Price Action - not quite what it seems?

[Splitlink]

Re: reply to op

Your statement tells me that you therefore do not have a trading edge that can tell you what the greater probability is (bounce or break) when price reaches such an 'S&R line.' If you do not have faith in anything that is not 'an exact science' - then good luck finding one - Lol !

G/L

Lots of people do not know (and with good reason) where to place their S&L lines. That is why they use fibs, pivots and other means that depend on being able to calculate mathematically and even the figures for those can vary from textbook to textbook. No, you are right, I have no edge in spotting the turns in that way and am quite happy to concede that point to you, if you wish, but I do put to you that the term "trading is not an exact science" is used a lot and covers a multitude of sins in an area that is, short term, at least, quite random, IMO. In fact, I would not call it a science, at all.

 

[bbmac]

Re: reply to op

Hi, I will answer your points in the order you raise them in your post above;

1. There are of course other types of edges in technical tradinng other than support/resistance based edges.

2. Previous Price Pivots (PPP's) are arguably the most essential potential support/resistance tool and fibs/trend lines whilst useful can be more subjective. The confluence of all 3 is where the highest probability potential 'turning points' are found over a large sample. If traders wishing to find a support/resistance based edge do not know how to plot PPP's, as you suggest, the best advice is to learn - it isn't rocket science.

3. Speaking of science, rocket or otherwise, I agree trading is not a science bit this does not mean that a probability based edge cannot be found to exploit market moves (technical, fundamental or otherwise.)

G/L

Lots of people do not know (and with good reason) where to place their S&L lines. That is why they use fibs, pivots and other means that depend on being able to calculate mathematically and even the figures for those can vary from textbook to textbook. No, you are right, I have no edge in spotting the turns in that way and am quite happy to concede that point to you, if you wish, but I do put to you that the term "trading is not an exact science" is used a lot and covers a multitude of sins in an area that is, short term, at least, quite random, IMO. In fact, I would not call it a science, at all.

 

[DashRiprock]

astronautical engineering

 

[bbmac]

Below is my current downside analysis of the potential support/rbs factors on 1hr/4hr/daily concerning Gbpusd.

Gbp usd has been in a 1hr range consolidation off last week's 6339 hi - 6262...look at 6262 there is a confluence of 3 x potential factors that could see support - sure enough price has risen from there (howsoever shortlived this may or may not be.)

There are 'levels' I wouldn't touch, and there are levels that I would be very interested in going long from should price drop and test them-depending on set-up, - ie not all potential supp/res 'levels' or indeed factors are created equal and you have to figure out which levels prove, over a large sample to be more important than others. Also do this in the context of prevailing price action conditions on the t/f's of interest to you.

(Daily S1 and that 23.6% 6003-6339 not shown on this chart.)

G/L

6262-39 previous 4hr/daily swing hi zone with 6262=Daily S1 @/around with 23.6% 6003-6339, 6255=38.2% 6119-6339, 6236 = 38.2% 6068-6339
6232-6229 Daily S2 @/around and 50% 6119-6339
6212-07 38.2% 6003-639 and Weekly Pivot @/around, 6207 = 23.6% 5779
6204/03 50% 6068-6339, 61.8% 6119-6339
6199 Daily S3 @/around
6195-82 previous 1hr/4hr swing hi zone
6171-72 50% 6003-6339, 61.8% 6068-6339, 76.4% 6119-6339
6148 Monthly Pivot @/around
6132-18 previous 1hr/4hr swing lo zone, 6132 = 61.8% 6003-6339 and 76.4% 6068-6339. 6127 = 38.2% 5779-6339
6118-12 previous 1hr swing lo zone
6085-68 previous 1hr/4hr swing lo zone, 6085 = Weekly S1 @/around, 6083 = 76.4% 6003-6339
6060 50% 5779-6339

 

[bbmac]

The quote below from my post above is 'where it is at' in respect of what the greater probability is of a bounce or break from potential support/resistance beit a Previous Price Pivot, a Fib, a Trendline or a Calculated Pivot (Like Daily S1 etc...) Figure this out and Support/Resistance starts to make more sense from which a trading edge can be derived.

Below is my immediate upside analysis of gbpusd...again there are 'levels' I would not touch but others that may be of interest in going short should price test them and a set-up (s) that I look for to go counter prevailing price action/trend develop there.

6290-96 previous 1hr swing lo zone
6320-29 previous 1hr swing hi zone
6330-39 previous 1hr/4hr swing hi zone
6366 76.4% 6546-5779
6376 61.8% 6746-5779
6387 Monthly R1 @/around
6420 Weekly R1 @/around
6425-42 previous 4hr/daily swing hi zone
6452-71 previous 4hr/daily swing hi zone
6480-96 previous 4hr swing hi zone
6520-46 previous 4hr/daily swing hi zone inc 76.4% 6746-5779 @ 6516 @ Weekly R2 @/around 6546

G/L

....you have to figure out which levels prove, over a large sample to be more important than others. Also do this in the context of prevailing price action conditions on the t/f's of interest to you...

 

[Splitlink]

Re: reply to op

Hi, I will answer your points in the order you raise them in your post above;

1. There are of course other types of edges in technical tradinng other than support/resistance based edges.

2. Previous Price Pivots (PPP's) are arguably the most essential potential support/resistance tool and fibs/trend lines whilst useful can be more subjective. The confluence of all 3 is where the highest probability potential 'turning points' are found over a large sample. If traders wishing to find a support/resistance based edge do not know how to plot PPP's, as you suggest, the best advice is to learn - it isn't rocket science.

3. Speaking of science, rocket or otherwise, I agree trading is not a science bit this does not mean that a probability based edge cannot be found to exploit market moves (technical, fundamental or otherwise.)

G/L

Thanks for the post. I appreciate your opinion and am willing to concede that you will have done much more research and backtesting than I have.

I am a subjective trader and like to follow my own logic as to where to enter a trade and, I'm afraid that pivots, fibs and other lines do not enter very much into this. Simple previous tops. on higher TFs, are just as attractive to me as most other lines.

I went into a trade this morning at 1100. At present I'm 12 points into profit. I traded off the bars and previous highs. Other lines did not come into it. I can figure, by watching the movements that I am in a spot, now, where orders are being triggered and profits taken. My decision is whether stay open, reverse or close. There is a certain amount of instinct in my trading. Perhaps, that's where my edge is. I guess that that is the way we are, for better or for worse.

Never mind, the main thing is that new guys coming onto the site can form their own opinion as to what works best for them.

Good trading and thanks again.

Split

 

[bbmac]

Re: reply to op

Just to be clear, my research and resulting methodology is from testing in the forward live market not back testing.

Also, as you state below you took a trade based effectively on a previous price pivot ie '....I traded off the bars and previous highs...' I assume you went short based on PA on a t/f (s) below that the previous swing hi existed on ? You also further state that '...simple previous tops on higher t/f's are just as effective...as most other lines...' in other words you are using previous price pivots already and having some sucess with them ? (albeit in trading against previaling price action at such areas where a previous imbalance of supply over demand existsed - ie a fractal swing hi / PPP / previous swing hi/lo whatever you may call it.

G/L

Thanks for the post. I appreciate your opinion and am willing to concede that you will have done much more research and backtesting than I have.

I am a subjective trader and like to follow my own logic as to where to enter a trade and, I'm afraid that pivots, fibs and other lines do not enter very much into this. Simple previous tops. on higher TFs, are just as attractive to me as most other lines.

I went into a trade this morning at 1100. At present I'm 12 points into profit. I traded off the bars and previous highs. Other lines did not come into it. I can figure, by watching the movements that I am in a spot, now, where orders are being triggered and profits taken. My decision is whether stay open, reverse or close. There is a certain amount of instinct in my trading. Perhaps, that's where my edge is. I guess that that is the way we are, for better or for worse.

Never mind, the main thing is that new guys coming onto the site can form their own opinion as to what works best for them.

Good trading and thanks again.

Split

 

[shapeshifter8]

I'm interested in people's views on this observation relating to Price Action. As someone who follows PA closely it's became more apparent to me that a lot of price action is following market sentiment rather than support resistance etc. So for example I'll often be following a particular currency pair, say AUDUSD on a 15m or 1H chart and I'll see the price hit a support/resistance level, whilst forming a Pin and showing overbought/oversold on a CCI or RSI. Confluence on 3 counts I'll be thinking. The Price will then bounce as predicted and will turn a profit. I'll have that warm glow and self-satisfaction from seeing the price behave as it should and reacting correctly to the S/R level etc. But my self satisfaction wanes when I then look at other currency pairs, say EURUSD and GBPUSD and see that the price has turned at exactly the same time, without the benefit of any S/R level or Pin bar etc and I'm left thinking that the reason the Price turned on AUDUSD had nothing to do with the S/R level, or Pin or CCI/RSI, but was just following the general market sentiment.... Anyone else as frustrated as I am?!

Hmm I always saw S&R as a reflection of market sentiment and not separate, since S + R are essentially reflections of suppy and demand. I think we should be careful not to get bogged down in semantics............

 

[dbrawner]

I'm interested in people's views on this observation relating to Price Action. As someone who follows PA closely it's became more apparent to me that a lot of price action is following market sentiment rather than support resistance etc. So for example I'll often be following a particular currency pair, say AUDUSD on a 15m or 1H chart and I'll see the price hit a support/resistance level, whilst forming a Pin and showing overbought/oversold on a CCI or RSI. Confluence on 3 counts I'll be thinking. The Price will then bounce as predicted and will turn a profit. I'll have that warm glow and self-satisfaction from seeing the price behave as it should and reacting correctly to the S/R level etc. But my self satisfaction wanes when I then look at other currency pairs, say EURUSD and GBPUSD and see that the price has turned at exactly the same time, without the benefit of any S/R level or Pin bar etc and I'm left thinking that the reason the Price turned on AUDUSD had nothing to do with the S/R level, or Pin or CCI/RSI, but was just following the general market sentiment.... Anyone else as frustrated as I am?!

Ok, I hear your frustration... Also been there, done that, and got the T shirt (maybe several of them).

Perhaps it will help to remember that ALL indicators (well 99.9%) are a reflection of past prices (or past something). This includes the venerable SR lines. What makes indicators work is the market's acceptance of them. i.e. When enough traders think something is going to happen at a certain point, viola, something happens!

Now to your other point of frustration. That other markets move in concert with one another should be no surprise. It's called correlation. Gold and interest rates, bonds versus stocks, one currency versus another, etc. etc.. Some have positive correlations, some negative.

I like to keep some perspective by applying the "guns and butter" theory to correlation. Given a finite amount of capital, in order to invest in something, I must prioritize and allocate funds from someplace else. If interest rates are falling, I want to take myself out of interest sensitive investments and put that money into something that will give me a better return. Same for currencies. If the Dollar is strengthening against the Euro with a strong trend, then I might reduce trading in a sideways currency pair to increase my positions in the trending one.

As traders we can easily be blinded by our own focus and totally miss the big picture.

In your scenario, did the other currencies move because of the turn in the AUDUSD, or did the AUDUSD move because of the activity in the broader markets? Who's to say which came first?

I don't know how long you've been trading but, after a while these things will be taken in stride without frustration.

Consider this... It appears you made some good profits. Smile, enjoy them, and look for the next opportunity. Life's too short to let the markets frustrate you forever.

Dave