Alternative Technical Templates.

[John P.]

Hi Tess:

Thanks to you and everyone else for all the great posts. This is a Grade A thread for a public forum. I havent finished with it all yet but thought I would drop off one question that occurred to me along the way. I did my due diligence by performing a thread search for this topic, and it did not reveal itself as already covered.

Given your preference for horizontal S/Rs, I have not seen pivots plotted on any of your charts. Is this b/c you doubt their reliability, or are they a part of something proprietary?

I plot them on some time frames but not all, sometimes using them as targets or to help configure a stop. I have ESignal for data and an issue Ive had with them is their predetermined 24-hour period for pivot calculation purposes starts midnight New York (EST). I admit I dont really know the answer to this but it seems possible that a large chunk of traders who use pivots may be using the GMT clock and have different daily pivots entirely.

Anyway, just curious of your thoughts on their usefulness.

And, again, gracias to all for the terrific efforts to date.

[tonymand]

Originally Posted by kagein

Nice moves today, unfortuantely i didnt get in to any of them. I saw this develop but there was no divergence so i decided to let it pass. Painful when that happens but i think its best to stick with the template you feel most comfortable with.

I dont know if i've asked this before but with regard to the Asian sessions highs and lows, many people take notice of these prices, how do you use that information going into the European session?

I have published a method somewhere in the thread George. Buying the upside break or selling the downside and using the 60SMA as your stop and a 1R target has a positive expectancy since I started tracking it in October 2006. Specifically since Nov 1 2007 it has returned + 27

[daydreamer65]

Originally Posted by John P.

Hi Tess:

Thanks to you and everyone else for all the great posts. This is a Grade A thread for a public forum. I havent finished with it all yet but thought I would drop off one question that occurred to me along the way. I did my due diligence by performing a thread search for this topic, and it did not reveal itself as already covered.

Given your preference for horizontal S/Rs, I have not seen pivots plotted on any of your charts. Is this b/c you doubt their reliability, or are they a part of something proprietary?

I plot them on some time frames but not all, sometimes using them as targets or to help configure a stop. I have ESignal for data and an issue Ive had with them is their predetermined 24-hour period for pivot calculation purposes starts midnight New York (EST). I admit I dont really know the answer to this but it seems possible that a large chunk of traders who use pivots may be using the GMT clock and have different daily pivots entirely.

Anyway, just curious of your thoughts on their usefulness.

And, again, gracias to all for the terrific efforts to date.

I have toyed with pivot points in the past, but did not have a
great deal of success with them, but like all indicators they may
have their merits.

On this thread the main idea is historical support & resistance,
points on the charts where action has been seen before. These
coupled with a "trigger" pattern & the patience to wait for the
low risk trade.

Take a look at the webpage below for more info on pivots which
you may not have seen.
Pivot Point Trading

[Tess]

Hello John P,

Thank you for your kind comments, glad to hear the info, from all contributors, has been helpful.

As daydreamer65 say's the main crux of the thread focuses on near term & historical (price) support-resistance zones.

Neither myself, Jocelyn or any of our colleagues utilize pivots in any form. That's not to say they're not useful or relevant, just that we prefer other forms of price action observation.

Try them out if they spark an interest. You won't really be in a position to judge if pivots float your boat until you've observed how they interact with your trading templates.

Have a play around with intraday as well as weekly pivots & see if you can integrate one or both into your regular worksheet?

The most popular recognized timezone for plotting next day pivot numbers is the 17.00 NY (22.00 London) close.

Good luck with your research/analysis

[kagein]

I'm having to move to the 4hr charts now because i ve started work, so i cant really use inside bars as triggers anymore. I was wondering would rejection candles be the best trigger on the 4hr?

[John P.]

Hi folks:

Still schlepping my way forward in this terrific thread. It pains me to see it withering on the vine at the most recent page, knowing that by the time I do finally catch-up, it will or may be over (my life story in a nutshell).

With an eye towards hopefully preventing that, I will throw out another question for Tess, apologies in advance if already covered in the great interim unread. But at least topical (espero tan).

Consolidation/base vs. quick turnaround. The question is which forms better/stronger S/R? It is my (current) position that when price rises or falls to a certain level but then quickly retreats or reverses in the other direction without spending much time at that level, it represents the greater imbalance between between supply and demand. One side was completely and quickly overwhelmed by the other. Whereas a consolidation or base formation shows a condition nearer actual balance between buyers and sellers over a period of time. Thus, a S/R line drawn at a one- or two-candle peak/trough (like a spike ending in a doji, or a two-candle piercing pattern that reverses price direction) shows a stronger level of demand/supply than consolidation pattern does. At least for the first visit back to that level.

Here is a picture that will probably better articulate what I cannot, showing one of each.

Is this counterintuitive? My logic faulty?

[Tess]

Originally Posted by John P.

The question is which forms better/stronger S/R?

It is my (current) position that when price rises or falls to a certain level but then quickly retreats or reverses in the other direction without spending much time at that level, it represents the greater imbalance between between supply and demand.

One side was completely and quickly overwhelmed by the other. Whereas a consolidation or base formation shows a condition nearer actual balance between buyers and sellers over a period of time.

There really aren’t too many options to worry about where price action is concerned.

It does 1 of 3 things. Moves up, moves down or moves sideways. How heavily it moves is wholly dependant upon the quality & quantity of the participation. The significance of a particular level often has an effect on the behaviour of price action, particularly if the level was previously well defended.

If you got a reasonable handle on those levels & can recognize the behaviour as it oscillates around the various support or resistance zones, then you can wrap a simple technical model around whatever else you use, to execute your strategy.

As you quite rightly point out John, prices bust out of tight activity pockets to the topside when buyers outweigh sellers at a particular juncture & breaks down when the reverse sets up. Prices often re-visit these breakout zones & repeat the process if the original reasons (supply overwhelming demand or vice versa) still hold good.

Until that occurs, it’ll kick around in a state of equilibrium. It really is nothing more complicated or mysterious than that.

A heads up from a higher timeframe than the one you’re executing from, to adjudge whether you’re operating under trend conditions or range boundaries + any significant area or two to the left of the chart as a gauge to the potential near term destination, is about all that’s required to build a workable strategy.

That generic practice unfolds across all timeframes most everyday of every week. The force with which it moves away (& pulls back to test the breakout) from equilibrium will be influenced by what’s driving it (technical reasoning-data release-world eco event etc), but these handover zones occur with consistent regularity. Certainly regularly enough to profit from!!

How you play them depends on your risk appetite, strategy implementation & aims/expectations.

I don’t really place a graded emphasis (differing strength’s) on what constitutes s&r to be honest. If price kicks away from an obvious (several bar) base or a 2-3 bar ledge, I’ll mark that area up for future reference.

I work mainly via an hourly chart reference as my template frame, but it doesn’t really matter which timeframe a trader works off…….these occurrences unfold across all the different timeframe chart grids. As long as you’re primed into which type of trading conditions are being worked (trend or range), you can work your edge to suit the exact conditions.

Here are a couple recent examples from differing pairs to illustrate the above comments:-

[Tess]

Originally Posted by Tess

It does 1 of 3 things. Moves up, moves down or moves sideways. How heavily it moves is wholly dependant upon the quality & quantity of the participation.

prices bust out of tight activity pockets to the topside when buyers outweigh sellers at a particular juncture & breaks down when the reverse sets up.

Until that occurs, it’ll kick around in a state of equilibrium. It really is nothing more complicated or mysterious than that.

That generic practice unfolds across all timeframes most everyday of every week. The force with which it moves away (& pulls back to test the breakout) from equilibrium will be influenced by what’s driving it

Thank you jonnykanoo glad to hear some of this stuff assists you in your quest.....

These little ranges/ledges whatever you want to tag them as, set-up all the time. There are reasons why they settle into consolidation phases (which have been referred to on here many times), & their behaviour is pretty transparent most of the time.

Combine your technical knowledge with a basic grasp of fundamental awareness & that combination will not only offer you an adequate pool of opportunities, but also keep you out of too much trouble

[Jocelyn]

Originally Posted by Tess

A heads up from a higher timeframe than the one you’re executing from, to adjudge whether you’re operating under trend conditions or range boundaries + any significant area or two to the left of the chart as a gauge to the potential near term destination, is about all that’s required to build a workable strategy.

Don't underestimate the above comment my sister makes in her original post.

Folks get their feet awful tangled up when they fail to spot, plan for & execute trades according to a pairs behaviour conditions outside of the smaller timeframe radar.

Someone operating via a 5, 10 or 15 minute chart who rarely looks outside those limits for a little wider geography can come badly unstuck at a range ceiling or floor if they're unsure of the conditions.

This well defined upper-lower range boundary on the Pound/Swiss being a classic heads up.

I wonder how many novices have been spanked attempting to short this lower floor down here @ 2.0110-0145 when they ought to have been buying it. Same for the top barrier @ 2.0410-30?

Like Tessa say's, the smart operators will wait for a previous area of demand/supply to come into focus & look for signs that the novice, clueless traders are doing the exact opposite of what they should be doing.

Executing trades at these lower risk/higher reward zones is what it's all about. Forget about flogging your ass inside all the hustle & bustle where all the silly money is operating - identify the key handover levels, bide your time until price comes into view & then jump on the value trade

Work smart, not hard!!

[daydreamer65]

Its somewhat striking that the topic of this thread is so rare on forums like this one. I am not exactly sure for the reason, given its relative importance. Perhaps supply/demand doesnt sound as sexy as a Rainbow this or Monte Carlo that?

Newbie traders & even more experienced traders seem to think
that if is doesn't come with bells & whistles then it's not going
to work.

As Jos has said "Work smart, not hard!! "