S/R and the Mirror of Erised

This is a discussion on S/R and the Mirror of Erised within the Technical Analysis forums, part of the Methods category; After bouncing around a 2pt congestion zone at 1530, price breaks through the 1530 level to 1527, then rallies back ...

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Old Aug 14, 2006, 5:06am   #91
 
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dbphoenix started this thread After bouncing around a 2pt congestion zone at 1530, price breaks through the 1530 level to 1527, then rallies back toward 1530. It doesn't quite make it, but 1530 becomes the level to watch.

Price then resumes its decline, reaching 1526. Here it rallies back to 1528 where it consolidates long enough to "break" the supply line. It then rallies further to S/R, then through, then to the top of the congestion at 1530. A slight retracement, then a further rally toward S/R at 1534, and while there's no clear "swing point", clearing that congestion level might qualify as a trend reversal.

Price consolidates here, falls back a bit, then rallies all the way to S/R at 1534 where it remains until the close.
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Old Aug 14, 2006, 10:45pm   #92
 
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dbphoenix started this thread As we all know, it is very difficult to change the long established habits that were inculcated in us when we were quite young. People will fight to defend old maps and old symbols, regardless of whether those maps actually represent any territory here and now, and regardless of whether they ever did represent just what we were told they represented.

Even when people take their map and go to the territory and compare them and note the changes or corrections the map needs, they will still cling to the old map, so much so that even when these realities have demonstrably changed, or are provably different from the "map", they still tend to deny the external reality and assert the "truth" of the map.

Is it any wonder then that there are contradictions among the views of various stock market analysts, if they are each clinging to a simple all-out view and for all practical purposes ignore anything that does not support the view they hold already? There are no contradictions in reality, you know. If we can just look away from the high abstraction long enough to see the facts, we find no contradiction.

If we value the map more than the reality, we must not be surprised to find that the reality doesn't always fit the map. In such a case, the reasonable man will change his map, not try to explain away the facts.

-- John Magee
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Old Aug 15, 2006, 10:14am   #93
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Hi, thanks for this great thread. I have been trading price on and off for some time now with a decent amount of success in forex 5min. I don't have the link but in one post someone mentioned just "watching price" for the day. I find this invaluable as you can start to understand what is effecting price and how it will react over time, not wow these 3 indicators are doing this so I have to sell. I also find looking at price over several time periods invaluable.. Anyway, my question is do you think i'm wasting my time on 5min fx charts with no volume etc or should i continue until i can get a decent index trading platform? Is volume that important?
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Old Aug 15, 2006, 11:42am   #94
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Quote:
Originally Posted by jackjones
Hi, thanks for this great thread. I have been trading price on and off for some time now with a decent amount of success in forex 5min. I don't have the link but in one post someone mentioned just "watching price" for the day. I find this invaluable as you can start to understand what is effecting price and how it will react over time, not wow these 3 indicators are doing this so I have to sell. I also find looking at price over several time periods invaluable.. Anyway, my question is do you think i'm wasting my time on 5min fx charts with no volume etc or should i continue until i can get a decent index trading platform? Is volume that important?
1. There is lot of noise on 5min Forex, better to trade off 10-15min.
2. As it is unregulated market, the only way to get some idea of volume is via tick vol which e-signal delivers.
3. E-signal provide charting, Tradeguider also links to e-signal and analysis the vol to detect professional footprints.
4. Anyway I have learnt that both price and vol are never going to be accurate, only banks have that info. so effectively you are trading against the crowd and your broker who quotes these.
check out this website: you might consider moving on to the regulated currency futures at CME:
http://www.tradingeducators.com/foru...hp?t=28&page=3
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Old Aug 15, 2006, 3:08pm   #95
 
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dbphoenix started this thread
Quote:
Originally Posted by jackjones
Hi, thanks for this great thread. I have been trading price on and off for some time now with a decent amount of success in forex 5min. I don't have the link but in one post someone mentioned just "watching price" for the day. I find this invaluable as you can start to understand what is effecting price and how it will react over time, not wow these 3 indicators are doing this so I have to sell. I also find looking at price over several time periods invaluable.. Anyway, my question is do you think i'm wasting my time on 5min fx charts with no volume etc or should i continue until i can get a decent index trading platform? Is volume that important?
The "someone" was probably me, though I suggest watching for far longer than a day. Several weeks would be more like it.

In any case, only you can decide whether or not you're wasting your time on 5m fx charts with no volume, etc, or whether or not you're wasting your time on 5m fx charts, for that matter, or even fx itself. If you can't come up with a consistently profitable strategy, then you're wasting your time, regardless of whether or not someone else can. Your best trading instrument may lie elsewhere.

Note, however, that I posted these charts without volume and I did so intentionally. Volume can be helpful, but it is not critical. It may not even be very important. The raison d'etre of this thread is S/R. Naturally, trading activity has something to do with where S and R lie. But can one detect and plot and exploit S/R without volume? Of course. These charts provide examples of how to do so.

As for "just watching price", the newcomer gets the most out of it by doing just that, watching price. He doesn't concern himself with what price is going to do next. He doesn't concern himself with where he might enter or what his stops might be or where his targets might lie. All of that comes later. Perhaps much later. At the beginning, his only task is to understand how price moves and to become sensitive to the changes in the balance between buying pressure and selling pressure and to those levels and zones where those changes take place. Once he understands that, volume becomes an elective, not a required, and he can then begin to investigate how he can make money off of all this.

I hope that readers will take the other sets of charts (in posts 3, 4, and 10) and try to "narrate" them without regard to prediction or cosmic meaning or particularly what they would DO with any of what they see. Once one learns how to observe price action objectively and disinterestedly, he will be much better able to plot S/R more accurately.

Db
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Old Aug 15, 2006, 3:56pm   #96
 
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Quote:
Originally Posted by dbphoenix
The "someone" was probably me, though I suggest watching for far longer than a day. Several weeks would be more like it.

In any case, only you can decide whether or not you're wasting your time on 5m fx charts with no volume, etc, or whether or not you're wasting your time on 5m fx charts, for that matter, or even fx itself. If you can't come up with a consistently profitable strategy, then you're wasting your time, regardless of whether or not someone else can. Your best trading instrument may lie elsewhere.

Note, however, that I posted these charts without volume and I did so intentionally. Volume can be helpful, but it is not critical. It may not even be very important. The raison d'etre of this thread is S/R. Naturally, trading activity has something to do with where S and R lie. But can one detect and plot and exploit S/R without volume? Of course. These charts provide examples of how to do so.

As for "just watching price", the newcomer gets the most out of it by doing just that, watching price. He doesn't concern himself with what price is going to do next. He doesn't concern himself with where he might enter or what his stops might be or where his targets might lie. All of that comes later. Perhaps much later. At the beginning, his only task is to understand how price moves and to become sensitive to the changes in the balance between buying pressure and selling pressure and to those levels and zones where those changes take place. Once he understands that, volume becomes an elective, not a required, and he can then begin to investigate how he can make money off of all this.

I hope that readers will take the other sets of charts (in posts 3, 4, and 10) and try to "narrate" them without regard to prediction or cosmic meaning or particularly what they would DO with any of what they see. Once one learns how to observe price action objectively and disinterestedly, he will be much better able to plot S/R more accurately.

Db
These two previous posts are IMO worth re posting especially for your summary DB

regards

rols

Quote:
Originally Posted by rols
The market is real so why not try to engage with it rather than struggle from a perspective of confusion and perplexity?

IMO until you can learn to 'let go' than no number of high probability signals would be of any use to you.

When the DAX opens next just passively observe the price action alone and nothing else. The aim is to become the market, to internalise and flow with the other thousands of traders doing the same as you. This may sound touch feely BS but just try it. After a while you'll see where all the S & R levels are and more importantly the character of this market will become something you know and with much practise will be to some extent become predictable. Then when that stage is reached it will be time to get the charts back up and depending on how your unique intuitive reading of the market has formed then you in turn will be able to develop your own strategies relevent to your interpretation.

I hope this is of some help...
Quote:
Originally Posted by dbphoenix
Jeez, rols, you're beginning to sound like me.

This search for instructions as to where EXACTLY to draw the line is in large part what makes Pivots and Fib and Gann and MAs and so forth so seductive. One doesn't have to think about just where it is that price(traders) really react. All the trader has to do is draw the calculated lines. This search for exactitude also motivates the search for the EXACT stop and exact TYPE of stop that the trader should use, along with the EXACT trigger and the EXACT target. But if it were all that simple, one could package it into a kit and sell it (wait a minute . . . ).

Many people can't get this. Maybe most people can't get it. They simply cannot trade without indicators, they can't trade without patterns, they can't trade without candlesticks, etc. And if they make money doing whatever they're doing, who's to say they're not right to do it. However, a lot of people also struggle with all of that and can't make money at it. They find instead that focusing on price is best for them. Unfortunately, by the time they reach that point, they have to unlearn an extraordinary amount of what for them is generally -- or entirely -- useless information (I've read that . . . People say that . . . I've been told that . . . ). This state of affairs makes learning to trade by price vastly more difficult than it would have been had the trader learned how to do it outright in the first place. But there's no going back, this side of amnesia, so wanting to is simply wishful thinking.

This isn't the first time I've heard all of this, of course. And the Go With the Force, Luke stuff only goes so far, true as it may be. But the individual who's willing to backtrack and learn a new or at least different way of looking at charts and price action may -- not will -- find that when he's looking at his umpteenth chart, the light suddenly goes on and he understands all those back and forth pressures which are propelling price one way or the other. All the babble about pace and momentum and trend and chop and all the rest of it will make sense.

But there's no shortcut. One may have to look at hundreds of charts. Maybe thousands. And he may never get it. Which is why people continue to spend so much money on 4x Made Easy and Weekend Seminar (lunch included) and Profits R Us.

Db
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Old Aug 15, 2006, 4:05pm   #97
 
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dbphoenix started this thread Yes, a copy of your post belongs here. I hope newcomers pay special attention to words like

After a while . . . will become . . . will be . . .

In other words, one doesn't stare at price action for an hour or so in the morning and be ready to trade in the afternoon. If the trader isn't "in the moment" and focusing entirely on what's in front of him, what's happening at that moment, then all this "observing" is probably a waste of time.

Db
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Thanks! The following members like this post: rols
Old Aug 15, 2006, 8:39pm   #98
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Db,
Below are two excerpts from your "Bases" and "Rectangles" articles:

"Bases" excerpt
If, however, what looks like a base is actually a roller-coaster in a narrow horizontal band with loads of volume to the upside and loads of volume to the downside, no agreement has as yet taken place, and to invest in this stock at this time would be extremely dangerous as there is no clue as to how this battle will be resolved.

"Rectangles" excerpt
Rectangles are a particular kind of base. They move sideways like a flat base, but they sure ain't flat and they sure ain't quiet. And they illustrate the phenomena of support and resistance in a very simple and easy-to-interpret way, better than almost any other kind of base.

Questions:
1. What is the entity to which you are referring in the "Bases" excerpt?
2. Is (are) the characteristic(s) which differentiates this entity from a rectangle the volume, a lack of identifiable S/R areas within a narrow horizontal band, the position of the lateral price action in the overall chart price pattern, some of these, none of these?
3. Depending on the answer to 2. (excuse the dangling participle) is the entity the fabled "Not a base" aka a mess?

TIA
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Old Aug 15, 2006, 10:02pm   #99
 
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dbphoenix started this thread A base is defined by its purpose, i.e., the paragraphs preceding and following what you've quoted, as well as in the Supply/Demand chapter which you probably don't have. The illustration at the end of the chapter illustrates what you've quoted as well as anything would.

In addition, bases aren't generally tradeable, at least most people wouldn't choose to do so. The ERICY chart that wasp posted to his journal is an example of a base that I would choose not to trade since it appears to be accumulative. I'd rather wait until the egg is ready to hatch. Bases can also thrash around with little rhyme or reason. You can't trade a pattern you can't detect.

Rectangles, however, as noted in your quote, are not distinct from bases. They are a particular kind of base, as illustrated in what you have, and are not necessarily accumulative or distributive. Trend-traders will generally avoid bases, regardless of whether the base is a tradeable rectangle or not.

Db
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Old Aug 18, 2006, 4:00pm   #100
 
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Analysis of charts #4, part 1

As no one else has picked up the suggestion of analyzing, or narrating them the other charts, I've decided to give it a try regardless of the outcome or comments I may receive. I choose #4, because in #3 there were volume charts and as of yet I'm still looking at charts without the volume on it.

So at the left, the composite chart which includes NQ, ES, YM shows what happened the last couple of months on a chart where each bar is one day. The left upper chart shows the last two weeks and the first intraday chart ends with the opening of the current day (7/12) if I'm correct. Price has been travelling upwards for quite some time. During the last couple of months it has found support at 1650 on more than one occasion, which indicates this could send price moving downwards fast if it were broken. A breakthrough appears to happen around 5/12, price plummets all the way down to 1540. The following months (right uptil around 7/11) it's hovering between approximately 1525-1600. After the last swing up however (around 6/23), price has been in a continuining downwards trend without any attempts to throw this around, except for one faint attempt around 7/7 (upthrust?).
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