IgazI wrote:buffalo wrote:
so chart on the right is a "bias"? when the chart on the right is going down you only take the downward moves on the left chart. Thanks IgazI!
The chart on the right is a condensed history of price moving through the horizontal lines of the chart on the left:
each column is called a 'price rotation' and each rotation comes in two flavors, common lengths and outliers;
when a rotation is of a common length (5 through 9) you begin looking for a reversal trade, and in the direction of the anticipated breakout if you are 'going somewhere'; the breakout itself is likely to be the end or near the end of a price rotation.
How many columns have a length of 4? very few? so you would wait to short because 4's are not 'common'.
What about 12+? very few, right? so there are places where you expect price not to go until there is a significant retracement.
It is really as simple as that.
so the first chart is the where are we going chart (.80x2). second is the "stick around" chart (.2x2)
for examples sake we'll say a common price rotation is 8. Entry on second chart in the box and exit when first chart gets to the 8th point?
Also im assuming with the criteria youve mentioned its best to skip taking the reversals off the columns that are 4 or less points?