Intraday Technical Patterns

[Soultrader]

I was listening to an interview by Peter Reznicek today and found one of his comment particulary interesting.

I am not a candlestick pattern trader but he mentions how day traders focus too much on trendline breaks, channel breaks, and candlestick patterns on too short of a timeframe. He mentions how these technical patterns are only valid on a 15 minute or more timeframe.

I also agree with his comment. I am not particulary fond of price patterns when day trading. Any thoughts?

[TinGull]

He's a riot. I listened to him almost every morning for months...he's a bit too intense for me to listen to, though. ShadowTrader.net is him.

He NEVER looks at anything below 15 minutes except for the opening 5 minute. Most of the time the stuff is right on, but he's strictly a stock guy. Doesn't care for futures.

I do look at trendlines to play sometimes, and use it as a stop on occasion. I don't buy breaks of downtrend lines or breaks of triangle or anything like that. Usually they don't occur at a level I'd need them to be at (VAL/H...).

There's my 2 cents for what it's worth...not even 2 cents ?

[torero]

I will have to disagree with him and YOU, soultrader! (jk). I think patterns are extremely important, especially for me to find targets. Most people think it's useless but it's my guide to understand and calculate risk and reward. Simple as that. True that the patterns become less and less reliable as the lower the timeframe you are, but so is every other indicator on the market, including price action. No TA method is immune to this fact. Lower you get, more noise you get, straight up.

But there is a caveat for using patterns and trendlines, etc. and that it is must accompany price action. Yes, no indicator can be used properly without reading that dang price action, no matter how accurate the indicator is, price is king, simple as that. High or low timeframe, price action rules. So, when seeing the break of the trendline, or break of whatever pattern like triangle, price action must confirm that break, that is, if breaking down, I want to see lower high/low forming, if thrusting up, i want to see higher high/low forming. That's all I need to know to make my entry. So I got direction when a pattern or trendline breaks, the R:R calculated using patterns, and my setup ready with price action. 3 pieces of info to make my entry.

I don't use candlesticks but only for higher frames (60min and up) and candlestick patterns. I use only highs and lows of each bar as my main point of reading price action.

[walterw]

I think that more than patterns, you should be aware on what MAKES the pattern... thats more powerfull... looking inside a pattern and what forms it... not just a pattern by itself but what its behind... cheers Walter.

[torero]

Hi walterw,

Can you elaborate on that a little bit more? Here's my example of what I was talking about using patterns with price action:



Like I said before, patterns need to be confirmed by price action, in this case, lower higher and that turned the support area into resistance area (this is what I call confirmation of a breakout). My stop would have been the last higher low pivot (just below 796), and entry just below the confirmation area, then target is around 791. The R:R is not even 2:1 so I'd either take a small position or find a bigger pattern in higher timeframe that might be at play to find a bigger target to confirm the direction and possibly lower target. In this rectangle target, the target is near the low of the day, which is quite a safe exit.

[Bfbusa]

Hello everyone,

This is one very interesting thread. I think I am the only one here that employs 1 min. candle bars to pin point my entry on certain trades. As far as intra day pattens go, there are a few that I have seen that work very well and consistently over and over again when they appear. Using these along with the pivots and tape reading ( that I both learned from you, Soul , I not only have better entries but now able to hold stops of less that 10 tics, on initial entry, with very few stop outs.

As for trading trendline breakouts, I don't like. However, trendline failures ( that is, failed to break thru ), is a whole other matter. If I had traded yesterday, I might have traded a downward sloping trendline that could have given as much a 30 points of profit, all depending how you manage your stops. You can see this pattern on a minute chart and on the 233 tic chart.

If you want to see a chart, just let me know.

Your thoughts are always welcome.

[fatdog1]

	Quote:	torero
	Hi walterw, Can you elaborate on that a little bit more? Here's my example of what I was talking about using patterns with price action: Like I said before, patterns need to be confirmed by price action, in this case, lower higher and that turned the support area into resistance area (this is what I call confirmation of a breakout). My stop would have been the last higher low pivot (just below 796), and entry just below the confirmation area, then target is around 791. The R:R is not even 2:1 so I'd either take a small position or find a bigger pattern in higher timeframe that might be at play to find a bigger target to confirm the direction and possibly lower target. In this rectangle target, the target is near the low of the day, which is quite a safe exit.

Torero,
Perfect example of the stage 3 top.
The best part is it is shortable the first time back to it no matter when that happens. I am shorting those patterns in @NQ and @ES from 2002.

[scalptrader]

15min is a life time for a scalper. A man on a radio show opens his mouth, probably never made dime trading on any time frame, and speaks his wisdom. These sort of comments have no value. Price action "time frame" is relative to trading style of an individual and has no relation to the success or failure of a trader.

[TinGull]

Peter never mentions that he scalps, he actually says he's not a scalper and doesn't like to trade in that manner. I'd ask you to listen to what he's got to say on his radio show (shadowtrader) before making assumptions that he never made a dime. Those kinds of comments just aren't constructive, and not really appreciated either.

[scalptrader]

You are exactly correct. He never mentions he scalps.

"mentions how day traders focus too much on trendline breaks, channel breaks, and candlestick patterns on too short of a timeframe. He mentions how these technical patterns are only valid on a 15 minute or more timeframe."

He is saying anything below 15min is not "VALID". I am saying he has no clue what he is talking about. Good think he has a radio show to pay the bills and scrape by