Best Thread All About Trendlines

[roguetrader]

Then of course there's Fib, Gann, Wolfe, EW, pitchforks, fans . . .

I'll go with Spock 🙂

Funny you should say that :cheesy: I am quite partial to Fib also. The others, not really to my taste, though I would not dismiss them based on the fact that I don't use them.

 

[dbphoenix]

There's no right or wrong
.

Quite true. I could provide a list of gurus as well, but to what purpose?

Two sides of an issue have been presented. That's the nature of debate. It's up to the newbie to determine what works for him.

 

[roberk]

Then of course there's Fib, Gann, Wolfe, EW, pitchforks, fans . . .

I'll go with Spock 🙂

And I still want to know which way to go if a black cat crosses my path. :-0 😀

 

[TheBramble]

Hi Tony, agree totally with what you say, my purpose was simply to demonstrate that there is another school of thought on the use of these tools.

That's exactly what I believed you were doing RT and IMVHO is an attitude and task essential as a trader (or anything for that matter) to consider in any undertaking.

If I've not been clear in a previous post, it would seem Farley's and Nison's views are in line with my view on this subject. I bet they're relieved. 😆 (I've not read Farley's work as I understand many who attempt such a task rapidly lose the will to live...)

For those who are established in their trading methods and do not view the use of these tools for this purpose worthwhile, fair play. But for those who are still searching for their niche then it is worth exploring.

I would suggest that any 'established in their trading' (i.e. trading successfully for a while) it is precisely because they have maintained an open mind and are constantly researching that they have achieved this position.

Of course, having researched and studied does not necessarily imply acceptance and utilisation. We can always choose what to use and what to discard.

 

[barjon]

Here's a way to combine both lines of thought.

Using an exploded view of the DJI retracement as an example. The first chart shows an intial channel with a resistance (supply) line drawn from the high and first peak with a support (demand) line drawn parallel to it. The horizontal lines are previous S & R. The resultant triangles (coloured yellow) represent the zone where you might expect to find S&R occuring and you'd be keeping a close eye on the action for clues.

The second chart redraws the channel to take account of the high of the next peak then determines next zones.

A viable compromise :?: 🙂

good trading

jon

 

[dbphoenix]

And I still want to know which way to go if a black cat crosses my path. :-0 😀

Run back under the ladder . . . 🙂

 

[dbphoenix]

Here's a way to combine both lines of thought.

Using an exploded view of the DJI retracement as an example. The first chart shows an intial channel with a resistance (supply) line drawn from the high and first peak with a support (demand) line drawn parallel to it. The horizontal lines are previous S & R. The resultant triangles (coloured yellow) represent the zone where you might expect to find S&R occuring and you'd be keeping a close eye on the action for clues.

Well, no, not really, since a supply line is not the same thing as a resistance line and a demand line is not the same thing as a support line.

But all that aside, why do you designate the horizontal lines as "previous" S/R?

 

[bracke]

Here's a way to combine both lines of thought.

Using an exploded view of the DJI retracement as an example. The first chart shows an intial channel with a resistance (supply) line drawn from the high and first peak with a support (demand) line drawn parallel to it. The horizontal lines are previous S & R. The resultant triangles (coloured yellow) represent the zone where you might expect to find S&R occuring and you'd be keeping a close eye on the action for clues.

The second chart redraws the channel to take account of the high of the next peak then determines next zones.

A viable compromise :?: 🙂

good trading

jon

barjon

Whilst not wanting to pour cold water on the newly conceived 'barjon triangulation system' I will give it a dousing with tepid water.

It would seem that as the trend continues the yellow area gets larger and larger until it would appear to be useless. ie the gap between the support/resistance line and the extreme triangle point becomes very large, which means that action in the yellow area may have little or nothing to do with support/resistance.

Apologies if I have misunderstood your proposed method but perhaps an additional visit to the drawing board is required to refine the method.

Regards

bracke

 

[roguetrader]

Here's a way to combine both lines of thought.

Using an exploded view of the DJI retracement as an example. The first chart shows an intial channel with a resistance (supply) line drawn from the high and first peak with a support (demand) line drawn parallel to it. The horizontal lines are previous S & R. The resultant triangles (coloured yellow) represent the zone where you might expect to find S&R occuring and you'd be keeping a close eye on the action for clues.

The second chart redraws the channel to take account of the high of the next peak then determines next zones.

A viable compromise :?: 🙂

good trading

jon

Sorry barjon, I'd have to join the camp of the naysayers here, to try and combine both these points of view like this creates an area much too large to be viewed as meaningful should anything happen within it. For example any price action occurring in the middle of your triangle would bear no relation to either line.
Also I'm not sure what you mean by "supply line" and wonder could you be confusing this with overhead supply?

 

[barjon]

db

ok can you explain the difference between a resistance line and a supply line for me please.

the "previous" S&R are just soft resistance and support lines taken from the each peak and trough of the retracement.

bracke/rogue trader

I wasn't suggesting an ever expanding area of yellow - that's just the visual effect as I've drawn it. If you go back to the first chart you see that the price breaks the trend resistance line but doesn't reach the resistance line drawn from the last peak. At the other end, the price breaks the support line drawn from the last trough but doesn't reach the trend channel support line. Thus at these points the yellow shows resistance/support zones.

Nor am I suggesting this is tradeable but, if you were into trading trendline breakouts you might want to see the price clear the previous peak before you were convinced. Similarly at the other end if you were into trading break of previous trough support. By the same token if you were into trading the channel you might still feel inclined to go short (assuming you see the action that triggers your trade) even though the price has broken through the trend resistance line because it was still in this yellow resistance zone.

Just some thoughts - I haven't used anything like it.

good trading

jon

 

[bracke]

db

ok can you explain the difference between a resistance line and a supply line for me please.

the "previous" S&R are just soft resistance and support lines taken from the each peak and trough of the retracement.

bracke/rogue trader

I wasn't suggesting an ever expanding area of yellow - that's just the visual effect as I've drawn it. If you go back to the first chart you see that the price breaks the trend resistance line but doesn't reach the resistance line drawn from the last peak. At the other end, the price breaks the support line drawn from the last trough but doesn't reach the trend channel support line. Thus at these points the yellow shows resistance/support zones.

Nor am I suggesting this is tradeable but, if you were into trading trendline breakouts you might want to see the price clear the previous peak before you were convinced. Similarly at the other end if you were into trading break of previous trough support. By the same token if you were into trading the channel you might still feel inclined to go short (assuming you see the action that triggers your trade) even though the price has broken through the trend resistance line because it was still in this yellow resistance zone.

Just some thoughts - I haven't used anything like it.

good trading

jon

Thank you for your explanation. Can I take it that you will be conducting extensive backtesting and fronttesting of your yellow peril.

Regards

bracke

 

[roguetrader]

I kinda see the jist of what you are saying, referring to the first chart, I think. Price does break out of the trend resistance on basis of lower timeframes and I would possibly have traded that depending on the tape at the time, but price does not breakout in this time frame, it simply tests the trendline as it closes back below it and gives us at best a failed breakout, though in a strict sense with no close above the trendline in this timeframe, no breakout.
If for my benefit I consider this to be an intraday chart, say 15min, and obviously disregaerding the point scale if I traded this I would be watching very closely the tape until the much more substantial horizontal resistance is cleared, so in a sense a zone would exist for me

 

[barjon]

Thank you for your explanation. Can I take it that you will be conducting extensive backtesting and fronttesting of your yellow peril.

Regards

bracke

Ah, bracky boy, you know me too well 😆

 

[dbphoenix]

db

ok can you explain the difference between a resistance line and a supply line for me please.

the "previous" S&R are just soft resistance and support lines taken from the each peak and trough of the retracement.

I've gone into supply and resistance (and demand and support) somewhat in my book, though I'll be going into it in more detail in the next installment. It's a Wyckoff thing, but difficult to explain without illustration. Unless one steps forward into application, it all becomes the usual theoretical and philosophical blah blah. I hope to focus on application in the P&V forum.

As for swing points providing S/R, see my previous post a little ways back regarding S/R.

 

[barjon]

I've gone into supply and resistance (and demand and support) somewhat in my book, though I'll be going into it in more detail in the next installment. It's a Wyckoff thing, but difficult to explain without illustration. Unless one steps forward into application, it all becomes the usual theoretical and philosophical blah blah. I hope to focus on application in the P&V forum.

As for swing points providing S/R, see my previous post a little ways back regarding S/R.

db

I ask because my Wyckoff book (Hutson) seems confusing. It says:

There are four basic trend lines: a support line passing through successive points of support in an uptrend; a supply line - my note: not calling it a resistance line - passing through two successive points of resistance in a downtrend; an oversold position line drawn parallel to the supply line and passing through the first point of support between the supply line's two tops; and an overpassing through the first point of resistance between the support line's two bottoms.

I've always thought of it all as a support line with the line drawn parallel to it as the supply line; and a resistance line with the line drawn parallel to it as the demand line. That not right?

jon

 

[dbphoenix]

db

I ask because my Wyckoff book (Hutson) seems confusing. It says:

There are four basic trend lines: a support line passing through successive points of support in an uptrend; a supply line - my note: not calling it a resistance line - passing through two successive points of resistance in a downtrend; an oversold position line drawn parallel to the supply line and passing through the first point of support between the supply line's two tops; and an overpassing through the first point of resistance between the support line's two bottoms.

I've always thought of it all as a support line with the line drawn parallel to it as the supply line; and a resistance line with the line drawn parallel to it as the demand line. That not right?

jon

Wyckoff is not always what one would call a model of clarity. He uses demand line, supply line, support line, resistance line, oversold position line, overbought position line, trendline, and, of course, support, resistance, demand, and supply. Therefore, some interpretation is required. Perhaps he didn't anticipate how anal traders would become. But what matters, of course, are the concepts he's trying to get across (remember that he was among the first -- if not the first -- to address all of this and attempt to codfy it).

Wyckoff does call an uptrend line a support line and a downtrend line a supply line (when it would be more consistent to call them support and resistance lines or demand and supply lines). The overbought and oversold lines are more or less parallel to these.

However, all of this comes from his chapter on The Significance of Trend Lines in the original course, and what he's trying to get across is the nature of trend, trend momentum, trend change and trend reversal. The labels he attaches to all these lines just aren't all that important.

What he is saying, essentially, is that when prices make higher highs and higher lows, one can draw a "trend" line under the lows of these bars or swing points or whatever. I don't call this a support line because doing so would be inconsistent with what he says about support throughout his course. But it doesn't matter. What matters is the fact of the line, whatever one wants to call it, and its angle or "stride".

Once one has this line, he can then draw a line which is more or less parallel to this line and which passes across the tops of the swing point peaks along the way. No, it need not be across the tippy-tops. But it shouldn't be running through the middle of the course like a linear regression line, either. The purpose of this line is to flag those swing points which fail to reach it, which may be a signal that momentum is slowing, which may be a prelude to trend change. As this parallel line is angled downward to track the lower swing points, it will begin to converge with the uptrend (demand, support, whatever) line and, eventually, something will have to give: either the trend line will be broken, or price will find new strength and make a new and higher swing high, restoring the angle of the trend.

 

[barjon]

db

Thanks a lot, that's helped cleared my confusion. I agree that what it's called doesn't really matter but it's as well to know what he's talking about.

jon

 

[wasp]

Not much to add ATM, but thought I'd bump this thread as it made fascinating reading and would recommend it to any newbies...

 

[marchusyoshua]

trading trendchannels and trend lines

I want som subjective professonal input on this. I have read a lot of trading book the last year 90% you cant use, some you can use, but just part of it, my qestion is the chose between to formation

Would you buy a in a trend that have dipped ?

Ore a trend that hits all time high in the last 3-4 months ?

Ore wait until the trend that have dipped reverses ?

Simple qestion hope fore some discussuion

 

[firewalker99]

Not much to add ATM, but thought I'd bump this thread as it made fascinating reading and would recommend it to any newbies...

True 🙂