How to Know End of a Trend

[charcoalstick 10]

hOW to know a trend has come to an end apart from top/ bot pattern double bot/top, reverse shS/shs ?...by the time the neckline is broken, price has probably moved some distance from top/bot..any OTHer means to spot possible turning pts fASTER (other than indicators)?

[torero 10]

It depends on what timeframe you're looking it. It may be end of trend on a 1min while a 30min chart it's not. In general the best test is see end of trend is use the higher high/low or lower high/low test. This is how I interpret it as trend or not. But of course, the markets throw curve balls when you least expect it so it takes experience and trial and errors to understand them.

[MC 10]

On trend trades...to try and max profit out thinking you know when the trend will end means you can pick tops/bottoms. It dosen't work that way, not enough to be consistant anyhow.

 

Take the trade, stay in your timeframe and execute your trading plan all the way through. I've been guilty of changing timeframes only to find an excuse to override the trading plan and screw up the trade.

 

I try to use fibs, trend lines and/or swing levels to attempt to set stops and to see when a cycle has broken down. Don't trail stops too agressively, don't try to pick a top, and be willing to risk some unbooked profit for the chance at even more of a gain. If you're on a trend trade with at least a break even stop you're executing a free trade so just remember there's no way to screw it up.

 

Side note on the single timeframe comment above...I use multiple timeframes to filter for directional trades, but once in a trade I feel it should be executed from start to finish in the same timeframe. I still look at other timeframes to see where broad support/resistance is but that's used only as a warning sign for me.

 

All JMHO.

[torero 10]

Good one, MC. The mind does have subversive motives. Yes, most people do try to find the answer in order to find an impossible feat: capturing tops and bottoms. But don't fall for that. Spotting tops and bottoms is one thing but trying to profit from them is usually not that profitable.

[brownsfan019 17]

Candlestick Analysis is built around monitoring possible end of trend strength.

 

I would recommend learning some candlestick analysis if concerned about seeing possible end of trend confirmations.

[MC 10]

Candlestick Analysis is built around monitoring possible end of trend strength.

 

I would recommend learning some candlestick analysis if concerned about seeing possible end of trend confirmations.

 

I love the candlesticks and TL's section for them. My disclaimer is that a candle in isolation has never worked for me. When I add them to key levels and a sprinkle in volume they bring much more focus to the psychology behind the action.

[Eiger 10]

On the intraday time frames on a good trend, you will see volume swell markedly near the end of a trend. Then look for the largest rally/reaction in the trend to occur next. The market is likely to then test the extreme price, which could extend price a little more, or not, but watch the volume - it will be significantly lighter.

[MC 10]

On the intraday time frames on a good trend, you will see volume swell markedly near the end of a trend. Then look for the largest rally/reaction in the trend to occur next. The market is likely to then test the extreme price, which could extend price a little more, or not, but watch the volume - it will be significantly lighter.

 

Very true, still I myself would let the trend prove over. You might perhaps scale out some at the prior extreme with less volume, but I would still hold some unless you are up grossly in profit and you have captured the bulk of the move, especially near EOD.

 

Range testing is very accurate, I watch for that all day long.

[brownsfan019 17]

I love the candlesticks and TL's section for them. My disclaimer is that a candle in isolation has never worked for me. When I add them to key levels and a sprinkle in volume they bring much more focus to the psychology behind the action.

 

For sure. Intra-day candlestick use requires some practice and patience. The smaller the timeframe, the less reliable a candlstick by itself is.

[MC 10]

For sure. Intra-day candlestick use requires some practice and patience. The smaller the timeframe, the less reliable a candlstick by itself is.

 

Which BTW, your post inspired me to look back at that section and brush up some on formations.

[Joseph 10]

hOW to know a trend has come to an end apart from top/ bot pattern double bot/top, reverse shS/shs ?

 

However strategies for possible end of trend can be developed ... you must be aware of the fact that a trend has come to an end by my definition only if actual trends last specific top (for decreasing trend) / bot (for increasing trends) is broken.

NOTE:

top = definition of top (this can differ at traders/strategies ... ) what to consider?

bot = definition of bottom (this can differ at traders/strategies ... ) of corse the inverse of top as definition (likely )

broken= definition of broken (this can differ at traders/strategies ... )

 

...by the time the neckline is broken, price has probably moved some distance from top/bot..any OTHer means to spot possible turning pts fASTER (other than indicators)?

 

Here you reffer already to check for trend is comming to an end. Here you can only rely on your technical analises (my advice), because for possible ends of trend you can find several strategies ... but all these are not for general use (my oppinion) ... it can differ from tend to trend and also from time frame to time frame ... but these are usually called pullbacks until the end of the trend signal appears (see above).

 

So based on all above your question can also be reformulated like:

- from were a pullback of a trend starts?

- out of wich pullback should we see a possible end of trend?

 

:doh: ...

Ideas/agree/disagree? :\

[DbPhoenix 42]

Very true, still I myself would let the trend prove over. You might perhaps scale out some at the prior extreme with less volume, but I would still hold some unless you are up grossly in profit and you have captured the bulk of the move, especially near EOD.

 

Range testing is very accurate, I watch for that all day long.

 

Correct. Lighter volume on a test is hardly a sure thing. Unless one takes support and resistance into account, he can easily be tossed out of what would have been a much more profitable trade had he stayed in, such as today's NQ.

 

For example: http://www.traderslaboratory.com/forums/39746-post177.html

Edited June 11, 2008 by DbPhoenix

[MC 10]

Correct. Lighter volume on a test is hardly a sure thing. Unless one takes support and resistance into account, he can easily be tossed out of what would have been a much more profitable trade had he stayed in, such as today's NQ.

 

For example: http://www.traderslaboratory.com/forums/39746-post177.html

 

 

Yep. Very good depiction of just lower volume tests not always being reliable by themselves.

What do you add to the picture generally? S&R from a broad timeframe like weekly maybe?

[DbPhoenix 42]

Yep. Very good depiction of just lower volume tests not always being reliable by themselves.

 

What do you add to the picture generally? S&R from a broad timeframe like weekly maybe?

 

That's difficult to answer in a single post. Posts 61-72 in my "boxes" thread should explain.

 

Sometimes the very short-term S/R is just too flimsy to rely on. This week, the S/R from the entire month of May has provided the tipping points.

[firewalker 10]

Correct. Lighter volume on a test is hardly a sure thing. Unless one takes support and resistance into account, he can easily be tossed out of what would have been a much more profitable trade had he stayed in, such as today's NQ.

 

For example: http://www.traderslaboratory.com/forums/39746-post177.html

 

You referred to the chart I posted of the NQ, but I didn't mention volume in my comments. I take it you were talking about the higher low around 1645 (my local time, as annotated on the chart) which presented itself on lower volume but below support?

 

And if the trader had not been tossed out there, wouldn't the break higher, above the last swing high, signal a (albeit perhaps temporarily) change in trend (regardless of whether or not the 1950 level was still valid as S/R)?

[DbPhoenix 42]

You referred to the chart I posted of the NQ, but I didn't mention volume in my comments. I take it you were talking about the higher low around 1645 (my local time, as annotated on the chart) which presented itself on lower volume but below support?

 

Correct.

 

And if the trader had not been tossed out there, wouldn't the break higher, above the last swing high, signal a (albeit perhaps temporarily) change in trend (regardless of whether or not the 1950 level was still valid as S/R)?

 

Yes, though that's not necessarily a reason to cover the entire short and go long. The odds are that price will continue downward.

[firewalker 10]

Yes, though that's not necessarily a reason to cover the entire short and go long. The odds are that price will continue downward.

 

One final question about these 'odds'. Is that based on personal experience or something other than the chart? Or is it based on a belief that important reversals only take place from important enough levels?

[DbPhoenix 42]

One final question about these 'odds'. Is that based on personal experience or something other than the chart? Or is it based on a belief that important reversals only take place from important enough levels?

 

According to those who keep track of this sort of thing, price will more often settle at or near the opposite end of the range. AMT appears to confirm this.

[Eiger 10]

 

Yep. Very good depiction of just lower volume tests not always being reliable by themselves.

 

You can't expect the market to turn on this kind of "testing." You need to see: high volume, a large rally, then a test. Until this occurs, so called support and resistance has little to offer in identifying the end of a trend. There was no large rally here. This was an indication of secondary (additional) distribution (i.e., more selling and supply). Viewing it as "testing" is inaccurate. When I look for a change in trend, I don't just look at support/resistance on the last wave; that will only serve to make you a part of the Herd. Background, or context, is key.

 

Hope this is helpful,

 

Eiger

[DbPhoenix 42]

You can't expect the market to turn on this kind of "testing." You need to see: high volume, a large rally, then a test. Until this occurs, so called support and resistance has little to offer in identifying the end of a trend. There was no large rally here. This was an indication of secondary (additional) distribution (i.e., more selling and supply). Viewing it as "testing" is inaccurate. When I look for a change in trend, I don't just look at support/resistance on the last wave; that will only serve to make you a part of the Herd. Background, or context, is key.

 

Hope this is helpful,

 

Eiger

 

High volume, large rallies, and tests occur all the time. But if these don't occur at some important level, i.e., support or resistance, they will likely mean nothing at all.

 

The original chart was a 1m intraday chart. Yours is a 15m 5d chart. Apples and oranges. Clearly the kind of volume, etc, that one looks for over the space of a half hour or so will have a different character than what one looks for over a period of a week. As to reaching the supply line, correctly-drawn supply lines would already have been broken twice.

[Kiwi 16]

I used to look for the end of trends. In fact I spent 80% of my trading career in search of them.

 

Then one day I realized that all the other newbies and most of the losers must be doing the same thing (seeing those I knew had a fascination with eoTr and seemed to lose money seeking them). Do you know what the best trade I have is? It's to wait until its clear to most that the trend will probably end - and then fade them. The more people that get tempted into fading the trend, the better the continuation.

 

There are some highly reverting markets but they don't seem to include forex or asiapac futures so it works wonderfully for me.

 

FWIW guys :doh:

[Eiger 10]

High volume, large rallies, and tests occur all the time. But if these don't occur at some important level, i.e., support or resistance, they will likely mean nothing at all.

 

Certainly a misstatement and untrue. Ends of trend occur all the time outside of support and resistance. Look at your charts. As Wyckoff always said, volume and the shortening and lengthening of the up waves and down waves are what count, not your poor and inaccurate reinterpretations.

 

The original chart was a 1m intraday chart. Yours is a 15m 5d chart. Apples and oranges. Clearly the kind of volume, etc, that one looks for over the space of a half hour or so will have a different character than what one looks for over a period of a week. As to reaching the supply line, correctly-drawn supply lines would already have been broken twice.

 

The original chart was a 15-min chart posted by MC. Your 1-min charts are oranges (rotten fruit, actually). This isn't about you or your charts. Why don't you try to check your narcissism at the door. It would serve everyone well.

[MC 10]

I used to look for the end of trends. In fact I spent 80% of my trading career in search of them.

 

Then one day I realized that all the other newbies and most of the losers must be doing the same thing (seeing those I knew had a fascination with eoTr and seemed to lose money seeking them). Do you know what the best trade I have is? It's to wait until its clear to most that the trend will probably end - and then fade them. The more people that get tempted into fading the trend, the better the continuation.

 

There are some highly reverting markets but they don't seem to include forex or asiapac futures so it works wonderfully for me.

 

FWIW guys :doh:

 

You doing any mentorships? You sound like a more seasoned version of me.

I believe we make things way too hard, and I love the psych behind the markets. That's drawing me to it as much as the desire to profit is I think. Here I get to practice like a shrink but without the long ass schooling.

 

Great post, as always bud.

[DbPhoenix 42]

Certainly a misstatement and untrue. Ends of trend occur all the time outside of support and resistance. Look at your charts. As Wyckoff always said, volume and the shortening and lengthening of the up waves and down waves are what count, not your poor and inaccurate reinterpretations.

 

Ends of trends occur outside of support and resistance only if one doesn't know where to look. The shortening of the wave itself is a form of resistance to further movement. Perhaps the VSA reinterpretation of Wyckoff has this confused.

 

The original chart was a 15-min chart posted by MC. Your 1-min charts are oranges (rotten fruit, actually). This isn't about you or your charts. Why don't you try to check your narcissism at the door. It would serve everyone well.

 

Actually, MC's chart was posted in response to the chart to which I linked. Nonetheless, you are correct that this isn't about me. Rather it's about end-of-trend, and, again, the mechanical climax, rally, test catechism isn't nearly enough in and of itself.

[MC 10]

We all bring knowledge to the table, lets keep it friendly fellas.