What is a good way to tell if a trend still has momentum? | Page 3 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

How to tell if the Bull/Bear trend is over, without an indicator 106 replies

Foung a good free system - may I tell 6 replies

Wasabiboys MT4Stats Good I think, tell me your thoughts please 3 replies

How to tell if Impact is Good or Bad? 5 replies

Can anyone tell me a good indicator for 5m charts? 11 replies

Attachments: What is a good way to tell if a trend still has momentum?
Exit Attachments

What is a good way to tell if a trend still has momentum?

  • #41
  • Aug 7, 2014 12:00am Aug 7, 2014 12:00am
Quoting Chicky
{quote} I respect everybody's opinion on this subject and hope my opinion wont get a different treatment. My very limited knowledge of these market tells me there are so many factors affecting price and movement of any currency pair that it is almost impossible to know if trend will continue, exhaust and stay, or it will reverse. There are several indicators including chart reading, order flow, etc. but every one of these indicators have their own limitations. For over seven years, I spent more time flying than on the ground. Every single time I...
Yup, agreed. I think the best thing to do is.. get it while the getting's good.. haha Ride it till you arrive at a good stop.. or as some say, ride the waves. We don't know where anything will go. All we can do is be in the now and read what we see and do what the currencies tell us.
Forex trading in my opinion is something that requires to master oneself than anything. Oh and, most importantly, we have to be able to have fun and enjoy the process.
Focus, Patience, Determination & Order in chaos
  • #42
  • Aug 7, 2014 12:05am Aug 7, 2014 12:05am
Quoting Hyperion
{quote} I think there would be plenty of black box trend following hedge funds that would disagree with you.I knew one who's main entry point was to buy at places where he knew hedgers would be on the otherside of his trade (he would buy new highs, they would be hedging there) and another who's method of entry was to buy where sellers should be stopping out (but probably weren't) or vice versa.

I can appreciate your view, however there is 1 underlying factor you failed to address .. the market hasn't changed in 100 years. The only thing that's changed is the speed of the computers used to grab swap before the news comes out.
  • #43
  • Aug 7, 2014 12:15am Aug 7, 2014 12:15am
Cool, people selling high and stopping out higher (buying) are the fuel for an up-trend, long may they stick around.
  • #44
  • Aug 7, 2014 12:54am Aug 7, 2014 12:54am
Trend following (say, buying 52wk highs) is indeed one of the most quantifiably profitable trading there is. Bank of America has no edge over you if you're a global macro trader placing market maker styled trades like buying near lows after giant W with a wonky right V's (buy limit @ the whipsaw break low). Look at USDJPY daily (as of 2014/08/07). I went long @ 101.50 July 24, and closed at 103.00, stop 100.50 (increasing as price went my way), last month. Some announcement was in there so slight luck but it was macro. Different W. Maybe I'll trend follow long if we break 103.20, stop 101, target 111.00 (rate hike Q3-2015, at least a discount window hike).

My fav momentum indicator is 50,3 Bollingers, and 500,3 Bollingers (color these 500s red). When GBPAUD was in strong uptrend some time ago, you could go long a purposeful thrust on M30 through the upper 50,3 BB, and then hold during its trendiness in that TF through the red upper error bounds (500,3) until a shooting star when you'd close. Sometimes upper 500 BB would be hit then price may make a new high but not hit the upper BB (anyone familiar with volatility know the future arc of bands go really wide, so new extreme touches of outer bands is a good momentum burden of proof), later after an entrenched topping formation. You could tell the non-purposeful fizzle or fading or shorting or profit taking at times.

http://en.wikipedia.org/wiki/68%E2%8...80%9399.7_rule
  • #45
  • Aug 7, 2014 2:00am Aug 7, 2014 2:00am
I am able to see easily if any pair is up-trending ranging or down-trading.
My system allows this visually to see in seconds

WR% RSI (8) 50 level is neutral however if going up its confirmation of trend continuing.Breaking 50 south continuation of down trend.
With quick glance I can tell RSI WR% hit 50 and pointing up.Trend went correction but most likely will go up.This entire analyses is precessed visually in seconds.
No need to over think it.
Attached Image (click to enlarge)
Click to Enlarge Name: USDJPY.Daily.png Size: 55 KB
In trading, you have to be defensive and aggressive at the same time
  • #46
  • Aug 7, 2014 7:34am Aug 7, 2014 7:34am
Quoting saver0
{quote} Really awesome explanation. Makes perfect sense.
Thank you very much!!

Quoting saver0
{quote} I'm sure it would help a lot of us visual folks if you could show some examples from a chart so we get exactly what you mean I'm pretty sure I get it but seeing it visually would be awesome!...
Attached is an annotated chart of the current DOW continuous contract (futures) The only indicator is a volume indicator...one I'm sure many here are familiar with..."Better Volume"

Things to note:

  1. Just prior to each down turn, volume dropped off significantly, even as it accelerated to new highs
  2. most of the down turns were preceeded by a period of ranging...the depth of the range seemed to say whether there was an acceleration coming or not...ie...deeper range, more volatility, grater likelihood of accelerated top; shallow range = bulls just can't get it up
  3. worthy of note is the fact that almost every time price made a new high, volume was lower...in some cases to almost nothing.
  4. At the bottom of each correction, volume intensified as the bulls stepped back in.

I highly recommend a book called "time compression trading" by Jason Alan Jankowsky. This market is the very picture of what he describes...it is "time compressed" and will soon move lower...significantly.

I hope this will help in some way. For me most of this is just academic...what really matters is you ability to see this in "real time" and deduce the order flow using price vs time vs volume.

Attached Image (click to enlarge)
Click to Enlarge Name: DOW.PNG Size: 80 KB
  • #47
  • Aug 7, 2014 2:01pm Aug 7, 2014 2:01pm
Quoting gspajon
{quote} This depends largely on your method for determining that imbalance. In Forex you can try to use futures volume. You can also look at the behavior of price and how that effects standard indicators like MACD or RSI. The crux of the matter is this: In my view, there are two ways a market "runs out of steam". Both manifest the same underlying structure but reveal themselves in different ways. The the example, I will use a bullsih scenario but the opposite is true for bearish as well. Scenario #1: Assuming a bullish trend...you must also assume...
Great post gspajon. A simple explanation of one of the many repeating patterns in market data.
  • #48
  • Aug 7, 2014 4:43pm Aug 7, 2014 4:43pm
Quoting COGSx86
VOLUME Add OBV, it helps to add confirmation on those levels of S&R. there is also OBV S&R, they help to show when reversal are going to happen was as well as breaks of S&R, when divergence/convergence happens, {image}
Thanks for the response, I've been meaning to learn a bit more about volume. If you don't mind me asking, what is the cause of a S/R level on an indicator, such as OBV? Is there a reason why volume may have difficulty breaching a certain level?

Quoting Visitor
The only way to observe what you all are looking for is by your own eyes. You don't need futures data or an indicator to tell you what you can see on your chart. Divergence is useless if the market is trending strongly. The price moves in waves. It is uptrend if it makes higher highs with higher lows. It is downtrend if it makes lower lows with lower highs. The steeper the movement with shallower corrections, the stronger the trend. You don't have to know anything else. Everything else is just noise, distraction. Think it over. Why do you need a tool to rely on? It has psychological reason. You don't think that you can make a good decision, you need a signal, need something to blame the failure on. Then changing settings and timeframes, and so on... What is the same on all the timeframes? Support/resistence, higher highs and lower lows. I am pretty sure in some years you all will get to the same conclusion... after trying all the indicators and theories. But, of course, it is up to you. I am sorry if I seem to be combative, just wanted to make my point clearly. I am done.
Thanks for the input, I totally understand what you're saying. One small thing though: I was lead to believe that the steeper a trend, the less likely it is to continue in the long run. Is this untrue?
  • #49
  • Aug 7, 2014 7:48pm Aug 7, 2014 7:48pm
Quoting gspajon
{quote} Thank you very much!! {quote} Attached is an annotated chart of the current DOW continuous contract (futures) The only indicator is a volume indicator...one I'm sure many here are familiar with..."Better Volume" Things to note: Just prior to each down turn, volume dropped off significantly, even as it accelerated to new highs most of the down turns were preceeded by a period of ranging...the depth of the range seemed to say whether there was an acceleration coming or not...ie...deeper range, more volatility, grater likelihood of accelerated...
Looks great! Thanks gspajon
Focus, Patience, Determination & Order in chaos
  • #50
  • Edited 12:07pm Aug 8, 2014 3:40am | Edited 12:07pm
Quoting Ponzi Jr
{quote} Thanks for the input, I totally understand what you're saying. One small thing though: I was lead to believe that the steeper a trend, the less likely it is to continue in the long run. Is this untrue?

I don't know, it depends on. The volatility is at historical lows now, but in 2008 we had 1,000+ pips daily ranges. Never ending steep movements. The volatility will not stay this low forever and when it picks up again, I would not be thinking about the end of the trend.

No one knows how long a trend will last. As long as the price makes higher highs with higher lows, you have imbalance, you have a trend. When the trading conditions are normal the continuation is more probable. There is no point to anticipate the end of the trend. You might be 100s of pips early. You can wait for the confirmation. You can see with your eyes when the price stops making new highs or new lows. Nonetheless, the picture can be different on different timeframes. It is good if the upper timeframes agree with your lower timeframe observation.
My point is: you don't have to anticipate when the trend ends or how it ends, you can see it. The best if you ride that steep movement that you mentioned. If you did not, wait for the confirmation whether it was the end or not.

In my opinion, if a trader understands that basic principle and understands the structure of the markets (what happens on impulsive waves and on the retracements) he can create his own any kind of style to make money. He can use indicators if he wants, but his understanding has to be based on that basic principle.

In my humble opinion.
  • #51
  • Edited 3:17pm Aug 9, 2014 10:34am | Edited 3:17pm
Quoting saver0
{quote} Looks great! Thanks gspajon
You are most welcome...I hope this helps in some way. I have recently become acutely aware that "trend following" or range trading is really all part of the same thing. It is only us (humans) that imply some significance to either of these conditions. The market is only doing one thing...processing orders. It is not malevolent (unless you see it that way).

My mentor once told me that the market is a mirror. You see yourself reflected back in what you are looking at. If you are confrontational by nature you will most likely view the market as a "battleground" between the bulls and the bears. If you passive by nature you will see the market move up and down but become confused as to when to enter or exit.

One must learn to "be" in the market...by that I mean that the market is neither aggressive nor passive. It is neither benevolent nor malevolent...it just "is". By learning to "see" where buyers and sellers are taking positions you can see where their relative strengths and weaknesses combine to produce an imbalance or conflict to produce a balance.

Price is irrelevant, indicators and "methods" are irrelevant, trends are irrelevant. Learn to see when the market moves from balanced to unbalanced...trade in that direction...until the market balances again...some trades will be big...some trades will be small...some win, some lose. But by following the order flow from balanced to imbalanced, you will ALWAYS be on the "right" side of the trade.

Trend - Schmend
  • #52
  • Aug 9, 2014 12:54pm Aug 9, 2014 12:54pm
Quoting gspajon
{quote} You are most welcome...I hope this helps in some way. I have recently become acutely aware that "trend following" or range trading is really all part of the same thing. It is only us (humans) that imply some significance to either of these conditions. The market is only doing one thing...processing orders. It is not malevolent (unless you see it that way). My mentor once told me that the market is a mirror. You see yourself reflected back in what you are looking at. If you are confrontational by nature you will most likely view the market...
Couldn't have said it better myself

I see Forex as a way to better myself. It's more of understanding self than anything else in a way. Patience, being calm and cool, doing the best we can, being ready to make mistakes and correct oneself without judgement, the values that we say are good, these are the keys to unlocking great potential in Forex. Since I have started Forex, I have found the development of these values or believes helps make good decisions. Certainly need to have a good technical/fundamental/sentimental understanding as well but I would say that's less than 50% of being a successful Forex trader. These are no secrets.. to be successful in anything, the requirements seems to be pretty much the same
Focus, Patience, Determination & Order in chaos
  • #53
  • Sep 10, 2014 4:10pm Sep 10, 2014 4:10pm
Quoting Ponzi Jr
Can anyone suggest an effective way of telling whether a trend is likely to still have momentum behind it? A way to tell whether there is still a heavy imbalance between buyers and sellers?
In my opinion, the most effective way of telling if a trend still has momentum behind it is if your targets are still getting hit. If it keeps taking out your stops, exhaustion is probably setting in. But then I also think your're actually asking the wrong question...
  • #54
  • Sep 11, 2014 2:31am Sep 11, 2014 2:31am
What is a good way to tell if a trend still has momentum?

There is no trend.


-- An impulse (swing, leg...) is the only valid observation, here is a typical trace that it leaves as it moves from start to finish:


Attached Image


Later....

Attached Image (click to enlarge)
Click to Enlarge Name: 09-11-14-02.gif Size: 14 KB
  • #55
  • Sep 11, 2014 3:59am Sep 11, 2014 3:59am
First the PA has to be relative to the time frame that you trade. I trade intraday, my entry chart is M5 to M30 renko, midrange chart is H1-H4 renko, and my map is the daily.

I look for indecision candles on the daily chart at an area of support or resistance, then count the waves or pushes down or up on the midrange chart. If waves are decreasing in length and on the 4th or 5th, this is a sign strength is diminishing. 2nd or 3rd waves are usually the strongest. Also look for a reversal pattern like a double top or head and shoulder at an area of support or resistance. Then a HH or LL depending on direction of price. Also if trading counter trend, stay 1-1 on your risk reward ratio. See the chart below that I posted a few weeks back.

Attached Image (click to enlarge)
Click to Enlarge Name: 2014-08-27_GU.png Size: 91 KB


and where price went

Attached Image (click to enlarge)
Click to Enlarge Name: 2014-09-01_GU_.png Size: 14 KB


Cheers
  • #56
  • Sep 11, 2014 4:24am Sep 11, 2014 4:24am
You simply need to know which trend you are actually in.
H.D
  • #57
  • Sep 12, 2014 7:49am Sep 12, 2014 7:49am
Quoting LITEchild
{quote} In my opinion, the most effective way of telling if a trend still has momentum behind it is if your targets are still getting hit. If it keeps taking out your stops, exhaustion is probably setting in. But then I also think your're actually asking the wrong question...
And what would you describe as the right question?
  • #58
  • Sep 12, 2014 7:53am Sep 12, 2014 7:53am
Quoting Ponzi Jr
{quote} And what would you describe as the right question?
Maybe a better question would be...
H.D
  • #59
  • Sep 12, 2014 4:36pm Sep 12, 2014 4:36pm
Quoting Ponzi Jr
{quote} And what would you describe as the right question?
The question you just asked is the prelude to the right one.
  • #60
  • Sep 12, 2014 5:05pm Sep 12, 2014 5:05pm
Quoting 60minuteman
If the fundamentals are unchanged then the trend will most likely continue
sounds very logical but its not that simple, specially for trading forex.

Markets (price) are always forward looking, they discount the possibilities of the future not the present fundamentals. So in that way your would be lagging just like any technical indicator.

For example the current USD rally. USD is trending hard cause of the expected rate hike that is atleast 6 months ahead of us. So market is discounting that event now but when the actual rate hike comes (if it does) i dont think that usd would have the same momentum at that time. Actually most the big money will be out before the actual event to get out when they can at higher prices instead of running around for liquidity when fall comes.

When using fundamentals you need to look and anticipate the future events and that will tell you where the prices are going next (if you guess right).
.
1 trader viewing now