Beginning and end of a trend

This discussion has the sole purpose of gathering, the methods that we use to identify the beginning and the end of the trend.
I hope in your cooperation.

One of the methods that can be used is the trend line, a line is drawn and when it is broken, in theory starts a new trend

On your chart, I see a figured pattern 1-2-3. You can determine the change of motion with candlestick patterns. The graph clearly visible candles with long shadow - this is a signal for a reversal. You can determine the start of a trend for levels of support and resistance. If the level is strong, there is a strong likelihood that the schedule will unfold after the touch and start a new trend.

If you are only studying the technical aspects of a trend, I don't think you'll ever know what it is doing until after it has done it. A genuine trend is simply the technical manifestation of a fundamental shift in the value of a currency .... if you know why the value of the currency is changing, you have a chance of anticipating the beginning and end of a trend.

Trend lines are are an illusion.
If you really want some hints where price might turn,look horizontally and to the left

Watch at this red lines, are you seeing something in common between them?

And watch at number one, can you explain now, after i have drawn the red line, why the pullback was there?

A statistical method that can be applied to trend following and is non-subjective in nature is as follows :


1. Apply a standard deviation channel to a weekly chart and ensure all negative volatility price action is contained in the SDC. You first need to identify major pivot points and then determine negative volatility extremes in the trend. A trend follower likes positive volatility (with trend) but hates negative volatility (against trend). This then determines a context for the trend on the longer term timeframe providing information such as the momentum of the trend (it's slope) and it's volatility (the width of the SDC in terms of sigma and often displaying the fractal nature of composite lower order trends (impulse movements)). It defines the longer term trend (the primary trend) and it's broad anatomy within which the lower timeframe directional movements are considered.



2. Now drill down onto D1 chart and refine SDC on that timeframe to coincide with the primary trend but better reflect the increased data set. Example, we can reduce the SDC from 0.80 sigma to 0.7 sigma on the D1 chart to more tightly reflect the data set. We also adjust the pivot commencement and pivot end to coincide the the highest high and lowest low on the D1 timeframe. The pivot end in real time is a higher high or lower low in the direction of the primary trend drawn on W1. We have now fully defined the primary trend on the D1 timeframe.

3. Trade breakouts in the direction of the primary trend with a trailing stop located at the outer SDC (that signifies an end of trade according to this method....... or if you are after retracement entries in te direction of the primary trend move to step 4.

4. For retracements, add a further SDC of half the sigma as that applied previously to end up with channel zones to apply your retracement strategy. Example, if the D1 trend ended up with a sigma of 0.70 on the primary trend, then add an SDC with a sigma of 0.35. This therefore places parrallel zones on the primary trend to indicate overbought and oversold levels. If price moves into the retracement zone for the primary trend, get ready to enter on retracement in the direction of primary trend after retracement confirmation back into trend. I simply go short in this example when price moves below the line delineating the overbought zone. Split the retracement trade into two trade components. Exit one component when price moves into the oversold zone or alternatively set a profit target on that trade of 5R.....and exit on whichever comes first. For the remaining component, simply hold the position until the trailing stop on the primary trend activates an exit.

One thing the red lines all have in common, is that they were all added to the chart with the benefit of hindsight.



I don't believe for a minute that the pullback happened after you drew the line - I believe the line was drawn after the pullback occurred.


I'm not saying your ideas are wrong, I'm just saying that this phenomenon you are highlighting is much less reliable and predictable than you think it is. Is that an hourly chart? Try extending some lines off to the right of the chart, then come back in two or three days and see if price respects them with anything more than 50% accuracy.

If you want to say to say after the fact, "that was the start of the trend, and that was the end of the trend", then drawing lines on charts is a good way to do it. Higher high and higher lows = an uptrend, but as mentioned above... you only know that after it's happened.

If you want to say as it's happening, "these are the things that would indicate this trend is about to reverse, and therefore that the current trend is as good as 'finished'", then like timos, I'd look to the left and look at signs weakness.

But actually, both are required. You can't identify (with any certainty) the start of a trend until it's already in progress. So you have to start there... and trend lines totally makes sense. I'm not sure we can say trend lines are an illusion. A trend is a trend because we can draw a line along it (the (trend) line is just an average of the trend direction... without lines on the chart (or in our head), then we can't identify a trend). Once identified you can look back and know where the trend started (which of course means you've also identified the end of the preceding trend).

Identifying the end of the current trend (and the start of the next trend).. a "trend reversal", is the fun question. A broken line doesn't really mean the trend is "broken" (over). If anything, it just a sign of weakness in the trend, and more likely a sign of a pull-back; all healthy trends need pullbacks... nothing goes in a straight line. Alternatively, a broken trend line means absolutely nothing and is in fact an illusion - something we've decided means something to justify our continual investment is this so called "zero sum" game. But every "idea" is an illusion. Put a whole bunch of illusions together and you might have something close to "real".

What are some illusions?
- support and resistance
- Dow theory (higher highs, higher lows, etc)
- trend lines / moving averages / donchian channels
- VSA (markup, consolidation / distribution / markdown)... volume, fib levels
- pinbars, evening stars, three white soldiers, three blind mice, three lost aunts, three black testicles
- Elliot waves (1-2-3-4-5, a-b-c)
- gartley, bats, crabs, muffin tops, unicorns, face of elvis
- indicators... RSI, MACD, ADX, stochastic, holy grail "no loss" indicators, take your pick
- order flow, tape reading
- and of course the one that's rarely invited to christmas because he's just well... weird, and scares the children... Fundamental analysis

The same concepts can be used to identify the healthy continuation of a trend, which is just as important I suppose if you trade with trends or trade on reversals.

And the same concepts are used to... well... trade. Because trading is all about trend identification. So, it's a pretty broad question now that I've thought about it!

Trend followers always enter late into a trend as they require confirmation that directional momentum is simply not random jitters (illusion of market complexity) and has some 'real' substance behind it. That is why applying a multi-timeframe context to trend following is a worthwhile exercise.

If signs of a trend are appearing on W1, then it is more likely that fundamentals or in statistical terms autocorrelation/levy drift are driving the movement. When you then drill down into a lower timeframe, what was previously the appearance of a new trend on W1 is a full blown directional trend movement on say D1 with loads of bars to statistically determine the bias, momentum and volatility of that movement. If you want further substantiation then do what Numbnuts does and use FA such as COT indicators to assess the likely 'reality' of the movement in terms of what is driving it.

If you simply focus on a single timeframe, the context of the price action (which is most important) is frequently lost resulting in you pressing the trigger finger more often than needed and subsequently overtrading with respect to the directional movement.

I agree with you, personally I don't do this when I'm trading 4H or even 1H charts because I know there the price will flow influenced by others things. In this chart that I drew the red lines, the chart that he provided, I believe it is something like 15min or 5min and here the PA is important and supports and resistances play a great role, however there is much more than this red lines to predict the price and knowing exactly where a trend end or beginning is very hard.


Maybe the pullback was a little forced ye......

Anticipating the trend, from what I've learned is a hard task with the sole use of TA. Some say it can be done through FA but I can't tell.


With a trendline break we're looking for
a follow the formation of a new trend
b a pullback of the current trend


One sure thing that anyone can see is the high volatility of the forex market, and since the market repeats the magnitude of said movements (I know that, I did several long term backtests) then what you want to know is if the magnitude of a is statistically greater than b.
No one will tell you anything other than what I said. I don't believe in Santa Claus.

Ok what I thought was all a delusion, and I wanted to get here
So if the trend is not your friend...
On what do you base your investments?

Who said the trend isn't your friend?

And asking "on what do you base your investments" is basically asking, "how do I trade" which is a very broad question.

Yellen.mq4
Fed.mq4

Try also draghi.mq4

that analysis do before entering the market

http://www.babypips.com/school

I'm not a rookie trying to find the holy grail, so please do not put links from superior man, it is normal that you enter in the market and trying to maintain pips.
On almost all the interventions made, one was in conflict with each other, whenever it happens so ', I believe that each one sees what he wants.

I'm a rookie. It's just that you're asking "what analysis do I do before entering the market". Babypips is awesome as it has hours and hours of information to answer that question. I don't even know where to start answering such a broad question (maybe someone else on here has the time, not sure?).

No, the question was addressed to those who say that there is no trend, support or resistance etc ..