(binned per thread starter’s request) Abe's Median Line Thread

It does help, Thanks. What's your take on warning lines? To me I haven't seen much edge in them because you never know which one it's most likely to pivot at, blows through some, pivots at another. Andrews didn't really provide any insight as to how this benefits trading. If it does pivot then there is no clear profit target other than maybe the next closest warning line. I have seen some success in waiting for a WL to hold, and then a new ML to form on a lower time frame from that point, and trading that.

It's good to see you posting and asking some very good questions.

An important concept to grasp is that MLs and any "lines" related to them are not meant to have an edge of some kind. They are meant to be used as tools to benefit our understanding of what price is doing. So for example I never expect a particular "line" whether it be a warning line or anything else to perform in a certain way. It really is just a marker where I will observe price's behavior. Given that I've put up a chart with one way that a warning line might be helpful.

So here is a daily USDCAD chart that has been marching upwards with pullbacks on its way up. There are different types of pullbacks and one of them is an A, B, C pull back where after C price might continue the previous trend. This is depicted by the red ABC pattern. Notice the blue ML with the warning line at C. This is one way a warning line may be helpful. If price continues to descend past the warning line then it is likely the ABC pullback will fail.

Even if you don't use ABC pullbacks in this case the warning line may just be used as your last potential attempt to get long or if it blows past it then you may start considering shorts.

This is an example of how I do not trade but I'm putting this up anyway to illustrate a little about warning lines. I rarely use them and they are not a routine part of my trading.

Once a warning line has been breached then IMHO it's time to consider a new ML rather than looking for "frequency" at more and more distant warning lines. The PA at the warning line can clue the trader into a trade and in fact it does in this case and at that point it does demand drawing a new ML. The new ML drawn shows this and even the new ML has a warning line and furthermore a sliding parallel!

The warning line is for traders who feel that a pull back in a "trend" is just an expansion and that price will resume the previous trend. But one has to be realistic. Once a warning busts then it's time to consider a new ML rather than hold on to the old ML and keep hoping more warning lines will be more revealing.

Finally, if a trader is using this much data or in other words zooming out to the point that the trader cannot see clearly bar/candle level PA then you really have no choice but to focus on trading the lines...and this is a mistake.

A NOTE ABOUT LEARNING

then

WHAT TO DO WHEN PRICE REACHES

the

CENTER MEDIAN LINE

Before getting into the chart shown I want to say that I know there are different ways to trade median lines and I will respect those differences. But it doesn't mean that I won't challenge the underlying assumptions especially if those assumptions are erroneous, poorly based in median line theory or just plain poorly thought-out. In addition if one's use of median lines will have deleterious affects on other's learning and trading then I will deal with it aggressively.

Most of the stuff that one will find if they search for methods to trade median lines is really a bunch of hogwash. Unfortunately so is much of what you'll find right here at FF. Despite this one can find an excellent education in using median lines but it is not free.

I invite everyone to post and share but more importantly I invite mostly for other's to learn. If you are a seasoned trader using median lines and can reasonably demonstrate that through charts, chart explanation and meaningful dialogue then this is the place for you. Now on to the chart.

This is a current EURUSD20min chart.
A standard ML is drawn and price has reached the center ML. Now the question is what next?

Since I have in certain way promoted the idea that one can trade from pivot C to the ML (and you can) in some instances, now we can look at what to do when price does reach the median line. It is valuable information when this happens.

Andrews says that once price reaches the center ML it will zoom through and retest or be rejected and reverse.

At the moment price hasn't really done anything as it is really just hovering at the center ML. So what do we do? Simple....wait.

PRICE ACTION

BEAR PA EFFORT TAKEN OUT

BY

BULL PA EFFORT

This is EURUSD 20 min. Current chart.
Price reached the center ML but look how is did so. Let's zoom in and unpack that violent PA.


The red arrow points at a WRB (wide range bar) bearish outside bar. After it occurred price continued down for 2 bars then we get another huge bar (pink arrow) to the upside. It's not as big as the WRB outside bar previously but price continues upwards and results in the bearish effort of the bearish WRB outside bar (pink arrow) being taken out. Now price has drifted back to the origin of the bar highlighted by the pink arrow. In essence we have aggressive bearish PA taken out by even more aggressive bullish PA. Price is testing the origin of the bullish PA so we'll see what happens.

This mornings trade on the NQ. 888 Tick Chart. Waited until after NY Open to get in. Took entry after price returned to median line. Took profit at lower ML. Now reentered Long at 7971. Chart to come.

short dj30 1min

exiting (https://www.forexfactory.com/)

Nice charts traders!

Here is that long trade on the NQ I entered this morning at 7971 and exited at ML at 8006. So here I traded the formation of the base and then the ML. Crazy!

Rock and Roll Brotha!

Looks interesting but I'll wait until after Fed rate decision.

Interesting note on the Daily Nasdaq- Never hit ML and now at critical juncture.

Wonder what a ML would look drawn off the prior swing with Pivot A at the Dec 6 high, B at the Dec 28 low and C at the May 7 high?

Ah yes, very different.