Trading W and M patterns on RSI: Third trial Cable trade.

The W has 7 points, as referred to in the first post in this blog i.e. Stage 1.

My software identifies the Pt 1, 2 and 3 - as used in the pdf on 1-2-3 trading. Point 0 is the one before Point 1 and Point 4 is the trigger one on RSI.
The least number of dots is therfore 5, Points 0,1,2,3 &4.

This shape has Points 0,1,2,2a,2b,3 & 4 i.e. 7 in total. What are 2a and 2b? They fill in the gaps between Points 2 & 3.

I prefer my WM shapes on RSI to have as few points as possible and 7 is my maximum.

A quick run through the checklist should confirm the trade meets all the rules.

The following images show how I use trendlines. I prefer to think right to left, so my trendlines are based on the latest information. In the case of an uptrend like this, the latest two Lows form their basis.

The single black line was all I used to start with. The initial two Lows define its slope, the third touch confirms it, the breach calls for a re-think.

The horizontal lines in red are my S/Ls, my style is to split trades. The upper dotted line is the "snuggle up" position and the solid line the "time to close down" level. I want to allow the trade as much freedom as possible but without throwing profit away, on allowing too big a retracement before closing it down. They are positioned below both a previous Low AND the trendline.

The latest Low is then used to construct the next channel. This time the upper trendline, formed by click and parallel drag on the chart, fits data that is already there, so it now goes in double thickness and I chose red to show up well in the posts.

After that I added the next trendline, using different colour and design of line. The problem becomes having too much info but this is a trial trade, so what the heck.

I have included RSI14 in the image below, using the standard line setting. This shows a W on RSI, of the continuation type, forming when the Price bounces off the already established red trendline again - context,context, context!