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Beginner Questions
65

Absolutely!! :slight_smile: :slight_smile:

This is exactly what the definition by Steven B Achelis is saying.

And that is why I posted the screenshot showing the erratic higher highs in the uptrend.
The most important part is the higher lows as you have just stated. :slight_smile:

66

my own system posted here in BP is based on HL and LH… is working for me and starts to working for other too.

i think HL and LH is the faster way to spot a starting trend and the faster way to spot its end.

but there´s a lot to improve in that “definition”… great thread tymen

67

another thing i´ve noted (and this one may be controverse) is that the HL and LH are more usefull and easy to spot in lower TF like 5M, 15M and maybe in 1H TF… higher TF don´t respect trendlines as much as lower TF…

in my opinion trendlines (created by higher lows or lower highs) should be searched in lower TF and support and resistance should be searched in higher TF… the combination of both gives very good trades opportunitys.

but one thing is see the HL and LH in a past chart… spot them in real time could be tricky… hope this thread can make it alot easier.

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Tymen - you have succeded admirably in getting a constructive and excited dialogue going on a key issue. No doubt it is the teacher in you!

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For those in Australia interested the sequence posted comes from the technical analysis course run by the Securities Institute of Australia. The course may have changed but 2 units led to a diploma in technical analysis which I found interesting and valuable. As I said before there is no single definition but understanding the challenges as Tymen is trying to assist people to do is of utmost importance. Dow theory does define the start and end of a trend

74

Thanks to you Tonymand, for your very valuable input!! :slight_smile:

It is easy to see that you know exactly what you are talking about!! :slight_smile:

Thank you for your information about technical analysis course run by the Securities Institute of Australia. :slight_smile:

Now as to your input you have not only posted something very valuable but have actually pre-empted my next few posts!! :smiley:

But no matter - it shows that we are on the right track and that should give all the other readers confidence!!

[B]I shall now continue with my posts with the new topic.[/B]

75

[B]TOPIC 4
CONTINUING THE DEFINITION SEARCH

THE START AND FINISH OF TRENDS[/B]

Now that we have looked at trendlines, I shall build on what [B]Tonymand [/B](Honorary FX Member) has posted and elaborate with actual charts.

Tonymand is showing in his diagrams how the trend is broken when price action breaks thro the trendlines.

Lets have a look at this in a real situation >>>

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Here we have the very latest daily trend in AUD/USD.
The downtrend has finished and the uptrend has started.

The downtrend ends with the red trendline break doji candle.

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Here is a 20 minute chart of the Cable.

And we see a trendline break as before, the long grey down candle being the break candle after the yellow morning star candle >>>

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77

Here we have a daily chart of USD/JPY >>>

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We see 2 trendline breaks.

The 1st breaks with yellow candles (the first is an engulfing pattern and is really the trendline breaker).

The 2nd breaks with long red candle after the small red engulfer.

78

There are times when the higher timeframes generate very good trendlines such as the chart below.

Later I will be introducing you to the wiggly wobbly trendline!! :smiley: :stuck_out_tongue:

Believe it or not, it is one of the most powerful trendlines!! :smiley:
And I am completely serious!!

Here now is the chart example of a good daily trendline >>>

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79

Its all very well looking back and saying that that was a break of trendline, but if you think what the candle in between the 17th and 21st would have looked like when it was still open, forming its lower wick, then you would have said that that was the break, [B]gone short [/B]and probably had [B]a losing trade[/B]. :eek:

And before you say wait for the candle to close… You are often missing out on a good chunk of the trade and with that same example, you would [B]go short [/B]as that bearish candle closes with your [B]SL above the most recent swing high[/B], and again, its a[B] losing trade[/B] :eek:

80

Thanks for the charts MikeTye.

Best Regards,
Matt Jones .

81

I don’t mean to interject here but you’re making assumptions on how this is being traded without us having the definition yet, let alone the rules or guidelines Tymen feels would benefit us.

You’re jumping to conclusions.

Tymen, if I may take a ‘wild’ guess at where you’re headed with the definition, may I safely estimate it include the talk of a trendline being broken as a signal for entry or exit from a trendline trade?

82

I see what you’re saying but at the same time, defining the candle which broke the trendline is easy when you look back at it, but at the time, its not as simple as it’s been made out to be

83

Based on Tymen’s charts however, waiting for a close is all that’s needed. Granted in these situations you do miss some of the move, hence I still await more to be revealed.

In my experience trading, I find that most of my problems and losses came when a candle ‘fakes me out’ and makes a cross but retraces before the close. I now wait for the close always, that’s how you backtest too, you don’t see half the candle and it unfolding in front of you. Thus, I wait.

84

Pretty sound explanations from Mike. Thanks man for taking the time and spelling it out for us.

Best Regards,
Matt Jones .