[fxscalper]

Originally Posted by fxscalper »

Hi imorgan,

My daughter isn't here right now, but here's my take on the areas in question:

This is the second time I've given up the handle I set up for my daughter.


Back to the drawing board.

Best Wishes,

Thales posting as FX

[Dinerotrader]

LOL. I can just imagine your reaction the moment you realized you made that mistake again. Hilarious.
Thanks for the explanations. Next time I will be more careful of the times so I don't include midnight hours.

[thalestrader]

Originally Posted by imorgan »

LOL. I can just imagine your reaction the moment you realized you made that mistake again. Hilarious.

She's not going to be happy. The first time she didn't mind because I made that one up and she didn't like it. This one she came up with, and she thinks its very cool.

Oh well. That'll teach me not to post from her computer.

Anyhow, two other things I wanted to point out:

1) Support and resistance are not necessarily precise price points, but often are more like "zones" or "areas" of S/R. These areas are often bounded by precise price points (but not always). Do not mistake a point within a zone of resistance for "Resistance Itself", nor a point within a zone of support as "Support Itself".

For example, suppose a stock declines from a high of 100 to a low of 80, and then rallies to 90. At 90, the decline resumes, but this time the decline is checked at 81. Price again rallies, this time halting at 89. The decline again resumes. Price declines down and through 81. I would not be looking to short a break of 81 just because that was the most recent swing low, because 80 is stilla potential and proabable support. The area between 80-8 is a zone of support.

2) Always be aware of the bigger picture. If you look at that chart, you can see a big rally that pushed through what should have been some serious resistance. Price twice tested that broken resistance as support. You do not want to be shorting right into that new found support. Also, since the rally high the market has been consolidating in a range at the high end of the rally's range. While identifying the extremes of of a line or range or consolidation is relaticely easy, it is much more difficult to identify tradable S/R within that range. As price crosses back and forth between S/R, it is likely to move all the way from one to the other. If price most recently tested support, then it is best not to short within the range until price has travelled back to test resistance (or fails to test resistance and instead breaks below the recently tested support. Likewise, after a test of resistance at the upper end of the range, it is best not to go long until price has again traveled to support (or fails to reach support before turning and breaking above recently tested resistance.

In example #1, that would be a buy point as price had tested support, rallied, made a higher low, and then continued on its way to test resistance.

In example #2, although some may make the case that price had declined from its test of resistance and tested support, but it does not lok that way to me. Your #2 looks to be a simle ABC type reaction against the decline on its way to support.

In example #3, that seems to me to be the test of the top of the zone of support. I wouldn't want to short into that zone, but rather I'd wait for a break belwo that entire zone.

In example, #4, price has tested support and it on its way back to resistance. So the test was your low, then a rally to a high, a decline to a higher low, and then a rally to a higher high. I'd prefer to wait for price to break above the high established at your example #2, but, as I said earlier, a case could be made for buying the break above your #4 (though I would say your at higher risk that the "breakout" reverses immediately.

I hope that makes sense.

Have a wonderful weekend and remember to enjoy your family.


Best Wishes,

Thales

[brownsfan019]

Good to see thales and others keeping the thread going!



Not sure when I'll be back at it hard again, just taking a little break from it all.

Keep it going guys!

[Dinerotrader]

Okay. I guess someone tipped off Brownsfan that I was highjacking the beloved P/L thread (one of my personal favorite threads) with this S/R stuff so I will quickly post my last comment related to the EURJPY chart and Thales' comments. I can just picture Brownsfan sitting on the beach in tahiti during his "break" when he gets a call that his forum thread is getting highjacked....he throws his margarita........but remains calm and just posts a simple "thanks for keeping the thread going" comment so we all know he is still watching. No worries, Monday will come and we're back to straight P/L posts.

Originally Posted by thalestrader »

1) Support and resistance are not necessarily precise price points, but often are more like "zones" or "areas" of S/R. These areas are often bounded by precise price points (but not always). Do not mistake a point within a zone of resistance for "Resistance Itself", nor a point within a zone of support as "Support Itself".

In example #2, although some may make the case that price had declined from its test of resistance and tested support, but it does not lok that way to me. Your #2 looks to be a simle ABC type reaction against the decline on its way to support.

See #5 comment on new annotations to chart. This area would represent new resistance due to prior night's PA so a resistance breakout just below that area would make a breakout-then-reversal more likely and consequently make trade #2 not that appealing.

Originally Posted by thalestrader »

2) Always be aware of the bigger picture. If you look at that chart, you can see a big rally that pushed through what should have been some serious resistance. Price twice tested that broken resistance as support. You do not want to be shorting right into that new found support. Also, since the rally high the market has been consolidating in a range at the high end of the rally's range. While identifying the extremes of of a line or range or consolidation is relaticely easy, it is much more difficult to identify tradable S/R within that range. As price crosses back and forth between S/R, it is likely to move all the way from one to the other. If price most recently tested support, then it is best not to short within the range until price has travelled back to test resistance (or fails to test resistance and instead breaks below the recently tested support. Likewise, after a test of resistance at the upper end of the range, it is best not to go long until price has again traveled to support (or fails to reach support before turning and breaking above recently tested resistance.)

I think I read this comment over 20 times trying to fully digest and visualizeits full implications and I am even still digesting. I hope that doesn't mean I am stupid. See notes #7 and #9 where I tried to comment about how this would be interpreted on the chart.

Originally Posted by thalestrader »

In example #1, that would be a buy point as price had tested support, rallied, made a higher low, and then continued on its way to test resistance.

See note #8.

Originally Posted by thalestrader »

In example #3, that seems to me to be the test of the top of the zone of support. I wouldn't want to short into that zone, but rather I'd wait for a break belwo that entire zone.

Not sure exactly what the full range of the zone you are thinking here but my guess is 131.80-131.50 based on prior comment on the "danger area". See notes #6 & #8.

Originally Posted by thalestrader »

In example, #4, price has tested support and it on its way back to resistance. So the test was your low, then a rally to a high, a decline to a higher low, and then a rally to a higher high. I'd prefer to wait for price to break above the high established at your example #2, but, as I said earlier, a case could be made for buying the break above your #4 (though I would say your at higher risk that the "breakout" reverses immediately.

See note #9. I would agree the green line would probably be the best breakout area because of prior resistance and support found in that tight range below the green line.

That's all I got. I also wanted to post this to demonstrate that the effort put into posts by contributors like Thales is equally matched by thought and contemplation of those learning what has been taught. The effort made by those that give such in depth answers is so appreciated.

Cheers.

[thalestrader]

Originally Posted by imorgan »

See #5 comment on new annotations to chart. This area would represent new resistance due to prior night's PA so a resistance breakout just below that area would make a breakout-then-reversal more likely and consequently make trade #2 not that appealing.


I think I read this comment over 20 times trying to fully digest and visualizeits full implications and I am even still digesting. I hope that doesn't mean I am stupid. See notes #7 and #9 where I tried to comment about how this would be interpreted on the chart.


See note #8.




Not sure exactly what the full range of the zone you are thinking here but my guess is 131.80-131.50 based on prior comment on the "danger area". See notes #6 & #8.



See note #9. I would agree the green line would probably be the best breakout area because of prior resistance and support found in that tight range below the green line.

That's all I got. I also wanted to post this to demonstrate that the effort put into posts by contributors like Thales is equally matched by thought and contemplation of those learning what has been taught. The effort made by those that give such in depth answers is so appreciated.

Cheers.

I've thought a good deal about this this weekend. If you remember, I kept saying that #2 just didn't look right, and that I would probably not even have thought to trade it. I asked my daughter what she thought, and she traced out the swings on the screen with her finger and said that it wasn't "a whole move." It then dawned on me that the best way to try to explain would be to show how price divides into swings of varying sizes.

For the sake of this chart, I used the terms Major to denote the largest swings, intemediate to denote swings of a somewhat smaller dimension, and minor to denote the smallest swings. Also, I did not outline each and every minor swing (the green lines) because it would take too much time. The first chart is probably my preferred swing "count," though I provided an alternate that I feel is also justified.

You see, one of the first things I had her do when she first started this project was to highlight the swings that represented H-HL-HH or L-LH-LL when taking a trade. She had to learn the difference between an intermediate high and low and minor highs and lows.

I've outlined the swings in the attached chart.

Rather than sitting here typing out a detailed explanation, I'll let the chart speak for itself. As I was putting this chart together, I kept "hearing" Db's posts where he cautions that many see S/R where it isn't and fail to see it where it is. I also recalled his comment that he had been involved in a Ross Hook thread where participants where seeing these 1-2-3 hooks all over the place, even in the middle of nowhere. I would suggest that not only were they seeing them in the middle of nowhere, but they were likely mistakenly indentifying minor swings as being of intermediate importance, and thus mistaking a mere correction against the intermediate trend for a change in that trend.

I hope that helps. Someone else, no doubt, may identify these swings somewhat differently, but the principle is sound, both in theory and in practice.

See you next week.

Best Wishes,

Thales


EDIT: PS The final Blue swing is still potentially in progress. Price as long as price makes a higher high before taking out the low at the last blue "pivot" then the current major swing is intact.

[brownsfan019]

You guys do what you want here. If it's helping, then do it. I have no concerns; nor do I plan to be an overzealous moderator that is seen elsewhere around here.

Plus, it's the wknd, so I guess it's ok to stray a little bit from the initial topic.



Have a good one guys, I'll be back at it in the foreseeable future. Been nice to take a little breather from checking TL daily and posting.

[HAL9000]

Last week I started to look at the 6B as well,
and liked it somehow.

Last Friday I mostly simulated, but did another scalp in the 6B a small 25 $ net.
I had trouble to find into the market, somehow it was the wrong time of day and I don't felt prepared. So I stopped after that.

During the weekend I examined more 6B charts and think I have found my system to trade the 6B.

During this morning I did some simulation trades, and it went well.


Then in the afternoon I traded real, on larger frames with larger stops compared to last weeks trades.

My fear always was (and is), that I will start trading real with a looser, and guess what happened.

In hindsight, this first trade might have violated my entry rules, but maybe it was just the one that had to fail.
I also missed to exit this trade on BE. This was clearly my mistake.

Then I had to decide: One more (and only one more!), or ...

I did one more, as it was where.

And then I was tired and stopped (as planned before).

Now I have to analyze, what I have done wrong (and right),
but the first step is done,
even if I don't know, what will happen tomorrow.