Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

eurotrader

Trendlines

Recommended Posts

I've been having a closer look at the drawing of trendlines of late and, Trader Vic aside, would like to canvas others opinions on how they would draw a trendline in the following scenario. Market is an uptrend from a prior swing low and has finished retracing to form a higher swing low. However, the second swing low is composed of 2 or more bars all with the same low (effectively a double/triple/etc. bottom). Drawing your trendline up from the first swing low, which of these bars with the same lows would you choose as the second point in your trendline? What if the origin of the trendline has two or more bars with equal lows, which would you choose as the origin? Would you go from the first to set the swing low to the one that started the next up-move? You can see the variables. It may seem like a silly question but it can affect effect your trendline substantially depending on the distance between the two swings? I''m sure there is no correct answer to this question, like so many things in trading, but it will be interesting to see how other traders approach this scenario. Cheers.

Share this post


Link to post
Share on other sites

You can find all the answers you are looking for concerning trendlines in Thomas Demark's book, "The New Science of Technical Analysis," it will really change the way you understand trendlines and I'm sure it will be profitable for you.

Share this post


Link to post
Share on other sites

Thanks clmacdougall. Went back and pulled out my book on DeMark's indicators and had a good read back over the section on TD Lines. I'd completely forgotten about them. Programmed them into Investor/RT and can definitely say it has been a big help in eliminating the guess work of which points to use. Cheers!

Share this post


Link to post
Share on other sites
  eurotrader said:
Thanks clmacdougall. Went back and pulled out my book on DeMark's indicators and had a good read back over the section on TD Lines. I'd completely forgotten about them. Programmed them into Investor/RT and can definitely say it has been a big help in eliminating the guess work of which points to use. Cheers!

 

On a bit of a sidenote, I found it really important to understand that the break of a trendline was really nothing more than either a slowing of price momentum or a slight change in support or resistance, it has a very limited predictive ability concerning the degree of change which "might" follow it being broken IMHO.

With all that said Mr. Demarks TD line stuff is the most thorough out there concerning trendlines. At least that I've come across.

Share this post


Link to post
Share on other sites
  clmacdougall said:
On a bit of a sidenote, I found it really important to understand that the break of a trendline was really nothing more than either a slowing of price momentum or a slight change in support or resistance, it has a very limited predictive ability concerning the degree of change which "might" follow it being broken IMHO.

With all that said Mr. Demarks TD line stuff is the most thorough out there concerning trendlines. At least that I've come across.

 

Yes, I agree with you here and have found the same with regards to breaks of trendlines. In fact don't trade breaks of trendlines at all. I also don't use DeMark's trade setups using TD Lines as looking back over time they don't seem to be overly reliable. However, I do find the TD Lines to be of value for staying on the right side of trend and monitoring changing momentum. They also help solve the issue of swing points defined by multiple bars with identical highs/lows.

Share this post


Link to post
Share on other sites
  Mr_black said:
To draw Trend Line you must have a confirmed TREND... (Point2 taken out)...Here is some confirmed Tl's......:missy:

attachment.php?attachmentid=19257&stc=1&d=1266151605

 

 

Yes, that's fairly basic and understood. The crux of the issue is dealing with swing high/lows consisting of multiple consecutive bars all with identical prices for the high/low.

Share this post


Link to post
Share on other sites

I have traded trend lines for a long time and here's what I'd like to share. The main point of my method is that you should determine a trend first. It's hardly to trust trend lines as sup/res levels when you don't see a trend. It's a safiest way of using trend lines - to analyse a trend, so you can make a very profitable trade. Once you have found a trend, you should sertainly trade in the direction of the trend. Wait till price crossed the trendline (consider here as sup/res level) and when buy on close. Set SL on opposite side of the line. Take profit is before the next sup/res level.

Share this post


Link to post
Share on other sites
  eurotrader said:
Yes, that's fairly basic and understood. The crux of the issue is dealing with swing high/lows consisting of multiple consecutive bars all with identical prices for the high/low.

 

Mr. Demark dealt with the problem of multi-equals in an article of "Futures online edition".

I hope this email add still works, if not just let me know. http://www.futuresmag.com/industry/references/demark1097.html

Share this post


Link to post
Share on other sites
  eurotrader said:
Thanks. Gave it a try but doesn't appear to be working.

 

Sorry about that eurotrader, I guess that's an old address. It will suffice to say that when you have multiple equals always draw your line to or from the last one in the multiple set, no matter how many there happens to be. If I come across the article I will let you know what address I found it at.

Share this post


Link to post
Share on other sites

Many thanks for that, big help. I keep meaning to subscribe to Futures mag but never seem to actually get around to it. Will have to pull my finger out and do it. Seems like they always some very good articles in it. Cheers!

Share this post


Link to post
Share on other sites

I have been experimenting with trendlines lately and am curious what your logical basis is for using them. In other words, what reality do you thing a trendline is showing that will have predictive value.

Does it illustrate market psychology, is it just usefull becuase everyone else is also seeing it, does it just help you see the scoreboard of the game between bulls and bears?

 

I was trying to determing which trendline I should favor, one drawn with contract volume based bars or one using time based charts. This lead me to considering much more about why I should really include them in my analysis.

 

The more I use them, the more I realize I like them just because of the context they put price in. Just the same as the price and volume give me context, S/R and trendlines seem to give context at another level which makes other considerations easier. For example, price reactions to an S/R level feels easier to understand when it is at the end of an upward trend which hasn't been broken.

 

Anyway, still playing around with them trying to see how and if they will fit into my strategy. Just thought I would continue this thread with a few thoughts in case anyone wants to discuss them more. Here is my SIM blotter I posted on the P/L forum Friday for my Gold trades. I was watching for trendline break along with some short term S/R to get an area to look for an entry. Once a major move starts on oil, gold, or gas I look at trendlines for pullback setups.

 

attachment.php?attachmentid=20674&stc=1&d=1271714962

5aa70ffa64c39_4-16-201006.thumb.png.ce21ba73490684c02bc40763d4f15c21.png

Share this post


Link to post
Share on other sites

Don't play with them Dinerotrader

 

Get the book Stikky Stock Charts that Thales recommends. Read it carefully. The apply what it says and see if you can make it work.

 

I highly recommend the book and guarantee you'll do better with trendlines after you read it.

 

What is more, its cheap and a fun read.

 

 

Stikky Stock Charts

.

Edited by Kiwi

Share this post


Link to post
Share on other sites

dinero - while I agree with Kiwi, I also think that your point is valid about context and " I look at trendlines for pullback setups"....this can give a nice visual for brain muscle memory if you like.

I think they will drive you nuts looking for the perfect way to use them.

As a suggestion, define a way for yourself to draw them, be it visually and free hand, or in a more structured way (TDeMark, Trader Vic), and then be consistent using them as an indicator only, and to give the general vibe....otherwise its just another holy grail chase.

Share this post


Link to post
Share on other sites
  DugDug said:
dinero - while I agree with Kiwi, I also think that your point is valid about context and " I look at trendlines for pullback setups"....this can give a nice visual for brain muscle memory if you like.

I think they will drive you nuts looking for the perfect way to use them.

As a suggestion, define a way for yourself to draw them, be it visually and free hand, or in a more structured way (TDeMark, Trader Vic), and then be consistent using them as an indicator only, and to give the general vibe....otherwise its just another holy grail chase.

 

DugDug, could you let us know what you personally consider to be a pullback, what is your context for defining one. And once defined whose definition of a trendline do you use for trading that pullback? Thank you.

Share this post


Link to post
Share on other sites

I dont have a definition for a pullback, I was quoting Dinero.

I also dont have a strict definition of a trendline.....I draw them freehand that was my point.

Over the years I have found them to be handy to act as a visual tool in order to remind myself of what i am trying to look for in a trade.

 

The example I have attached is a simplistic but good one ....

6A in a small downtrend, breaks the downside momentum shown by two things, the trend line penetration (any trend line drawn roughly would probably have been broken), and the breakup or the highest highs (set at 25, but any number will do, so long as its consistent).

This reminds me that for me in this instance, the down trend has been broken, a good entry maybe during the pullback toward the trend line, OR if the trend line has been broken, and then uptrend resumes, after a pullback it provides a good time to get on board.

(eg, the first close on a bar in the new uptrend direction, near the P)

 

If anything I also look for the zones of a pullback to be in the 50-61% of the "trend line break" if you like. Hence I dont particularly like double bottoms.

(this range was approx from 91.00 bottom to 91.60, back down to 91.19)

Nothing that I could attempt to quantify in a programing sense.....more just a visual reminder, of the price action.

attachment.php?attachmentid=20679&stc=1&d=1271760997

trendline.jpg.80a26959aec0aab6ae256ea19a874ff4.jpg

Edited by DugDug

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • NFLX Netflix stock watch, local support and resistance areas at 838.12 and 880.5 at https://stockconsultant.com/?NFLX
    • NFLX Netflix stock watch, local support and resistance areas at 838.12 and 880.5 at https://stockconsultant.com/?NFLX
    • Hello citizens of the U.S. The hundred year trade war has leaked over into a trading war. Your equity holdings are under attack by huge sovereign funds shorting relentlessly... running basically the opposite of  PPT operations.  As an American you are blessed to be totally responsible for your own assets - the govt won’t and can’t take care of you, your lame ass whuss ‘retail’ fund managers go catatonic  and can't / won’t help you, etc etc.... If you’re going to hold your positions, it’s on you to hedge your holdings.   Don’t blame Trump, don’t blame the system, don’t even blame the ‘enemies’ - ie don’t blame period.  Just occupy the freedom and responsibility you have and act.  The only mistake ‘Trump’ made so far was not to warn you more explicitly and remind you of your options to hedge weeks ago.   FWIW when Trump got elected... I also failed to explicitly remind you... just sayin’
    • Date: 7th April 2025.   Asian Markets Plunge as US-China Trade War Escalates; Wall Street Futures Signal Further Turmoil.   Global financial markets extended last week’s massive sell-off as tensions between the US and its major trading partners deepened, rattling investors and prompting sharp declines across equities, commodities, and currencies. The fallout from President Trump’s sweeping new tariff measures continued to spread, raising fears of a full-blown trade war and economic recession.   Asian stock markets plunged on Monday, extending a global market rout fueled by rising tensions between the US and China. The latest wave of aggressive tariffs and retaliatory measures has unnerved investors worldwide, triggering sharp sell-offs across the Asia-Pacific region.   Asian equities led the global rout on Monday, with dramatic losses seen across the region. Japan’s Nikkei 225 index tumbled more than 8% shortly after the open, while the broader Topix fell over 6.5%, recovering only slightly from steeper losses. In mainland China, the Shanghai Composite sank 6.7%, and the blue-chip CSI300 dropped 7.5% as markets reopened following a public holiday. Hong Kong’s Hang Seng Index opened more than 9% lower, reflecting deep concerns about escalating trade tensions.           South Korea’s Kospi dropped 4.8%, triggering a circuit breaker designed to curb panic selling. Taiwan’s Taiex index collapsed by nearly 10%, with major tech exporters like TSMC and Foxconn hitting circuit breaker limits after each fell close to 10%. Meanwhile, Australia’s ASX 200 shed as much as 6.3%, and New Zealand’s NZX 50 lost over 3.5%.   Despite the escalation, Beijing has adopted a measured tone. Chinese officials urged investors not to panic and assured markets that the country has the tools to mitigate economic shocks. At the same time, they left the door open for renewed trade talks, though no specific timeline has been set.   US Stock Futures Plunge Ahead of Monday Open   US stock futures pointed to another brutal day on Wall Street. Futures tied to the S&P 500 dropped over 3%, Nasdaq futures sank 4%, and Dow Jones futures lost 2.5%—equivalent to nearly 1,000 points. The Nasdaq Composite officially entered a bear market on Friday, down more than 20% from its recent highs, while the S&P 500 is nearing bear territory. The Dow closed last week in correction. Oil prices followed suit, with WTI crude dropping over 4% to $59.49 per barrel—its lowest since April 2021.   Wall Street closed last week in disarray, erasing more than $5 trillion in value amid fears of an all-out trade war. The Nasdaq Composite officially entered a bear market on Friday, sinking more than 20% from its recent peak. The S&P 500 is approaching bear territory, and the Dow Jones Industrial Average has slipped firmly into correction territory.   German Banks Hit Hard Amid Escalating Trade Tensions   German banking stocks were among the worst hit in Europe. Shares of Commerzbank and Deutsche Bank plunged between 9.5% and 10.3% during early Frankfurt trading, compounding Friday’s steep losses. Fears over a global trade war and looming recession are severely impacting the financial sector, particularly export-driven economies like Germany.   Eurozone Growth at Risk   Eurozone officials are bracing for economic fallout, with Greek central bank governor Yannis Stournaras warning that Trump’s tariff policy could reduce eurozone GDP by up to 1%. The EU is preparing retaliatory tariffs on $28 billion worth of American goods—ranging from steel and aluminium to consumer products like dental floss and luxury jewellery.   Starting Wednesday, the US is expected to impose 25% tariffs on key EU exports, with Brussels ready to respond with its own 20% levies on nearly all remaining American imports.   UK Faces £22 Billion Economic Blow   In the UK, fresh research from KPMG revealed that the British economy could shrink by £21.6 billion by 2027 due to US-imposed tariffs. The analysis points to a 0.8% dip in economic output over the next two years, undermining Chancellor Rachel Reeves’ growth agenda. The report also warned of additional fiscal pressure that may lead to future tax increases and public spending cuts.   Wall Street Braces for Recession   Goldman Sachs revised its US recession probability to 45% within the next year, citing tighter financial conditions and rising policy uncertainty. This marks a sharp jump from the 35% risk estimated just last month—and more than double January’s 20% projection. J.P. Morgan issued a bleaker outlook, now forecasting a 60% chance of recession both in the US and globally.   Global Leaders Respond as Trade Tensions Deepen   The dramatic market sell-off was triggered by China’s sweeping retaliation to a new round of US tariffs, which included a 34% levy on all American imports. Beijing’s state-run People’s Daily released a defiant statement, asserting that China has the tools and resilience to withstand economic pressure from Washington. ‘We’ve built up experience after years of trade conflict and are prepared with a full arsenal of countermeasures,’ it stated.   Around the world, policymakers are responding to the growing threat of a trade-led economic slowdown. Japanese Prime Minister Shigeru Ishiba announced plans to appeal directly to Washington and push for tariff relief, following the US administration’s decision to impose a blanket 24% tariff on Japanese imports. He aims to visit the US soon to present Japan’s case as a fair trade partner.   In Taiwan, President Lai Ching-te said his administration would work closely with Washington to remove trade barriers and increase purchases of American goods in an effort to reduce the bilateral trade deficit. The island's defence ministry has also submitted a new list of US military procurements to highlight its strategic partnership.   Economists and strategists are warning of deeper economic consequences. Ronald Temple, chief market strategist at Lazard, said the scale and speed of these tariffs could result in far more severe damage than previously anticipated. ‘This isn’t just a bilateral conflict anymore — more countries are likely to respond in the coming weeks,’ he noted.   Analysts at Barclays cautioned that smaller Asian economies, such as Singapore and South Korea, may face challenges in negotiating with Washington and are already adjusting their economic growth forecasts downward in response to the unfolding trade crisis.           Oil Prices Sink on Demand Concerns   Crude oil continued its sharp slide on Monday, driven by recession fears and weakened global demand. Brent fell 3.9% to $63.04 a barrel, while WTI plunged over 4% to $59.49—both benchmarks marking weekly losses exceeding 10%. Analysts say inflationary pressures and slowing economic activity may drag demand down, even though energy imports were excluded from the latest round of tariffs.   Vandana Hari of Vanda Insights noted, ‘The market is struggling to find a bottom. Until there’s a clear signal from Trump that calms recession fears, crude prices will remain under pressure.’   OPEC+ Adds Further Pressure with Output Hike   Bearish sentiment intensified after OPEC+ announced it would boost production by 411,000 barrels per day in May, far surpassing the expected 135,000 bpd. The alliance called on overproducing nations to submit compensation plans by April 15. Analysts fear this surprise move could undo years of supply discipline and weigh further on already fragile oil markets.   Global political risks also flared over the weekend. Iran rejected US proposals for direct nuclear negotiations and warned of potential military action. Meanwhile, Russia claimed fresh territorial gains in Ukraine’s Sumy region and ramped up attacks on surrounding areas—further darkening the outlook for markets.   Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Andria Pichidi HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • AMZN Amazon stock watch, good buying (+313%) toi hold onto the 173.32 support area at https://stockconsultant.com/?AMZN
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.