[patrader]

15m 6E chart

[Zan-shin]

ES 5 min............

[patrader]

60m CL chart

[patrader]

Daily CL chart

[thalestrader]

Hi Folks,

First, I want to thank patrader for the great charts showing how he tracks price action using trendlines and channels. I hope he doesn't mind if I add a my own take on the current 6E. It is not, I think, in any conflict with his approach.



I have shown an example like this in the past where I draw a trend line along two or more lows of a rally after a sharp decline. I then cop and paste that trend line to the chart, anchoring it at the first high off the extreme low of the decline. This produces a very good target to exit any longs, a short entry point with a very, very tight stop, and it also helps one interpret the current and subsequent character of price action.

As Marko had mentioned here in the past, a good rule of thumb is that "if it channels, it is corrective," i.e. price action that is bounded by a channel tends to be either counter-trend or a consolidation prior to a continuation. In this case, price rallied and just within the past few minutes touched that upper trend line.

What price does next should be telling. If price falls from here, then I would expect the decline to carry to the lower trendline, and if the lower trend line breaks, I would be looking for at least a test of the most recent extreme low.

However, should price rest up here a bit and then break and hold above the trendline, then this is likely not merely a minor correction, but we should see a larger rally, which may in the end simply be a larger correction of the down trend, or it could be a resumption of the prior up trend that ended a few months ago.

So, below that upper trend line, I would favor lower prices, above that trend line, I would favor longs.

The fact that that is how I am looking at it currently does not mean that I am not completely wrong. But I have a buy stop at 1.3718, as I have been looking for lower US Dollar/higher Euro based upon my read of the daily price action.

Best Wishes,

Thales

[thalestrader]

Originally Posted by thalestrader »

... should price rest up here a bit and then break and hold above the trendline, then this is likely not merely a minor correction, but we should see a larger rally... I have a buy stop at 1.3718

We have the break, but we also need the hold. At any rate, here is how it looks - long with a 1R risk and a 5R profit target. It does not matter what happens, as the worst case is a 1R loss, which is always my worst case scenario. If this trade is a loss, I simply wai for thre next one and keep taking my swings.



Best Wishes,

Thales

[patrader]

15m CL chart(parallel channel lines)

[thalestrader]

Originally Posted by thalestrader »

We have the break, but we also need the hold. At any rate, here is how it looks - long with a 1R risk and a 5R profit target.

We now have the break, and with the pullback to test the BO tickling 1.3715 and then attaining a new high, we have the hold. Risk is now -4 ticks, which is approximately .2R (2/10ths of 1R). So the risk is now 4 ticks for a 100 tick profit target.




Best Wishes,

Thales