patrader

three push wedge on 15m 6B

240m 6B chart

240m 6b chart

Moment of truth for retest on 6B.Will it be double top and reverse? or slightly higher high and reverse? or push thru and continue up??

I find the success of a 123 to be confirmation of previous price behavior that signaled a possible trend change.The previous price behavior i look for is three pushes(or legs or drives).These pushes occur in a trend channel contained by a tl and a tcl(or ltl and rtl or whatever you want to call them).Thales calls this pattern a diagonal.I know them as wedges.Doesn't matter what you call them it's seeing them in real time that matters especially if at an important horizontal S/R price area.Once the third push touches or slightly overshoots the tcl and price reverses then i consider this a possible start of a trend change.For further confirmation of the trend change i need to see a strong counter trend response that pushes price out of the channel and clearly past the tl.Now i look for further confirmation of this possible trend change by how price reacts on the retest of the third push's extreme.I need a test that fails to exceed the extreme to again confirm a possible trend change.Next i need price to reverse and push back to the previous ct swing point.Finally all i need is for price to push past this swing point (trade entry one tick beyond swing point) and continue pushing in this direction for total confirmation that the trend has changed.Sometimes on the retest price pushes thru the extreme and the trend continues causing me to again look for three new pushes,a strong ct tl break out of the new channel,a failed retest of the new extreme and reversal push past the new swing point(triggering entry).Other times price slightly exceeds the extreme and reverses again setting up the need for more confirmation via another 123 for total confirmation of trend change.Hope that helps

http://www.sierrachart.com/userimages/upload_2/1263225587_37_UploadImage.png

http://www.sierrachart.com/userimages/upload_2/1263225233_90_UploadImage.png

"The mistake is not being wrong,the mistake is staying wrong" from first page of chapter 6 in the john hill pdf.The longer a trader stays wrong the bigger the bias.When trading with little or no bias a trader quickly learns to stay on the correct side of the market in order to stay profitable.

when the market breaks out above resistance price will either continue up without testing the breakout area or price will pullback and test the breakout(previous resistance level).if the market pulls back to the previous resistance level it will then test to see what the strength of the buyers are at this level.if it holds and bounces and continues up then you can assume that institutions were defending their positions.if it doesn't hold but instead continues down then the breakout failed because of lack of institutional support.S/R is just one part of reading the market with price action.context is very important.is the market in a trading range or trend? if in a trend, is it a trading range trend or a strong trend with little overlap? how many times has the market tested this resistance level? hth