firewalker99
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Could you perhaps elaborate on that statement some more? I'm assuming you are refering to the "principle of reciprocity", but aside from that, why can't a TL be tested from the other side?
Could you perhaps elaborate on that statement some more? I'm assuming you are refering to the "principle of reciprocity", but aside from that, why can't a TL be tested from the other side?
firewalker99
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That was the reply I expected to be honest... I'd understand if you don't want to go there again or if you think this thread isn't the best place to do so.
The main reason for my question is that I was re-reading Schabacker over the weekend and when talking about S/R he wrote "the line of support or resistance to price movement is a diagonal rather than a horizontal line"... and further down the line "we find that the old trend line still resists any movement of prices back through it."
Perhaps I should have used the word "throwback" instead of test. Either way, I don't want to discount the fact that TLs don't provide S/R - in fact I believe they don't - but regardless of that there seems to be some interesting action happening along the way.
dbphoenix
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It may look like S/R and act like S/R, but that doesn't necessarily mean that it provides S/R.
Pin a chart to the wall. Throw a strand of cooked spaghetti at it. Note all the places where price tests the spaghetti. Is the spaghetti providing S/R?
Pin a chart to the wall. Throw a strand of cooked spaghetti at it. Note all the places where price tests the spaghetti. Is the spaghetti providing S/R?
dbp
The spaghetti comparison is not valid.
If the price continues its movement after you have thrown your spaghetti at it what isthe probability that it will receive s/r when it next touches the spahetti?
On the other hand looking at the charts above what is the probability that the price will receive s/r at the trendline. Just count the number of times that the trendline provided s/r.
Regards
bracke
dbphoenix
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We've been through this several times before. If what you're doing works for you, great. But TLs don't provide S/R any more than any other line drawn by the chartist. If there were only one way to draw the line AND every trader on the planet drew the line in exactly that way, then there might be something to study. Otherwise . . .
firewalker99
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I'd have to agree with what I see and the trendline: price touches the TL several times. But that in itself might not be anything more than the author's way to establish trendline as a useful concept. On the other hand, what I think dbphoenix is trying to say is that the only "true" S/R can be found in price. Because price is the same for everyone, regardless of what lines we like to add or what we think we see in it. In the end, we will draw the trendline that fits best what the chart shows us, connecting the best points along the way => price = objective, trendlines = subjective.
Schabacker also wrote: "Perhaps this attempt to relate ordinary trend action to support and resistance phenomena is not founded on any true and fundamental connection between the two, except in the very broad sense that we should naturally expect resistance to develop against any great departure from a trend dictated by major, basic conditions."
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dbphoenix
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Note, however, his choice of "very broad" and "great departure". "Trend" does not automatically mean "trendline". If one is concerned about great departures from the trend, he is most likely talking about the mean and the tendency of price to revert to the mean (which itself is ever-changing). This is why I suggested in my book (How to Double Your Money Every Week) that one use regression lines (the line pictured is an approximation). At the very least, this avoids all the irrelevant discussion about "touching".
Trendlines are meant to show trend, as are moving averages. That's it. With regression lines, all three are tools, but if one is going to get the most out of them, he has to use them appropriately. Trendlines do a good job of spotlighting potentially serious departures from the mean and possible important changes in the mean itself. But S&R are provided as a result of price levels created by supply and demend, not by price "touching" a homemade line.
Trendlines are meant to show trend, as are moving averages. That's it. With regression lines, all three are tools, but if one is going to get the most out of them, he has to use them appropriately. Trendlines do a good job of spotlighting potentially serious departures from the mean and possible important changes in the mean itself. But S&R are provided as a result of price levels created by supply and demend, not by price "touching" a homemade line.
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firewalker99
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Do you have a new e-book or have you decided to give the existing one an attractive title?
firewalker99
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Glad I got the first book for much less than that. Might be worth more than $5000 next century :cheesy:
"But S&R are provided as a result of price levels created by supply and demend, not by price "touching" a homemade line."
I think that the above is splitting hairs.
I totally agree about supply and demand.
When a trader decides to take a trade based on trendline s/r he is not thinking much about the price he is looking at the reaction of price to the line. If enough traders are using trend in this manner the supply and demand will react to it and become self-fulfilling.
The fact that so often the trendline is the turning point for a price must surely be proof that s/r is provided by the trend as much, if not more so, than it is provuded by the price.
Regards
bracke
I think that the above is splitting hairs.
I totally agree about supply and demand.
When a trader decides to take a trade based on trendline s/r he is not thinking much about the price he is looking at the reaction of price to the line. If enough traders are using trend in this manner the supply and demand will react to it and become self-fulfilling.
The fact that so often the trendline is the turning point for a price must surely be proof that s/r is provided by the trend as much, if not more so, than it is provuded by the price.
Regards
bracke
tune
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I've just bought a set of seats out of an old Jag on ebay. They will arrive on Wednesday and I'll have a stack of fakes knocked up by the end of the week. Quite happy to sell them as a job lot if anybody wants them. Can't be arsed with the marketing myself.
dbphoenix
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Db
erierambler
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Transports
Db,
Would Chuck, Dick, Ricky and Jack not be looking at them(Transports) to find s/r first?
erie
Db,
Would Chuck, Dick, Ricky and Jack not be looking at them(Transports) to find s/r first?
erie
erierambler
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Yes .
