(binned per thread starter's request) Market bottom rotation trad

TAHO could be nice play if supply is taken out.

RDC 14,64 longed. Rotation above all area supply.

AUDUSD nice rotation on symmetric structure, placed limit order but no fill without pullback.

Hi janpec1000!
That's high quality charting and trading. Good job. Reminds me on what i was doing 5 years ago.
Did you try non linear charts like range or renko? Imo they are much cleaner than the noisy time based chart.

TRD

Hey, yeh well in charting you have to focus on quallity symmetric patterns otherwise there is no statistic relevance in price performance, this can be easily proven by historical analysis.
The key to price analysis of structures is to be exact, and to not oversimplify this is the main reason why i would not suggest using renko or range charts at all, nor the bar charts. You need to have complex information baked in price movements and that can only be achieved with japanese candlesticks, there is a line of how much data you want in it, if its too much and too complex youll get lost in it, if its too less youll get oversimplification and thus very poor performance, candlesticks are a great balance however...it does require a lot of invested time in charting to get used to the complexity of information. That is why i never suggest to go easy route of using the renko or data-cut method, but rather to go candlestick but invest the time to get used to read the data.
Candlestick data will tell you crutial information that renko wont such as the strenght of change in volatility in each leg, and the strenght at which each key area of supply/demand has been taken out, one must not simplify such important informations, those are crutial for any technical trader no matter what you trade.
It for sure requires many hours in front of charts to getting used to grasp lot of data in each chart and make sense of the significant change, but there is just no easy way to make money in market so anyone has to realize that, consistency comes with price, and that price is time.
When it comes to price structural trading its very important to note that its not just about highs and lows information and following the extremes, there is a lot of needed information that also comes from simple volatility flow inside each leg and at the key price levels. Also if you trade lower liquid assets renko will be pretty much useless.
Most beginners will shy away from complexity thus it shouldnt come by surprise that not many will follow such thread, its natural to focus on simple indicators as a starter, but its important to note that in simplicity there is very weak statistical relevance, and the exactness comes only from complexity.

Small watchlist for Monday, if markets open gap up there might be play on EXPE or MDT. EXPE as priority.

Hi,
thank you for your response. I see you are not big fan of renko or range bars, because you probably havent understood how they work and can be traded. I personally know few hedge funds that train all their traders to use them. Also private successful traders.
All comes from the market microstructure. As you probably know, market moves only up and down (ladder based) and not sideways (time based charts). It moves only when there are enough orders to move it to the next price level. If there aren't, price stops. In time based charts price continues to move sideways. Range bars or candles represent what you see on the ladder, but with history. So you can extract your pattern.



That is half pip range candles chart. See what is happening inside every 1 minute (red vertical lines). The one minute gives me OHLC which i dont need and cant use as it is created aritificially and not coming from market nature. And range bar tells me where exactly and when the momentum came in. Many times that will be inside a 1min candle hidden inside its body.
Renko on the other hand has different features, what other charts do not have, but i wont go in detail because will destroy your thread Just to mention that it is very easy to trade for me and i trade every leg (up, down, up, down) I dont wait for specific pattern as renko cannot show many of them, which is what i like.
Why you call using bar charts over candles oversimplifying? Whats the difference for you? Both use same data (OHLC).

Did you try applying your pattern on tick candles? I am asking because i participate in private traders group run by trader called lakai. Most of them look for that pattern you presented here but they are convinced that tick candles are much better for that.

Hey, yes i did use tick charts to trade bellow 1M on FX especially on liquid events like FOMCs and employment data releases, but moved away since its not enough frequency of entries. There is a slight advantage on tick candles over candlesticks but not sure if its enough to consider it as replacement, besides that the indicator that i used for it was heavily CPU consuming.
Indeed its true that renko only shows movement when there is order flow however i would still stand by the fact that candlesticks will show more detailed picture of what has been happening inside structure, which is hard to tell by renko since all movements are non time sensitive, one does not get per leg specific information. One of most important aspects in trading is factor of relativity, and renko goes the oposite way of achieving that. The extremes and key levels are important, but also the relativity of movements to their previous neighbours is also just as important. For example you will not be able to tell if there was parabolic move on renko chart since bars are not time sensitive, info like that is easy to spot from japanese candlesticks.
On renko charts you will not be able to tell if there was liquidation event like clearout or squeeze happening, simply becouse you need structure to be time dependent relative to previous movement to get such information, this can often be key information to spot bottoming structures, the strongest bottoms usually come from such events.

There are often cases of very clean symmetric bottoms where market moves are very similar inside structure and in such cases renko bars will do just as good if not better job than candlesticks. One advantage of renko could be trading bellow M1 and having clean structures displayed where for example tick charts fall behind a bit displaying a lot more dirt in between. But the problem in FX markets is that for such trading you only get few oportunities each month becouse you need liquidity otherwise the commissions and spreads will eat too much into profit margins.
I traded pretty much every data/candle type avalible for charting and find candlesticks to be most flexible and detailed (ticks are even more but have some drawbacks and not enough advantages in my opinion).

Bellow the example ALLY for parabolic crash and EU for clearout.

EA tracking demand for possible short if takeout happens, LH printed lets see if bears can take it out.




On crypto side tracking Referum ICO for Feb 8th, signed for waitlist hopefully being accepted, 75k registered investors in Telegram, possibly heavy % increase even with extended supply of coins. Additionally tracking Coinstarter ICO, however not investing in this one since there was no interview with team and CEO has no public expousre whatsoever, if project is legit it could baloon heavily though.

Hi Janpec1000,

Thanks for the info you are sharing with us. Very solid stuff!

Best regards,
Dragos

EA takeout and immediate flip, sold for loss.

Rules of entry and pattern qualifications for bottom rotation.

Some examples and rules how to define the potential setup.Following the structural setups with lower highs or even highs trough the structure is preffered to ensure that supply and SLs are intact. If structure forms strong higher high there has to be liquidation following it with clearout of all lows in order to be quallified for entry setup. The most straightforward way is to just follow structures with even highs (highs/extremes formed around the same price) if one is confused.
Usually heavy bottoms are formed around two types of down trends (in 80% of cases), one is on down trend with heavy almost parabolic drop and the second is around very slow down trends where price is consistently pushing down, forming low and pushing up forming slow down chopping trend, but the key is that all highs are intact and no supply has been squeezed out yet. Intact highs are also a pattern overlap information since if its clean many traders will follow the same key significant levels thus increasing the strenght of such level and reactions around it.

Rules of entry and pattern qualifications for short squeeze

Short squeezes happen on markets every day, every hour across many assets, however the key for squeeze trading is to really focus on the bomb, the structural formation and fundamental basis of asset that supports the likeliness of very strong move, rather than just soft squeeze. On FX large short squeezes are rather very rare pattern, thus its not worth spending time on those, rather focus is on equities.

There are few simple rules that define a likely stock for squeeze:
-low float (low number of exposed stocks, for example 1 million outstanding shares)
-low priced stocks (0-7 USD)
-slow droping trend with a lot of condensed supply
-strong overall fundamental agreement on shorting the equity (eg every financial advisor on TV screaming to short the company)
-strong outstanding short interest (can be found on many sites. Means many traders are borrowing stocks to short in far larger quantities than those that are willing to long it).
-ignition event , news (often not needed, but it does help, especially for trader to prepeare ahead if news are pre-market open)

Generally the above rules are structured in a way that it can take trader a lot of time to prepare and research to find potential stock, therefore i usually tend to go with easier method which is usually aligned with relevance of above:
-focus on stock that is low priced
-ensure that there is condensed supply, set alert above it
If alert is triggered one then quickly takes a search if such equity fits the potential for squeeze by following the rules above, if so then initial target that trader expects for profits should be increased much more. Mind that structurally pattern could be similar on its bottom phase to bottom rotation pattern, however its the squeeze potential that is the key to split it into larger potential move.

Short squeeze can be traded both ways, long on initial pre-bake move and short on the top side. Playing it on long side is far better in my view, since one doesnt have to worry about 2,5 rule (for US equities), and the risk/reward is outperformed. One thing to note is that squeeze often creates liquidity hole and the spreads will in most cases jump quite high, rendering initial position in larger than expected DD, thats why especially for low floating equities its better to downscale position size.

Rules for entry and pattern qualifications for parabolic crash or parabolic rally

Parabolic move is not just any strong move up or down, there is clear difference between how price moves related to time or with other words how volatility is expanding in the leg of move. In parabolic move price will start to move slowly from base, and then in each step it will start making stronger and stronger one sided moves, where candles will be twice as large as the ones before them. A move will end with heavy extended candle and a liquidiation event, causing very quick turn of price in oposite direction and a short term bottom bake. Key is to be very patient with parabolic trades, trader has to ensure that move really is overextended where the last printed candle has to be clearly the heaviest candle in leg, and that the bounce in oposite direction has already began, those steps are absolutely curtial in order to prevent trader from jumping too early into parabolic trade.

Quick checklist:
-a leg has 3 phases where each phase of move has clearly stronger candles than the phase before it
-a leg has at the moment printed one significant end tail candle
-a bounce has began where after that singificant candle was printed price turned in oposite direction in swift move


Prefered method is to scale in position with 2-3 cuts (30-40% of total size per entry), so that in case one is early you still add another piece of position later. If its done in even more increments its even better, however on most equity brokers that can be problem if one is changed 5-10 USD of commissions per transaction it can easily ramp to 30 or 40 USD on total position commission costs, on FX however there is no such problem on most brokers, cryptoccurency are somewhat in between.

EU tracking for long.

Rules of entry and pattern qualifications for continuation squeeze pattern (flag type pattern)

When it comes to continuation patterns there are 3 steps that are a must to follow in order to execute them with consistency and positive edge. First is to cut loses very quickly, if initial takeout area has no base of price and micro shelf fails that should lead to exit of trade in quick loss. Squeeze structure trading should have heavily weighted RR towards win side, meaning at least 1:3 RR or better, which can only be achieved by cutting loss quickly, but also with being patient on profit side. Trader should aim for profits that reflect the size of structure in terms of price distance (distance between largest high/low should reflect TP distance) Second rule is that trader has to follow only precise clean symmetric structure and trendlines/line should always be drawn precisely from extremes and never drawn on avarage. If highs/lows inside structure disconnect to overall drawn lines, a trader should not consider structure worthy of a trade. Third step is that structure should be aligned with trend (eg trading bullish structure along bull trend), prefered with a strong very obvious trend, those continuation structures statistically outperform the random taken ones.

Its important to take a note what price is doing, if there are a behaviour changes in legs righ on the breakout area or after it that should help to refine whether a structure is worthy of entry. Structure should have at least 3 highs and lows in it and all of which follow the same trendline/line. The longer the structure and the more consolidated, the bigger potential for move, simply a larger condense of positions.

Clean example from BBBY.

EU micro bottom baked.

LEDS adding to m15 watchlist possible long play and soft squeeze potential.

CHD

EXPE cant believe i missed that one, alert got triggered but without sound. Clearout on market open with strong takeout, A quality pattern.