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Old 05-16-2011, 09:51 AM   #9

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Re: What Really Works for Technical Traders

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Originally Posted by steve46 »
Promising to "make" a person profitable is my opinion, a reliable sign of a scam...
I promised to provide info (fodder) such that a previously clueless trader can get profitable; I never promised anyone profitability per se. That, of course, would be in violation of CFTC regs.

Please come here to learn, you're not invited if you're here to "stir the pot." Nes pas?
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Old 05-16-2011, 10:00 AM   #10

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Re: What Really Works for Technical Traders



Let's take a look at another breakout. This one occurred last week in the euro.

What is striking here is how distinctive the post-breakout hammer was leading to a marked downswing.

These are the "picture perfect," ultra low risk type trades I love, for sure.
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Old 05-16-2011, 10:20 AM   #11

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Re: What Really Works for Technical Traders

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Originally Posted by BlowFish »
One thing you said Then price then retraced towards the consolidation zone and was rejected this is the key imho, leaning too heavily on specific patterns or candles ultimately will inhibit ones understanding of price action and the underlying supply and demand equation that causes the pattern/candle to manifest itself in the first place
You are right on the money, BlowFish. UNDERSTANDING WHAT IS CAUSING THE PRICE ACTION TO OCCUR is paramount to trading effectively. I don't take any hammer the chart provides; its always contextual with regard to previous price action. This is exactly what makes this entry so strong: the market was range bound, it broke out, it tested, it failed the test with price rejection, it continued away from the consolidation zone.

Furthermore, depending on how much "potential energy" was built up and stored inside the consolidation range, these breakouts can give tremendous reward for every dollar risked. I'd rather be patient and attack these trades than fritter my capital away scalping 3 or 5 minute charts, but that's just me...
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Old 05-16-2011, 02:01 PM   #12

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Re: What Really Works for Technical Traders



Using this chart of yet another euro breakout, allow me to instruct you on another form of price rejection, the false breakout-reversal.

Pay strict attention to the price action around the red arrow. Following a break below the 20 period moving average at around the 3:40 mark, the market moved into a sideways channel consolidation. The market moved up to a close near the high end of the channel range after peeking above the prior range high (the green bar just prior to the red down bar signified by the red arrow). The red bar moved all the way across the range and closed below the entire channel range. Following a short test, ie the "rattail" portion of the subsequent bar, the market plummeted. I sold the break of the arrowed bar with my risk stop one tick above that same bar.

Let's take a closer look at the market dynamics behind this form of price rejection. Prior to the breakdown the market tested the range high and even broke above the high. But the key element here is that the market did not FOLLOW THROUGH (false breakout). Instead, it moved all the way in a single bar through the trading range with a close outside the range on the other side (reversal). In other words, the market rejected the attempt to breakout on the high side of the range and opted to breakout strongly through the low side of the range. If the market doesn't meander back into the range and stay there any longer than it had to to complete the test (rattail portion of next bar) I am short this market!

I call the red-arrowed bar a volatility breakout bar due to its relative length with respect to the other bars in this consolidation. Also note that the MACD turned down with this vol breakout bar, confirming market direction and momentum.

This is a case whereby a hammer wasn't used to enter the market, but was replaced by a volatility breakout bar. In either case, price rejection was the "signal" used to enter the market relatively safely. Once again, the driving force behind the huge follow-through was the breakout of the much larger range that preceded the small consolidation breakout, providing enough "potential energy" to convert to the kinetic move you see at the right of the breakout bar.

That's the lesson for the day. Now go locate these opportunities for yourself and make some money!


Luv,
Phantom
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Old 05-17-2011, 01:07 PM   #13

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Re: What Really Works for Technical Traders

There's always someone that wants to stir the pot. I hope you won't be dissuaded from contributing to this site. Rational and logical strategies are always appreciated. And this talk about a scam is a bunch of crap. I didn't see anywhere, where you asked for money. This guy needs to go pee in somebody else's cereal. Thank you for taking the time to contribute.
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Old 05-17-2011, 01:46 PM   #14

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Re: What Really Works for Technical Traders

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Originally Posted by ricastein »
There's always someone that wants to stir the pot. I hope you won't be dissuaded from contributing to this site. Rational and logical strategies are always appreciated. And this talk about a scam is a bunch of crap. I didn't see anywhere, where you asked for money. This guy needs to go pee in somebody else's cereal. Thank you for taking the time to contribute.
You, and guys like you, are always welcome.


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Old 05-17-2011, 02:02 PM   #15

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Re: What Really Works for Technical Traders

hi Phantom,

I have just read your narrative with respect to your posted chart.

All very clear indeed to the point where even a person like I can follow and clearly understand
your thought process leading into your successful trade.

What I struggle with, is why you refer to Bolly Bands, 20 ema, MACD, Hammers etc,
when it is obvious that you can read price behaviour so clearly.
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Old 05-17-2011, 02:06 PM   #16

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Re: What Really Works for Technical Traders




Here we go again!

Let's take a look at this morning's natural gas market.

The bar at 6 am tests the high from yesterday afternoon and forms a hammer. The market then traverses the entire channel range in a single bar and closes near the low. The next bar tests the 20 period moving average. The bar signaled by the red arrow breaks above the test bar high and reverses all the way to the low, signifying PRICE REJECTION (my favorite two words), closing on the low. At 7 am sharp the market plummets...

Anyone else make any money on this breakout?

Start tracking some of these setups and at the very least paper trade them!
(Your bank account will love you for it).


Luv,
Phantom
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