Reading Charts in Real Time

[thalestrader 14]

I cannot post a chart right now, but if you were to look at the GBPUSD 15M I think you will see that we did get a fifth and possibly final wave down and it has the form of a diagonal.

 

Best Wishes,

 

Thales

[Beachtrader 10]

I cannot post a chart right now, but if you were to look at the GBPUSD 15M I think you will see that we did get a fifth and possibly final wave down and it has the form of a diagonal.

 

Best Wishes,

 

Thales

 

Something like this? I am quite interested in the level marked in red as that proved a tough one to crack earlier in the afternoon.

 

 

All the best

 

BT

[patrader 10]

That wedge or diagonal type pattern you show, patrader, is a clear indication that the rally was ready to pause or reverse. If I had bought the initial break high, I had have exited at break even +/- once that diagonal became manifest. I would not want to have been long unless price cleared the upper trendline.

 

I've attached a chart showing on the spot EURUSD.

 

Best Wishes,

 

Thales

I look to exit and/or reverse my trades at the completion of 3 push wedges on the 15m especially if near possible major resistance points.This trade was overshooting the tcl on the third push and was near possible major resistance(dark blue line) at 1.4165 so i exited at 1.4155.Three push wedges into major resistance are early possible signs of trend reversal and a 123 that follows will confirm the reversal if successful.In this particular case the market pushed one more time to the major resistance level and reversed after another overshoot of the tcl forming a slightly larger wedge.Then the 123 set up and the market reversed.Soon after price formed a downward sloping channel that just hit another possible major support level(1.4087) and bounced back up to top of channel.HTH

[elitejets 10]

Big picture - this cable drop is the third touch of a trendline from the start of the credit crisis in 08.

I really want to see a close today below 1.6085 (last weeks open and ideally 6060 (last weeks low)

[patrader 10]

15m 6E chart

[patrader 10]

15m rth ES chart

[patrader 10]

240m ES chart

[patrader 10]

ES Daily chart

[thalestrader 14]

Something like this?

 

Sorry, I had to run out today and was not able to follow up sooner. Looks like a lot of good chart reading was shared here this afternoon!

 

Yes, exactly like that ... here it is, albeit long cold, dead, and after the fact, on the 6B.

 

Best Wishes,

 

Thales

[TradeRunner 10]

2 trades: (-41)

 

Stopped trading after two losing trades. Difficult day.

[thalestrader 14]

2 trades: (-41)

 

Stopped trading after two losing trades. Difficult day.

 

Hi Traderunner,

 

A couple of quick comments. First, the first buy seemed both very late and a wee bit premature. It was late in that if you were looking to get long on that size of swing, the proper entry would have been the first long sequence following the correction off the earlier spike high. You can go back on your chart and find where I mean.

 

It was early in that since you missed the first long sequence, the next opportunity to go long would have been a break above the spike high. Your first entry was a tick or two early. No problem there, really, at least not in this case, as you would have eben stopped in no matter what.

 

I also do not see a problem with you cutting your loss quickly. I had one two nights earlier on the 6B where price poked above the chop zone to get me long, and then three minutes later I cut it loose for few ticks loss, and it proved to be the absolute right thing to do, as the 6B has not traded close to that level since. Sometimes we get lucky and do the right thing.

 

I do not know what to say about your second entry. I have cut trades loose and re-entered at new highs myself. However, if I was quick to cut the first one, I'm usually quicker to cut the second one. And if you look where you entered, there was a short sequence immediately following that should have been a clue to cut it for a small loss or even break even, if not outright stop and reverse.

 

Another thing you might do is zoom out a little bit from time to time to see where price is in a larger context. I'll direct you to a series of three posts between patrader and myself where patrader identifies a pattern on his chart that, should you train yourself to see it, will save you and make you money (when posting, patrader does not say too much in words, but patrader's charts speak looud and clear to anyone willing to listen).

 

Here are the posts, to make it easy for you to see the pattern to which I am referring:

 

 

15m 6E chart

 

That wedge or diagonal type pattern you show, patrader, is a clear indication that the rally was ready to pause or reverse. If I had bought the initial break high, I had have exited at break even +/- once that diagonal became manifest. I would not want to have been long unless price cleared the upper trendline.

 

I've attached a chart showing on the spot EURUSD.

 

 

I look to exit and/or reverse my trades at the completion of 3 push wedges on the 15m especially if near possible major resistance points.This trade was overshooting the tcl on the third push and was near possible major resistance(dark blue line) at 1.4165 so i exited at 1.4155.Three push wedges into major resistance are early possible signs of trend reversal and a 123 that follows will confirm the reversal if successful.In this particular case the market pushed one more time to the major resistance level and reversed after another overshoot of the tcl forming a slightly larger wedge.Then the 123 set up and the market reversed.Soon after price formed a downward sloping channel that just hit another possible major support level(1.4087) and bounced back up to top of channel.HTH

 

And here is the 6E with a few notes repeated from my above comments:

 

 

And if stopping for the day after 2 losses is part of your trade plan, congrats on sticking to your plan. I am not exaggerating when I say I have had more than one -40 tick day trun into a -200 tick day when I fail to just walk away and come back the next session. Some get better when they are down, but not me. I think you are doing well. I hope you feel you are making progress and your efforts are well spent.

 

Best Wishes,

 

Thales

[Beachtrader 10]

Apologies if my question has already been covered before but would you mind explaining what 'tcl' stands for in the above post?

 

Kind regards

BT

[Marko23 10]

Hi,

 

during the week there was a question about setting up targets with the Thales' method.

I want to share four alternatives to project targets from a 123 setup.

 

All have their merits and none of them may work, because the market always takes the path of least resistance like hikers in this drawing.

 

 

I'll use an EUR/USD daily chart from last year as a drawing canvas, so the example doesn't look totally artifical.

 

To be continued...

[Marko23 10]

...four alternatives to project targets...

 

The setup

 

1. extension of first thrust

One takes the 1st move X to 1 as 100% reference and extends it to some "magical numbers"

 

There a three zones; one can define more and go over the top easily.

The market in this example moves through all zones in an uptrend.

 

 

To be continued...

Edited January 23, 2010 by Marko23
Typo

[Marko23 10]

...four alternatives to project targets...

 

The setup (repeated)

 

2. actio = reactio

One takes the 2nd move 1 to 2 as 100% reference and extends it above 1 to some "magical numbers"

 

There a four target zones; the market in this example moves through all zones in an uptrend.

 

To be continued...

Edited January 23, 2010 by Marko23
Typo

[thalestrader 14]

Weekend Reading

 

Hi Folks,

 

This week I have a three part series entitled "Does Elliot Wave Subsume All Valid Technical "Chart Patterns." I only have the first part in a .pdf (I for the life of me cannot find parts two and three in .pdf but I have them printed out). I have included links to a Prechter website where you can sign up for FREE and view parts two and three in .html. Not ideal, but it is what it is; and if I do find the .pdf's of parts 2 and 3, I will post them here in the thread.

 

This series of article is from almost five years ago, and I have the three parts printed out and in my main Trading Notebook. Much has been made here in the thread about context and the role it plays in my trading. Well, much of the manner in which I view price action is through the lens of Elliot Wave. Again, I do not use EW to predict or forecast. I use it to sort out various probabilities. I know many have a built in distrust, dislike, or disgust with the theory. That is too bad. There is much of practical value in this theory if you do not expect certainty from it. I know it helps me daily.

 

Let me give a recent example of how a very simple use of EW saved me from taking a larger loss than I did, and if I had heeded my own inclination, I would have avoided the trade completely.

 

Yesterday, I took a long on the 6B (GBPUSD futures). Now, when I took this trade, I saw we had thre waves down (an initial wave down, a second wave correcting the initial first wave, and a larger thrid wave down). I had thought that we were in a wave four correcting the third wave down. But, I also saw price had printed a low, followed by a high, and then a higher low that retraced a suitable proportion of the bounce. I bought a break of that high. At that point, however, price had formed an small, upward drifting, overlapping structure, aka "a bear flag." That price action, coupled with the well-formed impulse down consisting of what can be viewed as Elliot Waves 1 down 2 up 3 down and the "bear flag" being a potenital 4 up, the expectation for a further push down for a final wave 5 down became quite high. In fact, here is what I posted before price broke to new lows:

 

...price wedging along the lows, the preceding impulse down, the tough level at which the entry point was placed all led me to abandon [the trade] ... by cutting out at -4. Had I not pulled the rip cord, I'd have moved my stop to where the red line is in this attached screenshot, as that would be a break of a pattern close enough to a bear flag for me to suspect the downtrend did indeed have at least one more wave to go.

 

So rather than let the trade run for my -20 initial stop loss, I used what I recognized as a high probability EW pattern to decide to cut the loss by 80%, Nothing special, nothing magical, but these patterns occur, they recur, over and over and over. Use them or not, but I have found EW to be extremely helpful to me. Again, I do not bother subdiving waves ad infinitum. I just isolate the recognizable patterns and trade accordingly. If nothing clear presents itself, then no problem - I stand down.

 

Here are the links to parts 2 and three:

 

Socionomics Institute - Please Login

 

Socionomics Institute - Please Login

 

I've attached part 1 as a .pdf

 

Best Wishes,

 

Thales

Subsume Part 1.pdf

[Marko23 10]

...four alternatives to project targets...

 

The setup is the same as in the preceding examples

 

3. extension like an Elliott wave

One takes the 1st move X to 1 as 100% reference but extends it from point 2 to some "magical numbers"

 

There a three target zones; the market in this example moves through all zones in an uptrend. One can define more.

 

To be continued...

[Marko23 10]

...four alternatives to project targets...

 

The setup is the same as in the preceding examples

 

4. the measuring rod

 

If you don't like the fibo stuff during the heat of daytrading or your chart program doesn't have an easy to use tool for, here is a simple way to draw a subset of the targets without any complexity.

From the 1st example take only 150% and 200% extension, rods in blue

From the 2nd example take only 100% extension, rods in green

From the 3nd example take only 100% extension, rods in light brown. This is known as a measured move.

 

When price proceeds you make a copy of a rod and move it to the right.

 

All these alternatives are nothing more than educated guesses. The market proceeds in its own way and we try to go with the flow. One should never insist on those guesses.

 

If anyone wants to know how the "magic numbers" are calculated, please ask. One can use them without the knowledge.

Edited January 23, 2010 by Marko23
Typo

[Marko23 10]

...Now, when I took this trade, I saw we had thre waves down (an initial wave down, a second wave correcting the initial first wave, and a larger thrid wave down)....

 

" a larger thrid wave down " would have raised an alarm for me, because wave 3 cannot be the smallest of...

 

That's hindsight of cause.

[thalestrader 14]

" a larger thrid wave down " would have raised an alarm for me, because wave 3 cannot be the smallest of...

 

That's hindsight of cause.

 

But wave C is often 1.38-1.68 of A, so the wave 3 is always a wave 3C for me until confirmed a 3 by a new low (or high in the case of a rally).

 

Best Wishes,

 

Thales

[Marko23 10]

But wave C is often 1.38-1.68 of A, so the wave 3 is always a wave 3C for me until confirmed a 3 by a new low (or high in the case of a rally).

 

Best Wishes,

 

Thales

 

Yes, it is in deed. One of the many reasons, one cannot draw a prognosis from this theory without alternate counts.

EW remains a kind of rolling forecast.

[thalestrader 14]

...One of the many reasons, one cannot draw a prognosis from this theory without alternate counts.

EW remains a kind of rolling forecast.

 

That, of course, is one of the main criticisms of the theory. The criticism drops away, however, if one accepts that the only thing that one should rightfully expect from the theory is the ability to rank order potential directional price moves in terms of probability. There is not an indicator or an oscillator that I have seen that is as capable of that sort of rank ordering of probailities as EW theory is, and yet folks continue to churn out all manner of indicators and none are as villified as EW is.

 

Even pure, unadulterated S/R is only capable of telling you that "if price gets to X, then either this or that, with this being somewhat more probable than that." No who has successfully learned to use S/R to help make trading decision criticizes S/R on the basis that it only offers the trader probabilities and not certainties, do they?

 

Elliot critics fix upon the "forecasting" claims made by some of the theory's adherents, and then say "A ha! we got you now ... why do you need an alternate count if your theory is so special!?". This is taking an easy shot, because EW, like any other approach, cannot say with certainty that "Price is here and it is going there." All EW can say is "price is here, and it is more likely to go there than somewhere else." I at times like to take the shot as well - but at the practioners who make outlandish claims in the theory's name, and not the theory itself. There is a difference.

 

Personally, I think that the flexibility of the theory to accommodate alternate counts is a strength and not a weakness. It is only a weakness if one insists that the theory only holds value if one can extract forecast with 100% certainty from the theory. I have had too much success using the theory to discern and rank probabilities for me to dismiss the theory, and I am quite pleased without any ambition to press the theory for certainties..

 

Best Wishes,

 

Thales

[patrader 10]

Apologies if my question has already been covered before but would you mind explaining what 'tcl' stands for in the above post?

 

Kind regards

BT

tcl=trend channel line.When price breaks out and starts trending i look to draw lines that best "contain" the price action.I first need two swing lows in an uptrend in order to draw a trendline(tl) across them and then extend this tl to the right.Next i locate two swing highs,draw a tl across them and extend this tl to the right.This tl is called a trend channel line(tcl).These two lines "contain" the trending price action.I pay particular attention to wedge shaped trend channels and watch for the third push that reaches or slightly overshoots the tcl.I use these overshoots for exits and/or reversals.HTH

[thalestrader 14]

I'd never heard of George Lane before this post. From my quick googling he's a trader of 50+ years, who is a big proponent of stochastic indicators.

 

Could you share, roughly what message did you find important from him?

 

I had never considered EW before Lane's seminar lecture. He said, "you'll see these little Elliot wave patterns all over the place if you know what to look for."

 

He was right.

 

For those who dismiss EW because of Prechter, you ought to recognize that EW pre-dates Prechter's involvment by 40 years. George Lane was teaching EW for Trading Educators Inc. as far back as the late 1940's or early 1950's. The fact that one individual has sought to profit by over selling the theory's ability to forecast does not undermine the body of evidence supporting the theory anymore than the existence of Fitness Infomercial profiteers somehow proves that physical exercise is not beneficial to one's well-being.

 

Again, I am not a EW ideologue. But I do feel the theory is useful and I would hate to see folks fail even to consider the few simple aspects that can be a great help because they have pre-judged the theory.

 

Best Wishes,

 

Thales

[Marko23 10]

That, of course, is one of the main criticisms of the theory. The criticism drops away, however, if one accepts that the only thing that one should rightfully expect from the theory is the ability to rank order potential directional price moves in terms of probability. There is not an indicator or an oscillator that I have seen that is as capable of that sort of rank ordering of probailities as EW theory is, and yet folks continue to churn out all manner of indicators and none are as villified as EW is.

 

Even pure, unadulterated S/R is only capable of telling you that "if price gets to X, then either this or that, with this being somewhat more probable than that." No who has successfully learned to use S/R to help make trading decision criticizes S/R on the basis that it only offers the trader probabilities and not certainties, do they?

 

Elliot critics fix upon the "forecasting" claims made by some of the theory's adherents, and then say "A ha! we got you now ... why do you need an alternate count if your theory is so special!?". This is taking an easy shot, because EW, like any other approach, cannot say with certainty that "Price is here and it is going there." All EW can say is "price is here, and it is more likely to go there than somewhere else." I at times like to take the shot as well - but at the practioners who make outlandish claims in the theory's name, and not the theory itself. There is a difference.

 

Personally, I think that the flexibility of the theory to accommodate alternate counts is a strength and not a weakness. It is only a weakness if one insists that the theory only holds value if one can extract forecast with 100% certainty from the theory. I have had too much success using the theory to discern and rank probabilities for me to dismiss the theory, and I am quite pleased without any ambition to press the theory for certainties..

 

Best Wishes,

 

Thales

 

Thanks for taking your time for this answer. I have to admit that very often in my answers many years of thinking in several programming languages shows up. These languages mostly have strict yes/no decisions and if a programmer forgets to consider an "else" somewhere, quality control or a customer will point him to this bug.

 

The decision to put on a single trade is also of this kind, but I learned to live with statistical reasoning, because I can measure an expectancy over 100 or more trades.

 

Perhaps it is the word "theory" which spuriously leads me to expect a forecast with 100% certainty. It may also be the modality in which it was presented by Neely in his book and newsletter. How does one measure the expectancy of a flat or double zigzag? Everyone is different from its cousins.

 

Thanks again, I will have to think more about it (and post a little less).

Edited January 23, 2010 by Marko23