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trade the reject of Sup/dem line

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  • First Post: Oct 4, 2006 9:01pm Oct 4, 2006 9:01pm
Has anyone ever traded the reject of the supply or demand line?

Obviously stops would go on the other side of it and PP would be near the opposing line.

It would have to be on the third touch of the sup/dem line, since the last two formed it.

I noticed it looks like a potentially profitable option while scanning for Mouteki trades.

After all Mouteki is a counter trend trade and a sup/dem reject would be a trend trade. They tend have great potential.

Any thoughts??
Hi Fibofan,

Please post a chart as an example.

regards,
HK
Quoting FiboFan
Has anyone ever traded the reject of the supply or demand line?

Obviously stops would go on the other side of it and PP would be near the opposing line.

It would have to be on the third touch of the sup/dem line, since the last two formed it.

I noticed it looks like a potentially profitable option while scanning for Mouteki trades.

After all Mouteki is a counter trend trade and a sup/dem reject would be a trend trade. They tend have great potential.

Any thoughts??
Not quite understanding what you mean by "reject" trade. Do you mean take the opposite trade on a supply/demand line? A break of demand line - go short? and a break of supply - go long?

Then you could quote "NOT MOUTEKI!".............instead of "GOT MOUTEKI?"
Quoting Nipper
Not quite understanding what you mean by "reject" trade. Do you mean take the opposite trade on a supply/demand line? A break of demand line - go short? and a break of supply - go long?

Then you could quote "NOT MOUTEKI!".............instead of "GOT MOUTEKI?"
NOT MOUTEKI! Haha that's funny!
Quoting Nipper
Not quite understanding what you mean by "reject" trade. Do you mean take the opposite trade on a supply/demand line? A break of demand line - go short? and a break of supply - go long?

Then you could quote "NOT MOUTEKI!".............instead of "GOT MOUTEKI?"
Hi Nipper,

I think what FiboFan is saying is that if we confirm the breakout is false, we can fade the move in the opposite direction. I believe Demark says the same thing, both in his book, and in the article in the September 2006 issue of Currency Trader magazine.
Quoting Horace Kent
Hi Nipper,

I think what FiboFan is saying is that if we confirm the breakout is false, we can fade the move in the opposite direction. I believe Demark says the same thing, both in his book, and in the article in the September 2006 issue of Currency Trader magazine.
Can you tell me the name of the book, I haven't read it. DeMark On Day Trading Options or maybe The New Science of Technical Analysis ?
Hi Wicker,

Sure, it's called "The New Science of Technical Analysis" by Tom Demark, 1994.

http://www.amazon.com/New-Science-Te...e=UTF8&s=books

best,
HK
Thanks HK.

Wicker
Quoting FiboFan
Has anyone ever traded the reject of the supply or demand line?

Obviously stops would go on the other side of it and PP would be near the opposing line.

It would have to be on the third touch of the sup/dem line, since the last two formed it.

I noticed it looks like a potentially profitable option while scanning for Mouteki trades.

After all Mouteki is a counter trend trade and a sup/dem reject would be a trend trade. They tend have great potential.

Any thoughts??
Yes I agree with you, this is something with potential!
I am JuMPeR.
Quoting Horace Kent
Hi Nipper,

I think what FiboFan is saying is that if we confirm the breakout is false, we can fade the move in the opposite direction. I believe Demark says the same thing, both in his book, and in the article in the September 2006 issue of Currency Trader magazine.
OK, now I got it.........


Thanks Horace for clarification.
Quoting FiboFan
Has anyone ever traded the reject of the supply or demand line?

Obviously stops would go on the other side of it and PP would be near the opposing line.

It would have to be on the third touch of the sup/dem line, since the last two formed it.

I noticed it looks like a potentially profitable option while scanning for Mouteki trades.

After all Mouteki is a counter trend trade and a sup/dem reject would be a trend trade. They tend have great potential.

Any thoughts??
Sorry Fibofan, wasn't poking fun.......just didn't quite understand, but now it's completely clear. I think it is a very good observation. This also makes sense in that it gives a clear picture as to which "Mouteki Lines" are invalid (or "rejects" if one looks at it that way). It may be a good location for position sizing "adding a lot" to a prior Mouteki entry. A good example is the GBPUSD. If for instance, lets say we were already long from the first Mouteki Supply line break Monday morning. We have our 10 pips already locked in (if we didn't yet close to max PP). On the retracement it supported at 1.8785 close to the third DL point. Later this would became a new DL point, but we didn't know it at the time. It was also close to the 38% fibo level at 1.8800. So, it makes sense that this third DL reject could be a good support level for long entry.

Nipper
I guess I didn't define what I meant corectly. Fading the sup/dem line would be a good way to describe it. Horice got what I was saying.
It would be an interesting study to see how many times the trend line was rejected versus broken on the third touch and how far the price action moved.
Although I woke up this morning only to see most of the sup/dem lines broken when I was looking for rejects. I guess that's the way it goes...
An example of how former TL come back into play / lend to trading....

Raczekfx has a very neat trading style based around this, you can see it on some of his posts in the bagovino thread or when that drop in USDJPY happened a while ago around 116.60 or something...

I'll try to illustrate with EJ as I just saw the bounce from the top happened on a former TL
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Trust price. Know yourself.
Recent cable example
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Trust price. Know yourself.
That's what I'm talking about

Especially that Yen chart if those arrows are position entry's that's my kind of trading!!
Neat concept, i think i might try it out, thanks for sharing!
Egyptian and proud of it!
  •  itguy
  • | Joined Sep 2006 | Status: 110..220....Whatever it takes | 39 Posts
So would your profit target be the opposite line?

Like if the supply rejected would the demand line then become your profit target?
That would be the basic idea. I have not backtested this idea just noticed the potential when looking for trend line breaks.
I think trading the reject of a trend line would make much more sense if it was in the direction of the trend.

In other words if a given pair is moving long in an over all trend and it drops short to a trend line and is rejected trading it long would be the way to go. Instead of going short at the upper trend line in the same market.
I think you could use relativley tight stops as well since a hard turn around has been determined.
Check USD-JPY of this past week. I've trade it twice successfully in between the trend line.
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Harmonics and Pitchfork using korHarmonics from TradingArsenal
I guess this is other wise know as swing trading. Which I think is the second most profitable Forex style of trading.
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