Buy @ support, selling @ resistance, selling @ minor resistance, buy @ minor support

[dbphoenix]

The required lower low, however, is thwarted. If you had shorted the lower high, you'd want to cover here if doing so under these conditions was part of your plan. And if all of this meets your criteria for a reversal off S, you'd want to go long.

 

[dbphoenix]

Now an even lower high (covering the long), followed by a higher low (trying to cut to the chase here). The lower high and the higher low define "trendlessness", i.e., a search for equilibrium. For most traders, this is not the best environment for profitable trades.

 

[dbphoenix]

And now a "higher high". What do you do with that? It's "higher", but it's also lower than the high set on the 8th. Which is where so many traders wander off into the weeds.

The major high and low were determined almost four weeks back. Anything inbetween is minor. One can trade these minor fluctuations if one wants to, and many do, but if he does so, he is also much more subject to whipsaws. Is this overtrading? Depends on the strategy. If one is going for only a few ticks in any direction, then whether this style of trading is worthwhile or not is entirely up to the trader. But knowing which direction to shoot for, much less whether or not to get into SAR, remains a key question.

 

[dbphoenix]

Now price drops below "S". And the couldawouldashoulda begins.

Should I have shorted that last swing high? If I had, where would I have entered? If I had been long off the last swing low, where would I have covered? Would I? Why?

If I hadn't shorted that last swing high, should I short now? Or wait? Should I go long? What the hell is the direction of price anyway?

And if you're waiting for the other shoe to drop, the shoe is in your hand. All this may seem like a tease because I can't tell you what's best for you.

You have to define your trading environment.

You have to determine how much risk you can stand.

You have to decide how much profit to go for.

You have to decide exactly what price has to do in order to tell you whether you're right or wrong.

You have to decide under what conditions the yellow lights will flash.

None of this is especially difficult, but it is time-consuming. On the other hand, you've been a member for at least four years and have most likely viewed a great many charts. If you determine in advance what it is that you're going to look for, the mess will resolve itself into trend, momentum, "divergence", and so on and you'll begin to be able to screen out the noise that distracts you from your goal.

 

[JTrader]

And now a "higher high". What do you do with that? It's "higher", but it's also lower than the high set on the 8th. Which is where so many traders wander off into the weeds.

The major high and low were determined almost four weeks back. Anything inbetween is minor. One can trade these minor fluctuations if one wants to, and many do, but if he does so, he is also much more subject to whipsaws. Is this overtrading? Depends on the strategy. If one is going for only a few ticks in any direction, then whether this style of trading is worthwhile or not is entirely up to the trader. But knowing which direction to shoot for, much less whether or not to get into SAR, remains a key question.

Thanks a lot DBP,
The commentary you've provided on these charts should prove a big help, in providing a better framework for how to think in terms of future chart interpretation.

I'm going to absorb this info before posting anything else, thoughts, questions etc..

Just one quick question first -

By SAR do you mean support and resistance S&R, or are you referring to something that I am unfamiliar with?

Many thanks
JT.

 

[dbphoenix]

Thanks a lot DBP,
The commentary you've provided on these charts should prove a big help, in providing a better framework for how to think in terms of future chart interpretation.

I'm going to absorb this info before posting anything else.

Just one quick question first -


By SAR do you mean support and resistance S&R, or are you referring to something that I am unfamiliar with?

Many thanks
JT.

Stop And Reverse. In other words, get out of whatever position you're in and take the opposite. (It's also the name of an indicator, but it's easier to type "SAR" than the whole thing.)

In the meantime, if you're interested mostly in intraday, repost your original chart, only start at 13:31 to get rid of those first two long red bars. And no lines or annotation.

Db

 

[JTrader]

SAR = Stop and reverse - the post makes full sense to me now.

Thanks again.

 

[JTrader]

Now price drops below "S". And the couldawouldashoulda begins.

Should I have shorted that last swing high? If I had, where would I have entered? If I had been long off the last swing low, where would I have covered? Would I? Why?

If I hadn't shorted that last swing high, should I short now? Or wait? Should I go long? What the hell is the direction of price anyway?

And if you're waiting for the other shoe to drop, the shoe is in your hand. All this may seem like a tease because I can't tell you what's best for you.

You have to define your trading environment.

You have to determine how much risk you can stand.

You have to decide how much profit to go for.

You have to decide exactly what price has to do in order to tell you whether you're right or wrong.

You have to decide under what conditions the yellow lights will flash.

None of this is especially difficult, but it is time-consuming. On the other hand, you've been a member for at least four years and have most likely viewed a great many charts. If you determine in advance what it is that you're going to look for, the mess will resolve itself into trend, momentum, "divergence", and so on and you'll begin to be able to screen out the noise that distracts you from your goal.

Hi DBP

the highlighted parts above express some of my thoughts/doubts.

I can now see on the historical charts posted, the potential significance of the lower-highs (LH) and lower-lows (LL).

However, I now need to go on to try and establish ways of deciding whether or not LH's or LL's have formed in real-time in order to be able to decide if and when a trade is appropriate - particarly if trying to trade the minor reversal swings (LL's and LH's) between the more major S & R.
As things stand right now, I would be more comfortable trading for reversals around the very obvious (major) S & R levels, but the swings inbetween major S & R, seem to be more difficult to trade as I have less idea why price is/might be stopping and reversing where it is, as this is inbetween (major) S & R. Hence, I would have more doubts before taking on such a trade, and less good reasons to take on such a trade.

LL's and LH's now seem more obvious on the historical chart, and easy to recognise in hindight, but in real-time it will naturally be more difficult. Recognising when price is running out of steam and forming an LL or LH.
In the run-up to a LH, on a candlestick chart, there are likely to be a few red candles among a majority of green candles. Maybe two red candles form next to each other that makes me think that price has topped and an LH has formed, therefore I may look to short. However, price then continues up and the next few candles are green, until the actual formation of the LH. In the mean-time, I may have had to activate my stop, as it would/I could not tolerate the continuation upwards, against my trade.

Therefore, particularly if I am to make use of LL's and LH's to trade possible reversals inbetween of major S and R, in real-time I need to start to define my criteria for when LL's and LH's have actually been formed, so that I can determine good trade entry points. Getting a better feel for for when price has run out of steam, as opposed to stopping briefly for a breather etc.

Thanks again.

 

[dbphoenix]

Hi DBP

the highlighted parts above express some of my thoughts/doubts.

I can now see on the historical charts posted, the potential significance of the lower-highs (LH) and lower-lows (LL).

However, I now need to go on to try and establish ways of deciding whether or not LH's or LL's have formed in real-time in order to be able to decide if and when a trade is appropriate - particarly if trying to trade the minor reversal swings (LL's and LH's) between the more major S & R.
As things stand right now, I would be more comfortable trading for reversals around the very obvious (major) S & R levels, but the swings inbetween major S & R, seem to be more difficult to trade as I have less idea why price is/might be stopping and reversing where it is, as this is inbetween (major) S & R. Hence, I would have more doubts before taking on such a trade, and less good reasons to take on such a trade.

LL's and LH's now seem more obvious on the historical chart, and easy to recognise in hindight, but in real-time it will naturally be more difficult. Recognising when price is running out of steam and forming an LL or LH.
In the run-up to a LH, on a candlestick chart, there are likely to be a few red candles among a majority of green candles. Maybe two red candles form next to each other that makes me think that price has topped and an LH has formed, therefore I may look to short. However, price then continues up and the next few candles are green, until the actual formation of the LH. In the mean-time, I may have had to activate my stop, as it would/I could not tolerate the continuation upwards, against my trade.

Therefore, particularly if I am to make use of LL's and LH's to trade possible reversals inbetween of major S and R, in real-time I need to start to define my criteria for when LL's and LH's have actually been formed, so that I can determine good trade entry points. Getting a better feel for for when price has run out of steam, as opposed to stopping briefly for a breather etc.

Thanks again.

You've made several important observations and you're asking very good questions. You're also addressing your tolerance for risk and the nature of your "comfort zone".

You may find it helpful to think about your preference for trading trend vs trading S&R. The two do not necessarily have anything to do with each other except when they intersect, such as, in this case, at 1.30 (+/-). You have at least begun thinking about the difference between major and minor swings (or fluctuations or oscillations or whatever you want to call them) and which are more likely to help you reach your goals. That's a start.

Db

 

[thebull27]

hi following fridays move eur/usd

I believe price will break down the 1.3 support and reach the area of 1.29 over there there is major support

 

[JTrader]

Hi thebull

I can't see the major support that you refer to at 1.2900. What chart are you looking at? and when (dates) do you see this support?

Does this major support come in the form of previous resistance, as opposed to actual support?, or did this support at 1.2900 exist way back, and has long since been broken?

Cheers
JT.

 

[JTrader]

I don't want to get sucked into trying to short 1.3000 today just for the sake of it, not unless my chart setups, give me good reason to.
It's a new week, but i would rather miss the move down (or some of it) than lose another 13 pips like i did on Friday. I want to see how price reacts around 1.3000 (a very round century level). It still looks like heavy support exists around the late 2990's. WHen this S has collapsed, price has only dropped to 2980 before recovering back above 1.3000.

In my mind, I'm just imagining the level 2 order book with huge S below 1.3000, and many more buy order than sell orders. I could be completely wrong though.

 

[JTrader]

Hi DBP


I have noticed the following, particularly with reference to the minor S/R levels within the major Highs/lows - R/S on a chart..........the swings inbetween the full range of price activity on a chart....

To confirm a downtrend, an LH needs to form to accompany the LL. The LL seems to usually form before the LH.
To confirm an uptrend a HL needs to form to accompany the HH. The HH seems to usually form before the HL.

Therefore for shorts, I am thinking it would be best to go short once you have the LH to accompany the LL, in what will hopefully continue to be a downtrend. And to wait for a HL to accompany the HH before going long in what will hopefully continue to be an uptrend.

On the charts i am looking at I am finding that if the LH comes before the LL, and you then need to wait for a LL to confirm the LH and thus a downtrend, price often reverses at this LL, and had you shorted this LL, you'd have been stopped out.

Similarly if the HL comes before the HH, and you need to wait for a HH to confirm the uptrend, price often seems to reverse at the HH, and if you'd gone long at the HH, the reversal would have stopped you out of the trade.

Therefore, in order to go long when an uptrend is confirmed it is better for the HH to come before the HL.
To short when a downtrend is confirmed, it is better for the LH to follow the LL.

Do these interpretations and theories of mine, make sense, and have any credibility in your opinion? or do I appear to be getting confused?

Thanks again.

PS. I feel it can definately enhance my understanding of price by interpreting the chart as a series of HH's, HL's, & LL's, LH's, if I can start to interpet this info correctly.
Previously, I didn't really pay any information to these waves of price movement (except when i connected the highs/lows of these waves for drawing trendlines. However, i've stopped drawing trendlines now, because -A - as you say DBP they do not show areas of S/R, -B- I found they took up unneccesary time and attention to draw and maintain, when I can visualise where the lines would go. I now draw only horizontal lines). Previously I only really payed attention to my indicators signals on the chart, considering the waves of price movement inbetween (except major S/R) as largely insignificant. Its good to be able to identify and understand as much of the full picture as possible........

 

[thebull27]

JTrader

in 1.29 there is a combination I believe of a round number and previous resistance. I dont know how you trade, but when I mean I believe price will go down it doesnt mean that there wont be a technical correction upwards so if you are worried about loosing 12 pips then in that case I dont know.

when I look at the daily graph it looks like there should be resistance at 1.29, but you know untill price has moved you can never know

I am actually waiting for a correction to around 1.3066-1.309 to short the position

Hi thebull

I can't see the major support that you refer to at 1.2900. What chart are you looking at? and when (dates) do you see this support?

Does this major support come in the form of previous resistance, as opposed to actual support?, or did this support at 1.2900 exist way back, and has long since been broken?

Cheers
JT.

 

[dbphoenix]

Hi DBP


I have noticed the following, particularly with reference to the minor S/R levels within the major Highs/lows - R/S on a chart..........the swings inbetween the full range of price activity on a chart....

To confirm a downtrend, an LH needs to form to accompany the LL. The LL seems to usually form before the LH.
To confirm an uptrend a HL needs to form to accompany the HH. The HH seems to usually form before the HL.

Therefore for shorts, I am thinking it would be best to go short once you have the LH to accompany the LL, in what will hopefully continue to be a downtrend. And to wait for a HL to accompany the HH before going long in what will hopefully continue to be an uptrend.

On the charts i am looking at I am finding that if the LH comes before the LL, and you then need to wait for a LL to confirm the LH and thus a downtrend, price often reverses at this LL, and had you shorted this LL, you'd have been stopped out.

Similarly if the HL comes before the HH, and you need to wait for a HH to confirm the uptrend, price often seems to reverse at the HH, and if you'd gone long at the HH, the reversal would have stopped you out of the trade.

Therefore, in order to go long when an uptrend is confirmed it is better for the HH to come before the HL.
To short when a downtrend is confirmed, it is better for the LH to follow the LL.

Do these interpretations and theories of mine, make sense, and have any credibility in your opinion? or do I appear to be getting confused?

Thanks again.

PS. I feel it can definately enhance my understanding of price by interpreting the chart as a series of HH's, HL's, & LL's, LH's, if I can start to interpet this info correctly.
Previously, I didn't really pay any information to these waves of price moevement - only really paying attention to my indicators signals on the chart, and seeing the waves of price movement inbetween (except major S/R) as largely insignificant. Its good to be able to identify and understand as much of the full picture as possible........

These have been the commonly-used definitions of trend for many years, so, yes, they are credible. As to theory, you can define trend any way you want. It's your trading environment. However, defining a downtrend by the presence of both a LH and a LL helps to prevent you from shorting, in an upmove, what turns out to be a retracement or buying what turns out to be a reversal. As for waiting for the LL after a LH, if you don't get one, you don't have a downtrend. You either have a sideways movement of some sort, or a possible preparation for a continuation. If you focus on the LLs and ignore the LHs, you're going to be trying to catch bottoms rather than trade the market flow.

For example, using the chart you posted earlier, all the green dots are potential longs. Which make the most sense?

 

[JTrader]

More observations/thoughts/ideas

Following on from my slightly confused sounding last post, my thoughts are a bit clearer.

With regards to trading around HH's or HL's, or LL's or LH's - I see two options -

Option A
Naturally a HH is a break above minor or major R, and it is possible to go long (looking for a breakout/continuation up) at that HH. While a LL is a break below either major or minor S, and it is possible to short (looking for a breakout/continuation down) at this LL.

Option B
If looking to go long, you would/could/should look to time your entry at the next potential HL.
If looking to go short, you would/could/should look to time your entry at the next potential LH.

 

[dbphoenix]

That's a beginning.

 

[JTrader]

Following on from my slightly confused sounding last post, my thoughts are a bit clearer.

With regards to trading around HH's or HL's, or LL's or LH's - I see two options -

Option A
Naturally a HH is a break above minor or major R, and it is possible to go long (looking for a breakout/continuation up) at that HH. While a LL is a break below either major or minor S, and it is possible to short (looking for a breakout/continuation down) at this LL.

Option B
If looking to go long, you would/could/should look to time your entry at the next potential HL.
If looking to go short, you would/could/should look to time your entry at the next potential LH.

...........And then there's Option C which is to go long at a new LL, or to go short at a new HH - looking for reversals.

 

[dbphoenix]

...........And then there's Option C which is to go long at a new LL, or to go short at a new HH - looking for reversals.

Technically, yes, that is an option. If you keep Dirty Harry in mind.

Db

 

[JTrader]

These have been the commonly-used definitions of trend for many years, so, yes, they are credible. As to theory, you can define trend any way you want. It's your trading environment. However, defining a downtrend by the presence of both a LH and a LL helps to prevent you from shorting, in an upmove, what turns out to be a retracement or buying what turns out to be a reversal. As for waiting for the LL after a LH, if you don't get one, you don't have a downtrend. You either have a sideways movement of some sort, or a possible preparation for a continuation. If you focus on the LLs and ignore the LHs, you're going to be trying to catch bottoms rather than trade the market flow.

For example, using the chart you posted earlier, all the green dots are potential longs. Which make the most sense?

Hi DBP

I may be wrong, but as I see it, the green dots form 5 pairs of dots - one upper and one lower dot in each pair for the first 4 pairs of dots. The fifth pair of green dots are the two dots to the far right.

Upon first sight, for going long, the chart didn't/doesn't look very appealing to me, due to each option being at or near a new LL.

However, upon close inspection -

Entering long at the close of the candle that the first lower green dot represents makes more sense than entering long at the close of the candle represented by the first upper green dot.
The preferred candle has closed by retracing back into a range, after breaking support/making a LL - showing signs of a retracement up/recovery/strength.
The upper first dots candle is one candle later, and has shown signs of weakness by closing below the previous candles close.
Therefore entering here not only gets you into the long trade later than the previous candle (missing out on some profits), but you're also buying into potential weakness.

For the second pair of green dots, entering at the close of the candle represented by the lower green dot again seems to make more sense.
The preferred candle again broke the previous support level and closed lower than its open. But after making that LL, price retraces sharply, evident through the long lower spike on the candle, closing within the range of the previous LL - showing signs of a retracement up/recovery/strength.
The candle represented by the 2nd upper green dot not only gets you into the long trade one candle later (when some of the potential profit has been missed), but this candle again shows signs of weakness by closing lower than its open, and lower than the close of the previous candle.

For the third pair of green dots, again going long at the close of the candle represented by the lower green dot seems to make more sense.
The preferred candle has made a new low, but it has closed within the range of the previous candle - showing signs of a retracement up/recovery/strength.
Whereas the candle that the 3rd upper green dot represents, one candle prior to this had made a new LL, showing significant weakness.

For the 4th pair of dots, buying at the close of the candle represented by the upper green dot makes more sense this time.
The candle prior to this one (represented by the 4th lower green dot) has again made a new LL. Although it has shown some signs of strength by closing 3 pips higher than it's low, it only closes at the same price as the previous LL.
The next (preferred) candle however, shows clearer signs of strength, continuing the retracement from the previous candles low, and closing within the range of the former LL.

With the fifth pair of green dots (two green dots furthest right), going long at the close of the candle represented by the furthermost right green dot seems to make the most sense.
This and the alternative candle (as i see it - represented by the green dot that is 2nd most right) both have seen price recover above 1.3000, following a very recent price fall below 1.3000.
However, the recovery of price above 1.3000 in the candle on the far right seems to take place easier, quicker and more convincingly (within one 10-tick candle as opposed to three 10-tick candles), thus showing greater strength and potential for a continued reversal up.

Buying into (signs of) strength seems to be the recurring theme, and buying into (signs of) strength does make more sense than buying into weakness, especially when looking for price to reverse.

Thanks again.