DislikedNote how today's profile is looking like a 'P' - long liquidation break, with a poor high and good support around 4440. It looks like locals are taking it down to support, not other TF...Ignored
Im not sure if it was a mistype of a “P” when you meant a”b” or visa versa. But either way imo ther was niether a “short covering rally” or “long liquidation break”. I went into this subject before. I posted a couple of cheat sheets per info from “Mind over Markets”. http://www.forexfactory.com/showthre...16#post4679016
as per "mind over markets" page 131:
"Summary of Short Covering and Long Liquidation”
A Profile beginning to develop the shape of a "P" or a "b" does not infer that short covering or long liquidation is occurring. Remember, all facts are surrounded by other circumstances. Properly evaluating short covering or long liquidation patterns requires that the trader make careful note of the underlying conditions prevailing in the market and the requisite characteristics that signify each pattern. The main considerations are: (1) the recent market direction compared to the formation, (2) the open—near the low for a short covering and near the high for long liquidation, (3) the subsequent non-continuation after a drive away from the open, and gradually retracing auctions as the short-term buying or selling releases temporary"
So imo/interpretation of “Mind over Markets” pages 126-131 , So if it looks like a P or b ask these questions first. you need to answer yes to all the prerequisites, before you can identify it as “Short covering rally” or a “Long liquidation break”
Short covering check list:
Recent market direction= Short covering often follows a day (or several days) of strong selling
activity. As the market moves farther out of balance, participants simply become "too short”. So if your too short it implies that the market has been in a Downtrend. Has the market been in a down trend? The first prerequisite is that there needs to be a downtrend/Down day.
The open= where did the market? the open—near the low for a short covering rally. Did we open on the lows?
The subsequent non-continuation after a drive away from the open= Did we fail to make higher prices after the initial drive and do we have gradually retracing auctions ?
Long liquidation check list:
Recent market direction= Long liquidation often follows a day (or several days) of strong Buying
activity. As the market moves farther out of balance, participants simply become "too Long”. So if your too long it implies that the market has been in a Uptrend. Has the market been in a up trend? The first prerequisite is that there needs to be a uptrend.
The open= where did the market? the open—near the high for Long liquidation. Did we open on the highs?
The subsequent non-continuation after a drive away from the open= Did we fail to make lower prices after the initial drive and do we have gradually retracing auctions ?
I hope this helps friend……….
Markets are not efficient, rather they are effective - Jones
have a nice trip
, i want to add an extra IB on MP indicator (like your chart) but i always fail on coding MP. Thank you in advance.
