or the patterns give you indication how to trade accordingly. You had said that you don't use patterns such as triangles, so I was aksing if you would post charts showing the types of patterns you look for and what it is they tell you.

[Soultrader 12]

drsushi,

 

MP patterns for me come in forms of normal days, neutral days, normal variation days, "P' shaped profiles, "b" shaped profiles, IB range, etc... For example, in the first chart below you will see profile on the ES from 2/13/08. The profile shows that of a neutral day in which range extension exists on both sides of the initial balance.

 

 

Although value shifted slightly higher compared to the 12th, the neutral day is telling me that there is conflicting opinion by the sellers and buyers. Once price shifts in one direction, this is going to cause one party to act strongly. On 2/14/08 the markets opened up near the 13 high and failed to take it out shown by the weakness appearing at the rallies. (chart below)

 

 

This weakness caused a nice downtrend as those long on 2/13 (neutral day) are now wrong and need to sell. Value shifted higher > lower. See chart below.

 

 

So in this example, based of these two patterns you could of positioned yourself on the short side for 2/15. If you had a plan to look for signs of weakness an example short could of been initiated at the gap fill. Please see chart below.

 

 

 

More importantly than the trade example is the concept I am using like MP pattern recognition to develop a trading plan.

[404 10]

great post Soul!

[drsushi 10]

Soul,

 

thanks for the post. I see what you mean by MP being as simple or complex as you want to make it. Are these MP patterns you speak of such as P shaped etc. in the MP book you've talked about before? Is that the Stodemyer (sp) book?

 

In your last chart you have a blue highlight on the volume bar. Are you indicating that volume is less on that bar even though price is higher? In another post you said you don't use the volume delta ocs because you read volume. Does one read volume in the same manner? in other words, are you looking for the divergence of volume vs. price such as in the second chart?

 

thanks again,

 

David

[nycdweller 10]

Soultrader, what is the light blue line on the bottom of the bar chart? Thanks.

[Soultrader 12]

Soul,

 

thanks for the post. I see what you mean by MP being as simple or complex as you want to make it. Are these MP patterns you speak of such as P shaped etc. in the MP book you've talked about before? Is that the Stodemyer (sp) book?

 

In your last chart you have a blue highlight on the volume bar. Are you indicating that volume is less on that bar even though price is higher? In another post you said you don't use the volume delta ocs because you read volume. Does one read volume in the same manner? in other words, are you looking for the divergence of volume vs. price such as in the second chart?

 

thanks again,

 

David

 

Not sure which book, but both Dalton and Steidlmayer may have mentioned it. Regarding the chart I am simply showing stopping volume. Divergence is one thing but I am reading the bars and relationship of volume.

 

Soultrader, what is the light blue line on the bottom of the bar chart? Thanks.

 

That is a 10 period CCI.

[walterw 10]

Not sure which book, but both Dalton and Steidlmayer may have mentioned it. Regarding the chart I am simply showing stopping volume. Divergence is one thing but I am reading the bars and relationship of volume.

 

 

 

That is a 10 period CCI.

 

 

Hi James, are you using cci on some particular way ?... cheers Walter.

[Soultrader 12]

Hi James, are you using cci on some particular way ?... cheers Walter.

 

Hi walterw, good to see you back I use trendlines for the CCI and as a timing tool for entries and exits. I'll probably create a new thread on this.