The Really Useless Thread

@chester123 request here is the next post on the series. For those interested before we open the election day posts, here it is the next one (check back post to follow from the beginning):


Bar 4: The Invisible Line and Points of Control.

The 5 macro notions in price analysis (Swings, Waves, Support & Resistance Levels, S&R Zones, and Trendlines) were defined in the previous post. All the following notions are built upon those principles and they will only add depth in the analysis. They shouldnt be interpreted (used) outside of this context.

Adding a 4th Bar in the original example will clarify the notion of mini points of control that I mentioned before. It will also give a very powerful visual aid to recognize what is the market doing right now and ,particularly important, will give us the first hint to develop a price based trigger. But before that lets define in more detail what points of control are.



Points of control can be defined as any price or price range that hasnt been tested in the next consecutive bars. They can be the ultimate top or bottom in a chart (strongest points of control), a Support or Resistance Levels in a swing (normal points of control) or more commonly, areas between consecutive bars in a wave (mini points of control).

With just an ex-post chart (after the fact) and with only few bars we dont know why this happened (e.g. Point A in Fig. 3a. because of lack of selling interest or strong buying at those levels or the opposite on Point A in Fig. 3b.) but in general:

1. As long as price is trading above/below these levels bulls/bears will be in control.
2. The wider the mini area of control the strongest the trend but also the deeper the potential pullback/retracement. As you can clearly see the mini points of control A in both Figures are a lot wider than the mini points of control B sending a clear message to who is in control (bulls in fig. 3a. and bears in fig 3b.)

The Invisible Line
Going back to the original example (Fig 4a)

1. We knew that there were stronger (smarter/early) buyers at the open of the 1st bar and there is a wall protecting them. After the close of the 3rd bar, sellers couldnt break the bulls in every single price on the 1st bar range to take control, making the open/low of the 1st bar a mini point of control (Point A).
2. We also knew that although sellers were dominating in the 2nd bar, there were almost wiped-out by the buyers on the 3rd bar leaving only a few sellers still holding in profits and making the open/high of the second bar the second mini point of control (Point B). The 4th bar confirmed the bears failure to take over the bulls stoking the move up when they covered their positions and attracting new breakout buyers.
3. Finally, we knew after the 2nd bar that we had a clear setup for potential longs and the closer to the 1st point of control (Point A) you go long the smaller the stops and the higher the potential targets for profits but because the move was not confirmed until a break of the 2nd point of control (Point B) there was also greater chances that price can fail to continue moving up. Here is where the invisible line comes to play.

If you connect with an invisible line (the dotted line in the chart) the Highs/Lows (depending on the case) of consecutive bars you can establish a visual aid of where and when a particular point of control is going to be broken. In the case of fig 4a) you can plot that line joining the highs of the 1st, 2nd (Point B!!!!) and 3rd bar and you can clearly recognize how after a few ticks in the 4th bar that line was broken (and not coming back!!!) and the move up was confirmed.

Obviously if you didnt pull the trigger on time the invisible line will tell you YOU ARE TOO LATE, YOU MISSED THE TRAIN, COME BACK LATER
The second very important piece of information with an invisible line is given by its SLOPE. The slope of this invisible line will most of time tell you if you are in the wrong side of the market in the current wave, the strength of a trend and pullbacks and if the move is overextended (overbought in an uptrend) without indicators !!!! (e.g. in an uptrend the invisible line instead of sloping down or horizontal has a steep slope up). These cases will be clearer when more bars are introduced in the analysis.

The same analysis goes for Fig 4b).

1. We knew that stronger (smarter, early) sellers at the open of the 1st bar had a wall protecting them. After the close of the 3rd bar, sellers couldnt break the bulls in every single price on the 1st bar range to take control, making the open/high of the 1st bar a mini point of control (Point A) and leaving a very wide mini point of control area untested.
2. In the 2nd bar the move down was confirmed. However, by the close of the 2nd bar, we also knew that buyers overwhelm the sellers at the lows closing the bar at the break point (low/close of the 1st bar) leaving the sellers on the break of the 1st bar that didnt take profits uncovered (especially weaker hands may have started covering shorts if price would have moved above the high of the 2nd bar). But this didnt happen and by the close of the 3rd bar all prices of the 2nd bar range were tested making the open/low of the second bar the second mini point of control (Point B).
3. Finally, we knew after the 3rd bar that bears were in full control and it was too late to get in the train. Nevertheless, if we introduce the invisible line joining the consecutive lows of the 2nd, (Point B!!!!) and 3rd bar, we can clearly recognize that after holding for a while, the bulls gave up and the line was broken and the move down was confirmed.

Remember that the slope of this invisible line will most of time tell you if you are in the wrong side of the market in the current wave, the strength of a trend and pullbacks and if the move is overextended (oversold in a downtrend) without indicators !!!! (e.g. in an downtrend the invisible line instead of sloping up or horizontal has a steep slope down).

Therefore, pay particular attention in this case to the slope of this line (horizontal in a downtrend) in comparison with the previous case (sloping down in an uptrend) and try to find what the market is telling you. (Hint: Starting move, continuation move or potential reversal)
Some very important notes on Invisible Lines:

1. Always respect the order in the analysis (3 Essential notions in price analysis). These lines are only worth if you already have defined the current direction (e.g. wave analysis HH, HL, etc) and you are in the right side of the market.
2. So NEVER EVER go against the current direction. If you go crazy plotting invisible lines connecting every single consecutive High or Low you are going to have a very poor profit/loss ratio and your broker will end up making more money than you (if you make any). Remember this is a visual aid to recognize what is the market doing right now, and a first useful hint to develop a price based trigger.
3. In other words, you only draw these lines on the side that is controlling the current move. In case 4a) we only draw a line on the highs because bulls are in control and in 4b) on the lows because bears were in control.
4. Always check if the instrument and timeframe are giving you enough room (true range) to apply this notion. If you are trading very fast charts or tiny range instruments, your analysis can be right but it may be impossible to implement in practice.

The final use of these lines are to add a fast, objective and efficient tool to evaluate any chart without getting lost in translation with indicators.

Try it. Open any chart, find the last 2 or 3 swings, define what are they signaling (HH, HL, LL, LH), check the last bars on the current wave and plot the invisible line connecting the highs or lows (depending on the direction you see in the swings). If you can't establish [in the first minutes you see the chart] the current direction and where in the current wave the market is, just close everything and come back later, the market is in choppy mode....

TBC....

sisse

awesome, thank you gonna read it prior to elections. hopefully it will shorten my waiting for the outcome of the elections

Dumb Money (yes that's me) says we are poised for a massive breakout for risk assets to ath's probably by Thanksgiving week. The US indices have been stumbling along zombie like in a <10% range for the last 22 months, with a couple notable dips that were immediately bought back to range. Humongous sums of filthy lucre are sitting out of the risk markets or parked in some crazy zirp/nirp induced vehicle. It's time for a wild month or two of risk shopping. A string of 100+ pt weekly spoos candles will not surprise me, nor will a steep slide in bonds across the board. BTFD, mofo's. When somebody named "The Fool" gives you trading advice on the internet, you better listen.

--> Things are pretty much settle for the year. Only last week tweet triggered contingency plans (risk off) especially after what happened in the UK vote.

--> Election got bit too close to call and given that the average low IQ or uneducated, xenophobe, nationalist hidden shame brexiter voter is pretty much in the same line with the average low IQ or uneducated, xenophobe, ultra conservative 'Christian' hidden shame zombie Trump voter ...and those few can make up the couple of points to swing some battleground States ...better be safe that sorry.

The 3 scenarios are very simple this time:

1. A clear Clinton victory without Drama from the nutter, and we will have a very short lived relief rally before completing the rates leg December across the board.
2. A close victory with Drama and we will short-circuit all risk off asset classes and you will get a major spike in the VIX
3. A victory for the nutter, will trigger a short lived risk off knee jerk reaction but limited to continuation for the DEC hike play. However, mid and long term we will pretty much lock a solid high at the current levels that will hold for 2017 and beyond depending on how much he walk the talk and the extend of the destruction of trade and foreign policy.

--> In any case, to wrap up Obama closing with every single macro, economic and socioeconomic indicator in very sharp uptrends and almost all in historical ATH or ATL depending on the indicator. From Employment, to Equities, Competitiveness, Trade, Debt, Fiscal and External Budget, Energy and even in the environment. After we pass the election noise in a few years, history will show as one of the best 2 or 3 performing presidents (despite the haters right now) in the last 116 years ....

Is history going to repeat itself if the US flop ....it usual does .... GL to all Americans and hopefully they take the lead in the west world and put this nationalist, populist, xenophobes BS politicians as far as possible from power ...

Chart update: Ciao Obama

sisse

well said...everyone should read this

lol you guys believe in Trump ? You know he is there to make Clinton elected, its just for fun, they are buddies

and you still believe he has a chance?

lol you guys believe in Trump ?

Meaning as in the tooth fairy? or Santa? Well I suppose I do. I mean he seems real although I've never actually touched him.

You know he is there to make Clinton elected, its just for fun, they are buddies

Wow. How did she swing that? So Clinton put him in place with a master plan to break the primaries, splinter the GOP and rally her minions around the bonfire in November? Certainly seems like the hard way but hey, whatever works right?..Is she buddies with Comey too? Do the three of them share a spinning class?

and you still believe he has a chance?

About 1 in 5. Thats what has priced in on most gambling sites. He's never been better than 1 in 3 and never worse than 1 in 9. Right now going into election day he's got about a 1 in 5 chance of pulling it off according to those. Needs every single swing state to do it. (or most of them and nail his desperate plan to flip a state like Michigan) Is it likely? No. Is it impossible? No. About 1 in 5.

There is a great page on New York Times website to help to follow the event with charts and data :
http://www.nytimes.com/interactive/2...-forecast.html

for example this diagram with the different paths to the presidency (much better on their website as it's an interactive one)

Good article. That is a nifty interactive they made there. Very cool.
And in the end, roughly 1 in 5 probability for Trump. The gambling sites are good, not always right (see brexit) and as the participants start basing a great percentage of their bets on poll results they read, the two become less distinguishable (doesn't seem to be happening as much this time) but in most cases i think they're the best predictor we have.

That was a good article Rep. Here is one describing the differences between liberals and conservatives . https://www.studentnewsdaily.com/con...beral-beliefs/ It was hard to find a article that wasn't skewed one way or another .

Everyone has their opinion but I believe Trump actually has a decent lead . ( 60/40 ) Guess we will know for sure by midnight est.

If the article I read some time ago was right, only 34 % of the voters consider themselves Dem or Rep . The other 66 % are the silent majority . That's who"s going to sway this election . We will see which side they vote for . Everybody have a great day !!

...that was it, in an uneventful European session with the whole world in standby until US decides. Yen, Gold, CHF, Euro, Dollar, Treasuries and US equities (SPX) on the spot in main trading workspace for today until we clear exits polls and/or final results. In that order for any knee jerk reaction on a risk off event or the opposite order in a normal flow.

-----

Very good last few pages in the thread...showing that you can have intelligent civilised discussion about politics when trolls, liars and the uninformed are not stirring the pot ...how far from what we have witnessed during the campaign and in the last UK vote ....

@chester123 ... superb post. You leave very little room for discussion.
@IMARICH1 ... I don't think you are ignorant at all...IMHO, you are just not use to say out loud and defend your opinions thinking that you are going to be judge for using the wrong technicalities and words ...
@goosebone ... ... I really like your last few posts...
@Replicant ... Excellent link. so basically and statically Florida is the rain maker all over again. If Democrats win FL and Republicans get the other 4 States (Ohio, NC, Iowa and Nevada) with the lower % [below 70%] chances for Democrats, Clinton will still have the edge ...

NY to come but a very dull session expected across the board with pretty much nothing to see until Tokyo opens (+/- first exit polls expected). CBs (SNB and BOJ only) are on watch today in case of a short-circuit so time to flatten all in Yen and CHF if you don't know exactly what you are aiming for until first results and beyond. On the rest of the board nothing to update until later...


sisse

And she could even lose Florida, Ohio, North Carolina, Iowa and Nevada and still win !

lol.True

Yes that is definitely the wild card. Wish I was better schooled in options like the Fool (working on it) and I would take a lotto ticket position of some kind in case that's the way it plays out. But I'm flat everywhere and will see what markets do after the fact instead. My guess is we will know what's up by 21:30 est latest based on Florida. But like I said only a guess.

Looking for a u/j short around 105.4x . If it gets there , it all depends on the timing. Same as you , flat on everything as I usually do on major news events . Tomorrow ,either way , should be interesting .

Yes, this needs to be said more even more than three times..

Thank you Sisse! I live in US and see this election as another "choose between piles of shit" time. When have we ever had to make a choice between two excellent candidates? It should be easy to see you would stand on the side of free markets and anti anything that would set this concept back seeing as how milton friedman is your avatar. Without going deeper into politics I just have to say how much i appreciate this thread and its contributors, and that I find so much information and feel such camaraderie to be allowed to be a part of it all.