Strategy Based On Chart Pattern

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fatdog1
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Postby fatdog1 » Thu Jun 22, 2006 8:56 pm

Ali Son wrote:So how many years is that since you first noticed what a flag looks like on a candle chart? Did you have a mentor trader who clued you in? Did you use it when you were employed full-time as a trader?

Time projections==proejcting (forecasting) in advance how long it takes for price to reach those areas of S/R. A few gods of EW do it consistently to the day, believe it or not. That's the only piece you are missing (and the most difficult) from your methodology. Perhaps Darvas method solves this, but if not, one is still a prisoner of the "random" (though logical some say) appearance of the inteaction of price and time.

Time is really the distance that price will move in between S/R and through S/R to the next S/R, forecasted in advance. Hence, to do it, you must not only have a price target in mind (S/R) but know the speed which is related to intensity, which might require greater understandings of pattern recognition and momentum ("intensitiy").

It's not esential as your methodology is sound and fairly accurate but gives those grey beards who can do it, Oracle-like piece of mind. Yes, it sounds crazy, until you've seen it done, again and again over the years. :shock: Don't ask me how. (I know S/R [called fibs, etc.] is essential to it though.)


Ali,

I have been trading for 2 years full time and 10 years part time.
I did all the usual stuff, books, seminars, work with full time traders, ect.

As far as time goes, I never know when price will reach an area of support or resistance.

When we were trading at 6 year highs, I went back 6 years to find resistance just like Weinstein recommends.

Time is not important to me.

Here is a news flash about everything you mentioned, Fibs, Gann, EW,
MA's, pivots, ect.

All that crap is only out there for someone to sell you.

They only work when they happen to form near true support or true resistance.

Stick a Fib or a pivot or your favorite indicator or MA on one of the charts I post here and watch them work when they line up with the horizontal line.

When I put a horizontal line on a price chart in an area of support, the price will at least attempt to stabilize. It will bounce if it is true support.
In many cases if it is a retracement in an uptrend, the uptrend will resume when the price revisits this area.

That last part is the key to the whole situation.

If the equity has begun to make the downstair pattern, it is no longer in a uptrend. When the price revisits old support during a downtrend, it will only act as a speed bump as the downtrend picks up.
The bounces will be small and not worth trading in many cases.

That is where Weinstein's 4 stages is most important.

Weinstein says never buy a stock that has entered a stage 4 downtrend.
Never! He is right. Wait until it enters a stage 1 trading range and breaks out into a new stage 2 uptrend.


A lot of stocks like BRCM entered a stage 4 downtrend long before the recent sell off. I have been buying puts on BRCM, AAPL, YHOO, EBAY since February because they all entered stage 4 downtrends a long time ago.

Look at the weekly YHOO chart below.
It broke down in February.

YHOO is in a trading range now.
Notice I said trading range not stage 1 trading range.
If it breaks down below the low of this range, then it is a stage 3 trading range as stage 4 resumes instead of a stage 1 into a stage 2 uptrend.

That could happen if this is a new bear market.

Notice I don't commit to what the market is going to do.
I just use the 4 stages to keep me on the right side of the market.

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fatdog1
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Postby fatdog1 » Thu Jun 22, 2006 8:59 pm

Ali Son wrote:I will get on it Fatdog, you can be sure of that. I will cast a wide net.

BTW, did you explain how you are drawing those lines?

-optionswings : :)


Look under the Drawing tab for the horizontal line.
Easy Language does not recognize the horizontal line so I will need a trendline set to a 0 angle to act as a horizontal line.
Darvas Box uses trend lines to draw the box.

fatdog1
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Postby fatdog1 » Thu Jun 22, 2006 9:08 pm

Ali Son wrote:I will also post links to this topic, strategically of course, without getting into trouble... : :(

OPTIONSWINGS


You better check with Mikal before you do that.
Here is the RIMM workspace.
Attachments
RIMM 6-22-06.tsw
(21 KiB) Downloaded 23 times

rrobin
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Postby rrobin » Thu Jun 22, 2006 9:12 pm

I would not want to take a short trade until EURUSD trades
at 1.2630.

Nice call! :o

I enjoy watching your method.

Thanks
rr

Ali Son
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Postby Ali Son » Thu Jun 22, 2006 9:13 pm

For your lines, have you thought of using TRO's and MSheiner's "!!_msheiner_text_2d " recently modified by TRO? I think TRO posted his latest change here today.

I'd be interested in getting your thought on hwo they line up with your S/R lines!

OPTIONSWINGS

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Ali Son
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Postby Ali Son » Thu Jun 22, 2006 9:18 pm

OK, I HAVE SOME CONTACTS ON THE TS FORUM, AND WILL PERSUADE THEM INDIVIDUALLY RATHER THAN VIA POSTING TO ENGAGE IN OUR EFFORT.

OPTIONSWINGS

fatdog1
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Postby fatdog1 » Thu Jun 22, 2006 9:25 pm

rrobin wrote:I would not want to take a short trade until EURUSD trades
at 1.2630.

Nice call! :o

I enjoy watching your method.

Thanks
rr


Hi rrobin,
So far, that area is holding as support at 1.2570 on the EURO.
Were you able to open the workspace?
Here is a screen shot of it if you could not open it.

fatdog1
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Postby fatdog1 » Thu Jun 22, 2006 9:55 pm

Ali Son wrote:OK, I HAVE SOME CONTACTS ON THE TS FORUM, AND WILL PERSUADE THEM INDIVIDUALLY RATHER THAN VIA POSTING TO ENGAGE IN OUR EFFORT.

OPTIONSWINGS


That is a better idea.

BTW, I have tried to explain this to several people in the past and no one
has been able to help.

Lets just start with modifying the DarvasBox.

How do you describe a flag pole in terms of ><+?)({} so
easy language can do something with it? :arrow: :idea:

This is a perfect example of when I would want to use the DarvasBox to take a breakout long trade that is shaping up right now.

The attached 60 minute EURUSD chart has a up flag pole from 1.2552 to 1.2566 and a congestion area between 1.2582 and 1.2571 using the bodies of the candles in the congestion area and I would buy a breakout at 1.2593 which is 1 tick above the highest wick of the congestion area with a target of 1.2630.

My stop loss would be 1.2562 which is one tick below the lowest low wick of the congestion area if I were to be put in the trade on the breakout and it failed completely which could happen.

The good news is that if this area of support does fail, I would not be dragged into the long trade unless the EURO first trades above 1.2592.
The current DarvasBox may have me in the trade already.

I sure do not want to short down here right now since the EURO is setting up for a possible breakout long trade because of the up flag pole.

If that trade works out, I would want the DarvasBox to extend the box top and box bottom lines to the right and take the trade again the next time the EURO comes back to this area of support in the future using all the same numbers.

That is a perfect Weinstein breakout of a stage 1 trading range into a stage 2 uptrend if the trade does work out and Weinstein does buy the first pullback to the breakout in his book.

Thanks,
FD1
Last edited by fatdog1 on Thu Jun 22, 2006 10:03 pm, edited 1 time in total.

fatdog1
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Postby fatdog1 » Thu Jun 22, 2006 9:58 pm

Ali Son wrote:For your lines, have you thought of using TRO's and MSheiner's "!!_msheiner_text_2d " recently modified by TRO? I think TRO posted his latest change here today.

I'd be interested in getting your thought on hwo they line up with your S/R lines!

OPTIONSWINGS


Is there an eld for this somewhere?

Ali Son
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Postby Ali Son » Thu Jun 22, 2006 10:05 pm

FATDOG, here is the link:

http://kreslik.com/forums/viewtopic.php?p=474#474

Or alternatively, I believe if you look in the recent top 10 posting box, you will see is listed as such. TRO just posted the update today here. He also referenced it in the old Rumpledone forum at Yahoo.

BTW, I also put out a call to all CODERS at the Yahoo forum, cited above, to come here and help.

--OPTIONSWINGS

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