Support, Resistance & Chart patterns

[WideEyed]

Interesting charts.

In the first image I see several smaller waves. Some of these are ones I would have traded rather than going for the long play.

I will investigate Rashke. Any pointers to resources would be appreciated.

I noticed that diverging lines often led to similar outcomes but have been unable to identify the conditions which supported such movement.

#3 - I discount those formation with multiple points. In my analysis so far I concentrated only on the clear wedges with strong convergence and no multiple points. There were enough price pairs and TFs from history for me to eliminate all but the most clear signals for studying/analysing. Obviously, such variety and choice is not available moving forward as my broker doesn't provide next month's charts yet.

#4 - The large WW that didn't perform as expected: I take it that 5 was circa April 4th - 6th. Volume was exceptionally low for several days, perhaps Easter holidays. As I said earlier, PA and high volume around 5 seem to be fairly important. If volume drops at this point it would seem better to wait for the price to get to the 2-4 slope before opening the trade even if it means fewer pips.

[WideEyed]

The loonie had the same low volume problem in early April last year that caused the WW to fail. In this case, the fact that it returned to the 2-4 slope didn't help and the trade would have still hit SL.

Low volume on 5 is best avoided, IMO.

[WideEyed]

This seems nice

SL can be placed at the support just before the start of the first wave and raised to BE in due course.

Given the close SL and very distant TP this trade makes for a great R:R.

In other news, 1.556 is a Fib 61.8 which may also turn out to be significant. COT is showing GBP short positions at a near 12 month high indicating that a correction may not be far off.

Unfortunately this is on the weekly and I can't hang about for a few months!

[slipshod]

I'll look into the volume at point 5, thanks for raising it. Btw the two charts you've posted above both look like pure sideways consolidations, and there's hardly any slope to speak of on the upper line in the 1st or the lower line in the 2nd.

Those are a different pattern, an Ascending/Descending Triangle, and they tend to behave quite differently to Rising/Falling Wedges. Trying for force-fit a WW on them could bring you pain.

Edit: I really hope you don't mind, I took a closer look at the two charts, and added some thoughts below...

[WideEyed]

Of course I don't mind you commenting. That's kind of the idea!

I hear what you're saying about hardly any slope. Many of Bill Wolfe's examples had a zero slope. I found a copy of his 45 page pdf called Wolfe Waves and he has examples like this on page 15, 20, 25, 28, 30, 31, 34 etc. In fact, more of his wedges seem to be of this type than ones with decent 1-3-5 slopes. I will now look again at my charts to see whether a good 1-3-5 slope comes across as a more reliable indicator.

In the second image above I would not have seen the blue wedge you did. What you see as 5 I would have seen as unusual, long drawn out action that destroyed the pattern. At the time if you had pointed the blue wedge out to me I would not have traded it as the long drawn out 5 corresponded with a drop in volume. As it turned out I would have missed a winning trade. So it was interesting to see your interpretation here.

I will be more careful with exact positioning of lines. When I did the above charts for upload to this thread I was on my laptop. I (partly) blame the touchpad and not having my usual mouse in hand.

On a different matter, and going back to diverging rather than converging lines, it might be worth analysing whether a drop in volume (at some point during that pattern formation) has some significance.

[WideEyed]

I think there's a good shape formed on the EJ H4. Your thoughts?

[mjws00]

Interesting discussion. It keeps catching my eye as I trade SR as well. Don't know this pattern well enough to add intelligently, so lurkin. Keep up the good work.

[slipshod]

Yes, the pattern is certainly there. It doesn't hurt to look at what USDJPY and EURUSD are doing either (below).

IF the USD is strong against the JPY, and IF the EUR bounces against USD, then EURJPY would be in for another bonanza rise. That's a bunch of "ifs" at this stage of course, as neither have happened yet - but the groundwork is there if they want to do so...

[slipshod]

Something else I just noticed about EU on a H1 chart (refer to my post of a few days ago to understand what I'm referring to here: http://www.stevehopwoodforex.com/phpBB3 ... 751#p41751)

[AnotherBrian]

Thanks for the Stoch rainbow indi - I use this in the same way you do, although this indi will help me out. I used a similar indi when I was using Amibroker to trade.

I have an indi that runs and sends me an email when I need to check the chart, it's very simple - daily 100 LWMA moving up, H4 LWMA moving up, 13 period stoch on the H1 below 30, look at the chart and determine if I should set a pending limit to go long at demand, with this alert price should already be near demand. I'll only do the trade if the trend is actually up and the moving averages are not just criss-crossing. (same for short)

This is where the rainbow comes in - it should also show as you suggested, price it "stalling" - this is key because it lets you see hoe the "zone" it has entered is impacting the price movement.

I also see you have written a S/D indi - and that you have tried SupDem. While SupDem is OK I dont use it as I don't think its accurate. I'm wondering what yours is based on?

Looking at your charts in this thread, the level (assume drawn by your indi?) appear very reasonable and accurate.

I have an un-finished indi that works on Sams scoring. First I use the daily range and compare it to the length of a candle on the 4hr to see if its a burst from an area - that gives me a potential level. On and on with the scoring odds enhancers until the levels are identified. It will only identify one long and one short because it looks back from current price, much like Sam teaches.