Tuesday, May 5, 2015

Maze's Walls

Graphical representation of price has it's own walls and corners. It could be well defined by using the trend-lines. It has ceiling and floor. That's the support and resistance.

When You want to find Your way to maze's treasury. Just follow it. Use the graphical tools to draw a trend lines. Just connect lower low and next lower lows to determine the descending trend line. Or in uptrend connect higher high and next higher high to find an uptrending line. When in uptrend, just wait for price to break the trendline and short. Vice versa when in downtrend wait for price to break the descending line and buy the break.

Vertical lines could be usefull on higher timeframes to find the levels where some traders are stuck. Find highest highs and lowest lows and draw a vertical line to find supports (from lows) and resistances (from highs). Expect either bounce from this levels or it's breaks.

Use Channels to catch the trend. Just use trend line and then copy it to opposite extrema. So when You have a downtrend and You drawed the trend line heading down from highs use opposite lows on the opposite side of channel and move it there. You'll find a trend channel. Once the channel is established look for thirds of it's widht. In downtrend channel short it in upper third. In ascending channel buy at lower third. Once the downtrend channel is broken in the lower trend line get out from the position. Do no buy. Once the uptrend channel is broken in the upper trend line get out. Do not short.

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