New idea + old faithfuls

OK let's start with a standard trade.
If you need the practice go through the checklist:
RSI shape,
RSI level,
Price/Bollinger,
Possible initial reward:risk assessment.

Apologies for the next bit two bits being rather "wordy" but I can't think of a way to avoid it.

I then have added a new idea. It's a standard support level as shown on the diagram as the green line BUT it's validated by the trade following from the W delivering the 0.5% return or better. This validated level is then the basis later on for a bounce OR crash through trade. I have been focussing on the unexpected crash scenario (more fun) and kept missing out on the expected bounce.

It was the market behaviour at 4500 which made me realise I was missing out. The top of that 1Hr M held out many times, OK I got the crash through spot on but opportunities were missed.



On the next diagram the support level appears as double thick green dashed line, the double bit will become obvious when you look at what happened.

The black lines are downstream channels based on previous Highs. The lower ones are the standard parallel click and drag through previous Lows.

Apologies for the red lines they are part of something I am trying out.

So I was ready for either the bounce or crash scenario. Once it was a confirmed move below the support line AND break through the trendline, I would go Short going with the double whammy. If, however it bounced and went back inside the channel then I'd go Long. The support was confirmed so the line was made double thick.

The thin green line on the next chart shows the PDH used during trading the following morning. During the night the index moved way above where I was expecting it to be - nice surprise. Once it came below that level I put covering trades on and so was neutral. There was no specific evidence to close the trade but I was looking at a healthy profit. The light blue trendlines showed the possibility of more to come BUT the early moves to close gaps and high volatility make this my least favourite time to be running a trade. The purples ones were added later.



So what made me remove the cover? Well it was the weak signal from the W in the next image. No way is this a system ENTRY but it was good enough to warrant letting the trade CONTINUE. If need be, go back and re-read the section on trend reversal shapes and trend continuation ones.



Trigger on the UKX board and of "moo river" fame, would be proud of what's in the next image. The upstream crossing of a downstream river and a breakout.



Finally just a few simple trendlines, a continuation W where the RSI signal that confirmed it had formed, was as high as any we have had. It delivered 20+ on Price, with the RSI hitting a maximum afterwards of nearly 80.

Key point here is that for continuation WMs it's the shape and NOT the level that matters, plus the Price/Bollinger is totally ignored - unless of course you include the Price moving along the SD=2 band!



cheers theory