Quote:
Originally Posted by greywolf238
Tymen,
I'm wondering if it would be best to take trades that only agree with the resultant of the BB and Macd.
Example, in the last trade you showed us you said "At my short entry the MACD was going up, the BB going slightly up - resultant going slightly up"
So with an evening star pattern, which we always short, a resultant going up is not what we want, unless you have a wide stop loss and stay in the trade a bit longer hoping it corrects itself.
The resultant was correct after all, it did go up and hit your stop loss. 
Your thoughts please..  |
I quoted you directly here so that other readers could see your post and my answer.
No! No! No!
There is absolutely
no correlation between the KC resultant and the ultimate outcome of the evening star price action.
Most of the time an evening star gives
great profit by price action going down (trading short).
But usually there are immediate
retracements and the KC chart aids in getting the best short entry on these retracements.
To get this best short entry the resultant, by definition,
must be going up.
Yet the ultimate price action will be going
down to get our profit
The Keltner approach is only an aid to getting a best entry price should there be a retracement.
A lot of the time the best short entry on an evening star is the
opening of the 4th candle. In these cases the resultant is nearly always going down.
The subsequent price action here could be either down to profit or up to a price retracement and then down to profit.
But when the Keltner approach
does work the short entry is usually a good deal better than the opening.
Hope this helps.