Trade Discussion and Analysis

[DbPhoenix 42]

IMO, that trendline in red is dead and should have been stopped when price crossed it and ignored from then on, a new trendline drawn (as was in black). Any touches thereafter as fw says, purely coincidential. It is no longer valid nor useful.

 

Of course it is. The job of a trendline is to show trend. The trend is down. The discussion here, however, appears to be confused between trend and S/R. Trendlines don't provide S/R. That's not their job.

[firewalker 10]

... at what point is the trend no longer down?

 

 

 

[wasp 10]

I assume they are the same chart so just annotated one.

 

Next......................

[firewalker 10]

I assume they are the same chart so just annotated one.

 

Next......................

 

They are all Nasdaq charts, first one 1 year, second 4 year, third almost 10 years. I've included these charts to compare 'steepness' of a trendline.

[myrtleturtle 10]

aaaaaaaahhhhhhhhhhhhhhhh!!!!!!!!!!!!!!

 

No, no, no, no, no, no, no. Did I mention, no?

 

drawing lines like that dont work! It gives the illusion that you went short at the beginning of the red-line.

 

Leading upto the red-line [1]...

 

if line[2] is the up-move, at what point do you say it has broken to the downside? breach of line[2] for 2 or 3 consecutive days?

 

but then, line[3] could be seen as another level of support since price seems to waver at horiz-line[4].

If you are long-minded, you would be buying at line[4], since you have no reason yet to suspect its a downtrend.

 

peak being a higher peak than peak[a] (peak[a] only becomes contextualised after peak is in), would lead you to suspect the upmove is still in play, and you are trading a pullback.

 

peak[c], lower than peak may lead you to suspect that the upmove is losing energy, and a H&S is forming.

 

however, a clear breach of line[4] shows the upmove is over.

ONLY NOW CAN YOU DRAW THE RED-LINE[1] at peak[c].

 

Note the huge difference from line[4], the point at which you might go short, and the retrospective red-line[1] drawn at peak[c].

 

A newbie might be fooled into thinking you went short at peak[c].

(actually you might have, but then you would be trading an H&S pattern and not a trendline break)

 

line[5] could be seen as local trendline, showing continuation of downmove.

however, how many days or amount of price needs to breach of line[5] needs to happen before you decide the downmove is over?

 

point[d] has no meaning until point[e] is in place, a higher-high.

Only then can you contextualise a higher-high and possibly draw in line[6].

 

But is line[6] another attempt to dynamically adjust to a down-trend, as happened with line[3] when line[2] broke?

 

the pin-bar over where line[2][ is drawn would suggest action-zone, but a clear breach to the upside would be needed.

 

If you are minded to think the downmove is still intact, you would see the pin-bar as resistance, and might be inclined to short at 1870 or so, after the move after point[d] falters.

 

only point[e] may suggest that an upmove is in the offing.

 

if you thought the downmove started at line[4], and believed the red-line[1] indicated a downmove, and the breach of the red-line[1] was the downmove ending, you would have made very few pips.

(the breach of line[4] was at 2000 or so, and price braking above red-line happened at 1950, after several months)

 

There is as much discretionary analysis as Fibs or Eliotts, and open to interpretation.

 

In the words of Fox Mulder: I WANT TO BELIEVE.

[wasp 10]

There were 5 trades in that chart.

 

Each time the trendline broke recent areas of S/R and through the trendline as annotated 1,2,3 and 4. Any prior breaks of trerndline were not couple with the break of S/R and thus not valid.

 

EDIT: The 2nd 4 should read 5.

[JT1 10]

There were 5 trades in that chart.

 

Each time the trendline broke recent areas of S/R and through the trendline as annotated 1,2,3 and 4. Any prior breaks of trerndline were not couple with the break of S/R and thus not valid.

 

EDIT: The 2nd 4 should read 5.

 

I'd go along with this. A breakout beyond the S/R, and a breakout beyond the trendline combined, provide 1-2 valid reasons to trade in the hope/expectation of a reversal/move in the opposite direction, as did happen in the examples shown by wasp.

[wasp 10]

I favour the short side and this is where it will go!

[firewalker 10]

Interesting! I didn't realize there was so much to discuss about trendlines...

 

drawing lines like that dont work! It gives the illusion that you went short at the beginning of the red-line.

Depends on what you are expecting from those lines. Obviously you can't short 'at the beginning of the red line' because of the red line, at that time you can't draw the line yet.

 

if line[2] is the up-move, at what point do you say it has broken to the downside? breach of line[2] for 2 or 3 consecutive days?

 

Wasp has his own "style" of drawing lines in his forex charts, but whether or not a trendline is broken doesn't necessarily have to mean something big is going to happen...

 

but then, line[3] could be seen as another level of support since price seems to waver at horiz-line[4].

 

I wouldn't draw a line at [3], because at that point price failed to make a higher high. As the first break of a trendline signals a change in momentum, price can still make higher highs and higher lows (in an uptrend), but this is not the case here.

 

If you are long-minded, you would be buying at line[4], since you have no reason yet to suspect its a downtrend.

Even if you had a strong bias towards the long side, I can't see any reason why you'd want to buy at [4], except for the first time in November. But after that price fails repeatedly ('b' and 'c') to break above 'a' so there is weakness in the background. The third time price goes down to the line at [4] it goes straight through it.

 

peak being a higher peak than peak[a] (peak[a] only becomes contextualised after peak is in), would lead you to suspect the upmove is still in play, and you are trading a pullback.

Although peak 'b' went slightly higher then 'a', it fell back immediately. If you were to suspect the upmove still in play, then I would draw a demandline from the bottom of the congestion in November, extended after the first swing past a and that gets broken soon after the swing to 'b'.

 

peak[c], lower than peak may lead you to suspect that the upmove is losing energy, and a H&S is forming.

I would expect a H&S to form after a sustained upmove, not like in this case.

 

however, a clear breach of line[4] shows the upmove is over.

ONLY NOW CAN YOU DRAW THE RED-LINE[1] at peak[c].

Yes, but are you going to wait until you can draw a trendline to go long or short?

 

A newbie might be fooled into thinking you went short at peak[c].

(actually you might have, but then you would be trading an H&S pattern and not a trendline break)

Actually, I think wasp is trading neither of those

 

line[5] could be seen as local trendline, showing continuation of downmove.

however, how many days or amount of price needs to breach of line[5] needs to happen before you decide the downmove is over?

The second time in March, when price fails to make a lower low I would have reason to believe the move lower is over (at that point: 'for the time being'). Also, you can draw a line mirrored of [5] on the lower side, which makes up a triangle formation.

 

point[d] has no meaning until point[e] is in place, a higher-high.

Only then can you contextualise a higher-high and possibly draw in line[6].

Point d has meaning to me, as it is a higher low, which leads to drawing a first upsloping line (first green line on attached chart).

 

If you are minded to think the downmove is still intact, you would see the pin-bar as resistance, and might be inclined to short at 1870 or so, after the move after point[d] falters.

I don't see individual bars as resistance.

 

if you thought the downmove started at line[4], and believed the red-line[1] indicated a downmove, and the breach of the red-line[1] was the downmove ending, you would have made very few pips.

Exactly, so why would you make your entries based on trendlines?

 

 

In the words of Fox Mulder: I WANT TO BELIEVE.

 

Just 50 days left

[JT1 10]

I'd go along with this. A breakout beyond the S/R, and a breakout beyond the trendline combined, provide 1-2 valid reasons to trade in the hope/expectation of a reversal/move in the opposite direction, as did happen in the examples shown by wasp.

 

Interestingly though, i have found that this type of approach will work on dailies, but then starts to work less well on a TF smaller than dailies. I suppose that this is due to the chop of intraday charts caused by news etc.

 

Take a 30 min chart for example. Try mapping out trade entries & exits based on combined S/R & TL line breakouts, and it rarely works, as the times it works are outnumbered by choppyness & spikes. To me, it seems like you have to be happy to grab some level of profits if/when they present themselves.

 

What do you think about this phenomenon?

 

Cheers.

Edited June 6, 2008 by JT1

[wasp 10]

Interestingly though, i have found that this type of approach will work on dailies, but then starts to work less well on a TF smaller than dailies. I suppose that this is due to the chop of intraday charts caused by news etc. What do you think?

 

Cheers.

 

 

I think it can work as low as 30m charts but below that and it becomes a different story with much sharper trendlines that don't mirror a bigger picture. Not to say they can't work for a smaller TF player but in the grander scale of things, you won't see the same thing as one using 60/240m charts.

[JT1 10]

I think it can work as low as 30m charts but below that and it becomes a different story with much sharper trendlines that don't mirror a bigger picture. Not to say they can't work for a smaller TF player but in the grander scale of things, you won't see the same thing as one using 60/240m charts.

 

Yes.

 

for me, it seems the smaller the TF, the less it seems possible to let these trades run until an opposing signal, and that one needs to be happy/able to use profit targets to bag profit while its there, rather than be able to let the trade run until a reversal opportunity appears.

[firewalker 10]

I favour the short side and this is where it will go!

 

Another view:

 

 

Since the bounce off what I believe is major support around 195, it has made higher highs and higher lows, although it's not a smooth uptrend. The last swing low didn't dip very far, I think this favours a breakout.

 

The question is will you take a short because it seems like resistance (or if I've missed it are you already in?)

[wasp 10]

I was in, took 9 to finish the week off with a round number (600) and I am staying out of NFP as I have never traded GJ over NFP and unsure.

 

I actually think its 50/50 atm which is why I'm not in!

[wasp 10]

technically still in an uptrend too.

[myrtleturtle 10]

 

Just 50 days left

 

??

That would take us close to end of July or so. (mid year)

 

What? Is this some sort of Gann thing going on?

 

EDIT: nice forecasting stuff on your last chart, wasp. quite reminiscent of mr.marcus.

[wasp 10]

??

That would take us close to end of July or so. (mid year)

 

What? Is this some sort of Gann thing going on?

 

 

Nah! Its his 18th birthday and he is legally allowed a real brokerage account :rofl::rofl:

 

EDIT: nice forecasting stuff on your last chart, wasp. quite reminiscent of mr.marcus.

 

Only if it goes back down!

[firewalker 10]

??

That would take us close to end of July or so. (mid year)

 

What? Is this some sort of Gann thing going on?

 

You said "I want to believe", so I figured you knew:

the new X-files movie premieres at the end of next month.

[firewalker 10]

Nah! Its his 18th birthday and he is legally allowed a real brokerage account :rofl::rofl:

 

Actually, I think most brokers require you to be 21! Oanda doesn't, so I guess that's why you trade FX and not futures :haha:

[wasp 10]

213.50 back on the cards....

[firewalker 10]

213.50 back on the cards....

 

This looks like a typical pattern that leads up to a break higher...

[JT1 10]

213.50 back on the cards....

 

Hi Wasp

 

if possible, please can you give a little more insight into how & on what basis you draw-continue-discontinue your Support & Resistance lines?

 

Thanks a lot.

[firewalker 10]

Hi Wasp

 

if possible, please can you give a little more insight into how & on what basis you draw-continue-discontinue your Support & Resistance lines?

 

Thanks a lot.

 

He copied my style :o

 

Seriously, they look pretty much exactly as the ones I would draw... although there'd be less (200.90 and 202.61 probably originate from a lower TF).

[JT1 10]

He copied my style :o

 

Seriously, they look pretty much exactly as the ones I would draw... although there'd be less (200.90 and 202.61 probably originate from a lower TF).

 

Really.

 

The main reason i ask about wasps is that i think he sees S/R levels that have always been broken up or down from the past, but still mark significant turns or price action levels on the chart, as relevant to what is happening in the present.

I'm just wondering on what basis, he would view a former S/R level that has now been broken as still relevant to the present, as opposed to a former/now broken S/R level as being irrelevant to what is happening now?

 

Cheers.

Edited June 9, 2008 by JT1

[wasp 10]

Mornin' chaps,

 

My niece and sister here today so no time to post but quickly............

 

they are daily areas which price could not surpass due to supply and demand basically. All very simple and some go back weeks. If they are penetrated more than a couple of times with no reaction I kill them off, other wise they stay.