Haven't I seen a lot of triangles which had downward movements extend from them?
If so, how does one use that shape to predict the future movement?
umm, the first one like that you saw was
here I believe?
(Chart)
where I explained
and.. for all those here who think markets are driven by news and fundamentals, I thought I'd explain to you what's going on in that pink herding triangle. what you have there is a period of distribution where smart money are once again offloading their earlier buys and accumulating sells gradually, without wanting to disturb price too much yet.
what you also have, is retail traders (herefore known as the herd) buying things that go up, and selling things that go down. please notice how if you bought at any point outside the top of the triangle, always, within a bar or two, you were underwater almost immediately. the same applies for any of the herd selling below the bottom of the triangle, a bar or two later, you are either negative, (or stopped out)
remember, there is also a small spread, so you are immediately slightly negative as you buy, and are then dragged backwards into negative float and never see your price level again to get out at zero or above until the shift bar (if you're short, - if you were long and are still in, the shift bar is your worst nightmare)
most people will have been stopped out on the immediate subsequent runs to the other side of the triangle, only the brave (let it ride) or the stupid (move their stops because they don't want to take the loss) are still in and now they might have to ride out 3 downward cycles again first.
this is how they take new trader's whole accounts.
followed by..
3 cycles down by the Nikkei etc.
we are observing price
action at the borders of the zone, if every time price gets out it is sold (or bought straight back into the zone again, you are in accumulation or distribution, pre-trend.
if you already have seen 3 pushes downwards, probability is accumulation (up next), and vice versa, if you've had 3 pushes upwards, you're in most likely distribution and probability is down.
however, when it's in level 3, as you can see in the rectangles I use, price bashes up and down, and
can go either way, so the
only thing we know for sure, is that if we're going up, the price will break the most recent lows before any extended push higher, so really you want to be long from stopruns at the bottom, as well as short from the top.
and you might catch 3 or 4 x range trades of 50 or 60 pips before the price eventually breaks out of the range in one direction or the other.
but it will be confirmed by a break of the
opposite direction, highs or lows, some time before the big move, usually just before. until we see that, it is
not game on.
in the meantime, if we are expecting a stop run of the highs and a reversal, and see the twitchy spread syndrome, its all part of the puzzle. I've never said I can get them all, but I can certainly get some of them pretty accurately now, I have been amazing myself at the clarity the last few weeks.
and I've not been cherry picking I have shown you everything good and bad, stopouts etc, they get me from time to time, even me. it happens, no biggie.
but there is not a single market turning point ever where retail traders are not put through the ringer at every turn. I just want to be there alongside
my 10 marketmaker liquidity providers while they do it, is all
the question I am asking myself every day looking at charts, is what
are retail looking at, and trading off here, trendlines fibs etc, because thats where their orders will all be clustered, and
that is where we will see "manipulation" before the move goes. daily. for months and months now.
)
