[aquarian1]

I have a question I am looking for help on.

Has someone found a reliable indicator, or combination of indicators, or some other way, that from their personal trading experience can tell if an intra day direction change is a trend change as opposed to a retracement?

To explain my question further, some days the first leg is down, it retraces, and then the second leg is down, that is Leg2 is in the same direction as Leg1. On other days, the first leg is down and then it reverses trend and the remainder of the day is an uptrend.

I have included a 5 min chart of Friday 24 July 2009 for the ESU9 (S&P emini Sep 09) contract, as an example (all times are CT).

From 972 at 8:40am it fell to 962.50 at 9:56 (marked point A). From A it rose to 971 at 10:59 or +8.5 pts in 63 min (point B). A to B I am calling Leg1.

Next it retrace to 968.75 at 12:05 or –2.25 pts in 66 mins (point C). Then it rises to 979 @ 15:14 or +10.25 in 189 mins (point D). From C to D I am calling Leg2.

In this example point A marks a Trend Change with the balance of the day now upward.

So in reference to this graph, my question is:
“At point A is there a way to tell that the balance of the day will be up?”
In other words:
“Is there a way to tell if point A will be marking the beginning of a retracement, that the next leg after the retracement will be down, that is in the same direction as 972 to 962.50, or is it a intra day trend change?”

I would note that one book waits until it has risen from A and it continues to rise beyond 61.8% or 968.25 and if it does then a trend change has taken place and the rise is not a retracement. (972-962.5 = 9.5*.618 = 5.75+962.5 =>968.25 = 61.8%.) I am looking for an answer at point A so this “if it retraces more than 61.8% it is a trend change” is not the answer I am looking for.

Thank-you to all.

[DbPhoenix]

Originally Posted by aquarian1 »

So in reference to this graph, my question is:
“At point A is there a way to tell that the balance of the day will be up?”
In other words:
“Is there a way to tell if point A will be marking the beginning of a retracement, that the next leg after the retracement will be down, that is in the same direction as 972 to 962.50, or is it a intra day trend change?”

Sure. Though you may find the price action easier to see if you remove all of the extraneous indicators, etc.

If you're interested in pursuing this, click here.

[Tams]

Originally Posted by aquarian1 »

I have a question I am looking for help on.
Has someone found a reliable indicator, or combination of indicators, or some other way, that from their personal trading experience can tell if an intra day direction change is a trend change as opposed to a retracement?
...
Thank-you to all.

The volume will give you a clue...

[thalestrader]

Originally Posted by aquarian1 »

I have a question I am looking for help on.

Has someone found a reliable indicator, or combination of indicators, or some other way, that from their personal trading experience can tell if an intra day direction change is a trend change as opposed to a retracement?

The only indicator that will tell you what you wish to know is already on your chart, but you have so many useless indicators sharing space with it that you have distorted it nearly beyond recognition, and certainly beyond usefulness.

Originally Posted by DbPhoenix »

If you're interested in pursuing this, click here.

[/CENTER]

If I were you, I'd follow Db's link and forget anything anyone else, including myself, might post. I would stop searching for a magic indicator, and for the next several weeks or months, devote myself to studying the material to which DB is directing you. But that is me. And I already know how to use the indicator that you wish to be able to read. Here is your chance to learn to use it as well.

And do take Db's advice, clean up your chart. You have so many indicators that you distort the only indicator that matters - Price!

Yes, price is the only indicator that leads itself. Always. And without exception.

Best Wishes,

Thales

[ehorn]

Originally Posted by Tams »

The volume will give you a clue...

+1 for this - Volume (more accurately the sequences of volume leading price) is a leading indicator of price and trends (whether price is moving in a non-dominant direction (retrace) or dominant. IMHO, using price alone to determine a trend (dominance) is akin to gambling.

As a wise man once said...

"Price Action is a vendor induced fad and the dog will not hunt ultimately simply because it is not systematic. Meaning, there is no complete structure, no complete process and it is not possible the get results from the incomplete structure and process."

Best wishes

[DbPhoenix]

Originally Posted by ehorn »

As a wise man once said...

Wise? Price action has been central to the auction market since the first Sumerian traded his first pot, if not before. Remarks such as these serve only to detour the beginner down paths that will waste his time and his money, perhaps for years.

[ehorn]

Originally Posted by DbPhoenix »

... Remarks such as these serve only to detour the beginner down paths that will waste his time and his money, perhaps for years.

Here is another quote I am fond of:

"Even if it were possible to prevent the gullible from being led down the garden path, one would first have to determine what is or is not a garden path, then determine who is or is not qualified to prevent the gullible from walking it"

Though I am unable to validate the wisdom of its author.

[thalestrader]

Originally Posted by DbPhoenix »

Remarks such as these serve only to detour the beginner down paths that will waste his time and his money, perhaps for years.

I agree, Db. And there is now tolerated an entire thread here at TL that serves no other purpose than to so detour the novice down such a detrimental path.

I've been down a few such paths myself and wasted more money and more years than ever should have been allowed, both by myself and my "guru-mentors."

My advice to the original poster is this: Dedicate yourself to removing all indicators from you chart and spend two and half months really focusing on learning to read price action. If, after two and half months of studying price you are still unable to trade profitably, then you either do not have the ability to read price (which is doubtful, even a child can tell up from down from sideways), or (and this is more likely) you are psychologically unfit for trading, and you must seek to understand how your fear is controlling your trading rather than your knowledge of price action, and learn then to control your fear.

Or, you can continue with your clutter of indicators, and perhaps be pulled into one Guru's Den or another's, and two and half years from now you will still bemoan the fact that after two and a half years you still do not have the right indicator or that you still do not understand your Guru's "wisdom."


The credible in the trading world offer you freedom, by demonstrating a self-sufficient approach to profiting from anticipated price moves. Learn to read price action, and you will not need to follow a Guru from internet forum to internet forum. You will be free, and you will need only a sufficient capital deposited into a trading account, a computer with an internet connection, and a chart.

It is up to each one individually. You will have to determine for yourself the credible from the incredible.

Best Wishes,

Thales