Dow Intraday charts 27/05 31/05

ChartMan

Legendary member
5,580 46
Dino, you have to know that things change with time...... The 3 pk divergent tops and bottoms have always stood the test of time. Lately , and certainly this week, these formations have evolved into 4 peaks..... Why, I have no idea, and I don't care. The thing is to recognise that something that was a bankable "dead cert" yestreday,( as far as that statement is true) may not hold entirely true today. We're nit picking here though. The points lost or at risk by holding for a fourth peak is insignificant,therfore close the trade after three.
As for a specific TA formation, one could look on these tops as all being Bear Flags, and as such, because they are at a top, they are a reversal indicator. Logic would say go short on the uptrend support break. If this is close to the 100MA, then it's a reasonable trade. If the break is 50 away from the 100MA, I wouldn't take a short as at this point as the market is very strong. This last week has seen these tops fail a bit, and then slowly continue their move up....
As for taking the short and watching it go sideways, that's with the benefit of hindsight. At that point in time there is no knowing what the market will do, as is always the case. My analysis makes it sound simple and easy. In reality I know full well it is not easy at all.
 

mombasa

Established member
561 1
Hi CM,

Thanks for all your help and advise in the chatroom today. After my initial panic I managed to settle down and make a few points - shame the dow traded sideways for the rest of the day - I went short after it broke the 100MA and pulled back - closed for a few points at the channel bounce.

You are absolutely right - your analysis does make it sound very easy - in realtime its not :( - except for you ofcourse - u were spot on and it's nice to see a master in action.

One valuable lesson I did learn today was patience - the entries will come sooner or later - a weekly target of 100 points should be achievable.

Dunno when I'll next be able to join u all in the chatroom - but it was a scintillating experience - my thanks to all (china, rosso, otho, ford, frugi and yourself - apologies to any I've missed).
 

ChartMan

Legendary member
5,580 46
Glad you could join us Mombasa.It's a shame the DOW didn't play ball. Your entries were well judged and based on good TA. That's how it goes sometimes. As you figured out, It's just as important to take your time planning an exit as it is an entry and it isn't always a simple case of "that's my stop".
Today was all over by 16:00, but we carried on deliberating in the chat room about TA forms.There was a break from the down channel/bull flag that just didn't deliver. We discussed the exit from this trade and arrived at a poor exit. Just 3 more points down and it turned round and the trade could have been recovered at even... We decided that support was around 8838/8840. At 17:05 there was an apex formed from horizontal support and uptrend support meeting at 8840. This seemed the perfect place to close on failure. :(. The long entry was taken at 8845 at 16:47. Fins gave a price of 8860 and it was taken...... At this point , the price was 20 above the 100MA, so a nice "safe entry"....
Now the error in the exit was this. Trading the 100MA rules says hold a position all the time the price is within the 100MA +/- 20 band. So in reality, we shouldn't have considered closing the trade until the price went below 100MA -20. Unfortunately that could have been a 40 - 50 point loss. Had the trade been taken at an unbiased level, then it would have been a more acceptable risk. We also recognised that the down moves were very weak at 2:1 RSI to price. That could have swayed us to consider a lower stop......
But there we go. As Mombasa said, " there's so much to remember". Very true.
Incidentally, 8840 was a channel resistance line from yesterday.
 

Attachments

  • dow 30-05-03 1 mina.gif
    dow 30-05-03 1 mina.gif
    19.6 KB · Views: 375

mombasa

Established member
561 1
Hi CM,

In the chatroom u mentioned 8810 for going long and 7860 for short- still can't figure out why. Help please.

thx
 

mombasa

Established member
561 1
ah, presumably because of the potential success / failure of the pullback at 8800?

If the pull back had failed there, would it have been ok to go short there rather then wait for break of 8760? Probably not since that was support earlier?
 

mombasa

Established member
561 1
ok, last question - I started about 15 min after open and didn't see the expanding triangle. Chances are I would have gone long on the first or second pullback.

First one would have been a good call, second one not so because the target fo the first pullback was not reached? Also, shortterm ND was setting in.

Also, would u expect the expanding triangle to break to the upside? Not sure how to read these reverse ascending triangles.

Thx
 

ChartMan

Legendary member
5,580 46
Mombasa- I think I said 8860- long 8810 short. 7860 is off the map! A bit of a broad statement. Stocks are in two states, trending or rallying. 8860 was clearly the top of the sidewas channel, so a break above that would put us in rallying mode... a break below 8810 would see a likely big drop... perhaps 8825 would be a bit closer for the short call...
On the expanding triangle,they're difficult to call. I'd prefer not to second guess, except with maybe 1/3 stake. The basically signify big moves coming. Get the direction wrong and poof , you're down 50 points in 2/3 minutes. That move did 40 points in 3 minutes. How to blow £400 in 3 easy steps....
Lastly, I don't trust anything at the open..... unless it opens flat, ie no gap.
 

V. III

Junior member
15 0
Could Chartman or one of his disciples pls explain (or point me to an earlier explanation) the main concepts behind ND Top, PD Bottom, SR/RS switch.

Thanks in advance.

V. III
 

ChartMan

Legendary member
5,580 46
go to the bottom of this forum and do a search for divergence and switch..... from the earliest date
 
 
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock