Day trading the DOW 17/03/03

chartman,

many thnx 4 yr graphs! can u tell me one thing: when say u've got a bull flag or a triangle, how do u work out the target on the following move?
 
Here's an example of a triangle breakout target. You take the size of the "Mouth" and add it to the trend line at the breakout point. In this case,( as is often the case in a bull triangle) it is the horizontal resistance line. IF it breaks to the downside, take the mouth value away from the support break trendline to end up with your "short" target. The target is ususlly met by the time the triangle lines ( theoretically) would have reached a point. The breakout point is usually defined as occuring between 60% and 75% of the distance from the start( mouth) and the theoretical apex. Note there are almost always three cycles in the triangle before the breakout. The 3rd low cycle was at 8270. You will often get a clue about the direction of the break by looking at RSI and CCI and also where the 100MA line is relative to the body of the triangle . I call this the "balance of power" in the triangle. In this case, the balance was below the 100MA, and could have lead to a break to the down side. Here, the final overriding clue was the early small false break to the upside, followed by a dip, NOT to the support line and NOT breaking the 100MA. ( The middle "confirmation pullback"). WATCH out for the false BLIPS!!!!
As for bull flags, look at the previous few posts about targets. They can all be regarded as bull flags. Bull flags also usually have 3 cycles, with the breakout coming off the third cycle to the upside. The reverse is true for Bear Flags.
 

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Here's a Bear Triangle break to the downside. As it's at a top, we EXPECT it to have the balance of power ABOVE the 100MA. ( In the previous example, it was a bottom, so the BOP was ABOVE the 100MA). The BOP comes into play in a sideways market, where it may give you a clue to the exit direction. Don't guess it!!!!! You already know how big the move will be from the mouth. Just be prepared, and know where the target will be when it goes.
 

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OK last one. This is a "reverse triangle" or "expanding triangle". These often lead to high volatility. :) 4 days of dithering and 1 day of massive rise. Same rules, same targets. No doubt, many would have been surprised had they not checked their longer term timeframes.... BEWARE of these intraday. They are swift, ruthless adn will eat you alive !!!!
 

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I couldn't resist this one from today, showing pre-market action and the rest of the day.
 

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Can someone put up an attachement if i email it to them. Its CM'c commentry of his trading last week in wrod format. For some reason i cannot put any attachements up

thanks
 
chartman

u r just excellent! many thanks!

one more ? if u've got some time. From y'day: at about 19:10 the mrkt was playing with 100 MA after topping out, I actually went short there and had some rather unpleasant minutes at about 19:30 having to cover and go short again on the spike up. Is there anything in your tools that could predict that spike - thus putting off going short on the 2nd crossing of 100 MA until 19:40?

cheers mate!
 
China. One point I've mentioned before. A top IS NOT a signal to go short. ( mostly, with the odd notable exception). You obviously made a good call on the top. You should have then been looking for a pullback towards the 100MA after it crosses below to the down side. This was at 19:40 and again at 19:45
If you want to play extra safe, wait until the price is more than 20 below the 100MA... ie 19:45. You will undoubtedly miss those extra early entry points, but you have the comfort factor in your favour. Each to their own..... I do both.
The other rule that may help is: If you are in a trade, ( lets say short from 8326 @18:31), stay in the trade all the while the price is within 100MA +/- 20 UNLESS there is an over riding reason to get out ( long term drift against you maybe) . This would have kept you in at the peak at 8334,just ( 100MA at 8314). At this point, RSI was STILL showing divergence from the top. Also top resistance was at 8336.
Hope tis helps.
 
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