Hi, again!
Take a look to the following chart:
As you can see, I have drawn three lines which seems, at first sight, trendlines. My problem is that they are not, though, all valid.
Every A,B,C and D is a Higher Low (HL) which leads, each one, to a Higher High (HH). As we know, in order to draw an up Trendline, we need first a HH, and later a HL; also, considering that sometimes we might see several potential Trendlines, the valid TL ones are those from the most recent higher high or lower low (according to what Damion has taught us in the thread). Finally, a TL is not valid when price decides not to respect it, by showing "random" bars and swings around them.
In the case above, all the three TL's are crossing each other; according to what it is on this thread, this kind of situation leads to confusion, so we should stay with one.
Thus, having in consideration the above rules, which TL, if any, is the valid one? We need this in order to know where we should wait candleticks patterns to go long/short.
I am opinion, we got this:
- Red TL: Although it considers C and D, which were the beginning of the last higher highs, it had some tiny bars around it, which seemed to broke it, followed by a bullish bar, and after that price "seemed" to boune in it.... this is all too much zig zag for my taste, so I consider that price invalidated it.
- Yellow TL: In D1, is the only TL that can be seen (the only one from the three I am showing), so for some eyes this might be the most obvious, but in 4H it takes in consideration A, which was a swing that was formed a long time ago. So, according to the rules we follow in the thread, it should not be valid.
- Blue TL: When it was broken, price did that with strength, and it has been the TL that price has most respected (if we consider that it has been on its backside for several days). The only problem is that it does not consider the last two recent higher high (the swings that led to those points, began in C and D). Then, consider we still do not know that price will respect its backside, I believe that I should had discarded it before the Red TL.
Thus, in summary, and in my opinion, the Red TL can be forgotten because price zigzagged around it); Yellow TL is not valid because it consider very old swings; and Blue TL can be discarded as it does not consider the last "higher high swings" (a pity, because it is beautifull how price has respected its backside).
I'm sure that many might think that I 'm very square-minded with the arguments I have just written, but the reason of this post is to try to have some lights in the matter. Also, I am aware that if I have doubts, I should not take the trades, but if I got this case clear, it will for sure remind me what is important when looking for TL's. Can anyone of the most experienced guys in this thread help me to know which one is the valid one?
Although I am thinking to do several visual backtests in order to know which TL's, in cases where they cross each other, are the most likely to be respected, other opinions will certainly help me not to go crazy in those tests, LOL!
Thanks a lot!
Take a look to the following chart:
As you can see, I have drawn three lines which seems, at first sight, trendlines. My problem is that they are not, though, all valid.
Every A,B,C and D is a Higher Low (HL) which leads, each one, to a Higher High (HH). As we know, in order to draw an up Trendline, we need first a HH, and later a HL; also, considering that sometimes we might see several potential Trendlines, the valid TL ones are those from the most recent higher high or lower low (according to what Damion has taught us in the thread). Finally, a TL is not valid when price decides not to respect it, by showing "random" bars and swings around them.
In the case above, all the three TL's are crossing each other; according to what it is on this thread, this kind of situation leads to confusion, so we should stay with one.
Thus, having in consideration the above rules, which TL, if any, is the valid one? We need this in order to know where we should wait candleticks patterns to go long/short.
I am opinion, we got this:
- Red TL: Although it considers C and D, which were the beginning of the last higher highs, it had some tiny bars around it, which seemed to broke it, followed by a bullish bar, and after that price "seemed" to boune in it.... this is all too much zig zag for my taste, so I consider that price invalidated it.
- Yellow TL: In D1, is the only TL that can be seen (the only one from the three I am showing), so for some eyes this might be the most obvious, but in 4H it takes in consideration A, which was a swing that was formed a long time ago. So, according to the rules we follow in the thread, it should not be valid.
- Blue TL: When it was broken, price did that with strength, and it has been the TL that price has most respected (if we consider that it has been on its backside for several days). The only problem is that it does not consider the last two recent higher high (the swings that led to those points, began in C and D). Then, consider we still do not know that price will respect its backside, I believe that I should had discarded it before the Red TL.
Thus, in summary, and in my opinion, the Red TL can be forgotten because price zigzagged around it); Yellow TL is not valid because it consider very old swings; and Blue TL can be discarded as it does not consider the last "higher high swings" (a pity, because it is beautifull how price has respected its backside).
I'm sure that many might think that I 'm very square-minded with the arguments I have just written, but the reason of this post is to try to have some lights in the matter. Also, I am aware that if I have doubts, I should not take the trades, but if I got this case clear, it will for sure remind me what is important when looking for TL's. Can anyone of the most experienced guys in this thread help me to know which one is the valid one?
Although I am thinking to do several visual backtests in order to know which TL's, in cases where they cross each other, are the most likely to be respected, other opinions will certainly help me not to go crazy in those tests, LOL!
Thanks a lot!