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clarifications

  • #1
  • First Post: Nov 27, 2007 7:52pm Nov 27, 2007 7:52pm
In a Trend Channel, if the price touches the upper trend line but doesn't break it, why is it that it would be a good selling area and not good for buyers?

Just want some clarifications..

Thanks!
  • #2
  • Nov 27, 2007 8:54pm Nov 27, 2007 8:54pm
Quoting ladytrader
In a Trend Channel, if the price touches the upper trend line but doesn't break it, why is it that it would be a good selling area and not good for buyers?

Just want some clarifications..

Thanks!
Not Always 100% Cast In Concrete, BUT, The Channel has already defined the SPEED at which the Price can Move.

IF there is insufficient commitment from Traders to push it beyond those Bounds, It is normally accepted that the Bounds will remain Intact.
hth.
  • #3
  • Nov 27, 2007 9:48pm Nov 27, 2007 9:48pm
Quoting ladytrader
In a Trend Channel, if the price touches the upper trend line but doesn't break it, why is it that it would be a good selling area and not good for buyers?

Just want some clarifications..

Thanks!
There's no guarantee that price will fall very far after touching the upper trend line in an upward trend, especially in a steep sloping trend channel. In some cases price will continue to creep up the trend line or just move sideways until it hits the lower trend line.

Time frame is another consideration. For instance, Daily or weekly charts don't show the battles that often occur at key areas like trend lines, especially if there's confluence of other types of support and resistance (fibs, pivots). Many traders place stops just beyond these key areas and that makes for potential targets by market makers (bucketeers). IMHO
  • #4
  • Nov 28, 2007 6:16am Nov 28, 2007 6:16am
So since there's no guarantee, does it mean that there would be a
chance that it would still be a good area for bulls?
  • #5
  • Nov 28, 2007 8:32am Nov 28, 2007 8:32am
Quoting ladytrader
So since there's no guarantee, does it mean that there would be a
chance that it would still be a good area for bulls?
If you wanted to be long, when it touches the upper line in an upsloping channel is the worst place to get long. You want to get long on a retracement. For example, if price hits upper line, breaks through, then comes back down to test the broken line as support, and it seems to hold, then you get long. Pitchforks are great for this tactic.
  • #6
  • Nov 28, 2007 9:57am Nov 28, 2007 9:57am
Quoting Bemac
Not Always 100% Cast In Concrete, BUT, The Channel has already defined the SPEED at which the Price can Move.

IF there is insufficient commitment from Traders to push it beyond those Bounds, It is normally accepted that the Bounds will remain Intact.
hth.

Excellent point made.
  • #7
  • Nov 28, 2007 10:57am Nov 28, 2007 10:57am
Quoting Bemac
Not Always 100% Cast In Concrete, BUT, The Channel has already defined the SPEED at which the Price can Move.

IF there is insufficient commitment from Traders to push it beyond those Bounds, It is normally accepted that the Bounds will remain Intact.
hth.
Quoting WHTenn
Excellent point made.
Yes, but vague.
Excellent point about the excellent point too, but again, vague.

My point restated is that beginners should wait for confirmation of a trend change before jumping into a position. Another point that was understated is that trading against the trend of a trend channel is risky and the reward is not as often as desirable as if you waited for a retracement to enter with the major trend.

Although this appeared to be a simple question, the answer like so many things in treading is not clear cut. My recommendation is to base any trading decision on a full and detailed examination of many factors and not just trade because price 'appears' to get rejected from a trend line.
  • #8
  • Last Post: Nov 28, 2007 8:32pm Nov 28, 2007 8:32pm
Well, I am a newbie and i undergo some lessons and right after each lesson, i took a quiz that made by them and my question was based from their question.. and their answer was it will be good area for selling, so i got confused that's why i decided to ask about this here in forum and thank you guys because you enlightened my mind and clarified it.

I really appreciated all your help.. Thanks a lot!
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