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DbPhoenix

Getting Down to Cases

By DbPhoenix, in Trading

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DbPhoenix    42

DbPhoenix
Posted

So how does AMT play out in trading? There are several ways of locating the requisite support (upper limit), resistance (lower limit), and consolidations (or congestions or trading ranges or any sort of sideways movement). One can, for example, plot a volume distribution (the hinge is circled):

 

attachment.php?attachmentid=28896&stc=1&d=1336540670

 

Drawing a line below the bottom of the middle distribution gives one a zone on which to focus, particularly when price opens below this zone (price also opened below this zone the previous day, leading to another profitable trade):

 

attachment.php?attachmentid=28897&stc=1&d=1336540670

 

Or one can draw a box around the congestion:

 

attachment.php?attachmentid=28898&stc=1&d=1336540670

 

Or one can use plain ol' S/R lines, noting the test of the previous day's high:

 

attachment.php?attachmentid=28899&stc=1&d=1336540670

 

All ways of illustrating the same thing. And it doesn't require special software.

 

This, then, is what one should have had for the day following the previous chart, at minimum. If one doesn't know in advance what he’s going to do at each point, then he’s not prepared.

 

attachment.php?attachmentid=28900&stc=1&d=1336540761

 

And this is what happened the day after that:

 

Price finds support at B, resistance at C.

 

Preparation, Execution, Review.

 

attachment.php?attachmentid=28901&stc=1&d=1336540761

 

Let's see how it all worked out (same chart but drawn with Sierra):

 

Monday and Tuesday, price tested R ©. Thursday it bounced off the midpoint of the lower trading range (D) and tested R © again. Friday it dropped to S (E).

 

The advantage being, again, that all of this can be plotted in advance, saving one from having to peer fixedly at his screen for however long looking for a particular type of bar.

 

For the coming week, the setup was the same, keeping in mind that the interface between the two ranges, at 1970, might take on added importance.

 

attachment.php?attachmentid=28902&stc=1&d=1336540761

 

And as it turned out.....

 

attachment.php?attachmentid=28903&stc=1&d=1336540761

 

Note that while intraday data is included in these charts, the principles of AMT apply regardless of the bar interval of the chart, even if there is no bar at all (e.g., a tick chart or a T&S digital display). The high of the range is the high of the range, regardless of how one chooses to display it. Ditto the low of the range. And the bulk of the trades take place in the middle. Therefore, whether one trades off a tick chart or a weekly chart, he can incorporate AMT principles into his work.

 

 

NEXT: [THREAD=12805]For Daytraders Only: the TICKQ[/THREAD]

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