:: actio-et-reactio ::
amg's market charts and blather
One place where people "new" to technical analysis get stuck is in half or fully blindly throwing indicators on a graph and then trying to figure out what it means.
Mind you, everyone has been there, including myself, and it is from getting OUT of that rut that I've learned, and from where I speak.
So some BASIC basics about median lines, Andrews pitchforks, action-reaction lines, or as I much prefer to call them, for a very important reason: BISECTS.
Bisect: to divide in half. Half is above, and half is below.
I included action-reaction because it is fundamental to the idea of BISECT. It is also why I call this site actio-et-reactio -- it is Newton's first law, that for every action there is a reaction.
When you draw a pitchfork, a BISECT, you are drawing a 50-50 (half above-half below) probability line:
- The P0 (origin pivot) represents the final ACTION price took before reversing its course
- The P1 and P2 price points are recent price REACTION extremes relative to the origin pivot
- The median line (the BISECT) is HALF-WAY between those recent extremes and is therefore the BALANCE point, again, relative to the origin pivot
- The projected lines are ALL conjectures of
-- future price balance (bisect line-the middle line) and
-- future price extremes (median parallel lines, upper and lower lines)
When you consciously remind yourself of these fundamentals everytime you draw a "fork"-- a BISECT, you will begin to "see" why one might choose the mid-point of a prior move as an origination pivot-- it is the point where half the prior profits (or losses) sits. Hopefully, other things will begin to "pop out" at you the more you realize median lines represent probabilities, at times 50-50, but often 80-20 (confluences, retests, gap throughs, etc).
A swing moves up and down from the balance point. The only time price just sits there is when there is the balance on both sides is equal, but that may be only at one level. Even in congestion, price is moving THROUGH the balance point to the extremes, searching for a new balance point. The bisect (median line) is the balance point, the upper and lower MLs are the extremes.
You must THINK balance, BISECT when ever you draw your lines. When you see a fork that appears to be "containing" price well, even with an "odd" origination pivot... don't get all prudish and academic and think that's not a "correct" pivot. Step back from the chart (go one step higher in time frame) and see how that pivot relates as a possible balance point in the larger context.
There are a few other "BASIC basics", which I'll comment on later as this is enough for now.
Ah ha! Found a Negative Reversal ('hidden divergence') on 60m (below). 1st target 1043, where there is a multi-fork tangle, or 'confluence'. A push down through it targets even lower. Likewise, a bounce off the tangle signals more congestion.
When support & resistance are in close proximity, that's called congestion, which is shown below on the 60m by the red fork colliding with the green.
19 Oct: I didn't trade end of last week-- but the 60m was a good guide for those who did. The focus now shifts to 'old support becomes resistance' -- in indicators as well as forks. 60m chart below. Open this link (my stockcharts charts) for daily, weekly charts.
Another 'handy' rule of thumb is to watch MACD. When above the zero line, bias is long, below zero, bias short. This works across all time frames, with the higher time frame, of course, trumping when considering longer term position trades.
Note that the daily MACD is looking to turn down, but is strongly above zero. To me, this says this particular pullback may be shallow, particularly as the weekly MACD is rather strongly above zero.
Looking closer at the weekly MACD, it is a bit long in the tooth and there is triangulating in the STO. These advise caution as a turn down could be sudden.
14 Oct: Little change in 60m path. Added numerous commentaries. Caution, IMO, is advised, but not enough for outright broad market shorting. Pick & choose carefully.
7 Oct: The Energizer Bunny rally! "
click on chart to open a "full size" version
I've long wanted a 3-column layout, primarily to give me more room to add links. I also wanted to build on what little CSS I've managed to osmose, or better said, clone and reverse engineer. The boys at glish.com have, once again, trumped with the wonderful layout whose bones I am using here. What makes their concept superior is the center colum that expands or contracts with browser window size. Trust me, not all CSS-oriented layout come anywhere close to allowing this without major crumbling of the intended "look". My sincere appreciation to their sharing.
Now, let's furnish the place with some toothsome market blather!
Note: the 135m chart below will continue to be "self-updating" -- meaning I overwrite it at the end of the day.
This is classic stuff: meets Rules (1) & (2) outlined earlier:
(1) Reached the latest ML
(2) Gapped through it
Rule (3) says price will now pull back to the ML....and we again look for either a gap-through it (making it a failed bullish move) or a reversal, which would target the uppper fork.
Note that Rule (4) iswas temporarily negated (on this part of the move) by the move through the ML. Rule 5 says I now need to draw in extensions from prior MLs to see where potential resistance lies. See this chart
Were one swing trading, one would have positioned last night w/a long and kept a Short ready; or vice-versa, which would have been riskier & very much counter the immediate smaller trend, which was still up.
Will keep monitoring "the situation".
I've chosen the 135m ES-mini chart using Ensign software to review today. That this was a reaction rally is evident in the decreasing volume, whose weakness is also indicated by the downtrending Acc/Distribution line overlaid on the Volume.
The red down bisect finished during yesterday's late day run up and was pretty close to ideal. The yellow bisect I've drawn isn't at all "ideal", ie, price doesn't track the centerline. HOWEVER, it has a different use: it show bigger picture price velocity relative to two important pivots.
A gap-up or strong move tomorrow would give cause for ocntinued bullish moves. Likewise, a weak move would signal there is no price velocity to overcome resistance and I would at that point promote the "ghost grey" potentially bearish fork. Note too the Fib 61.8 @ 1019 crossing the bisect.
Note: the bias says FLAT because the general trend is DOWN and the indicator buy signals are to be interpreted as countertrend buy.
|
moon phases |
At last, over the rim
of the waiting earth
the moon lifted with
slow majesty
till it swung clear of the horizon and rode off,
free of moorings
- Kenneth Grahame,
The Wind in the Willows
blather: nonsensical talk.
At times my analysis log, at times sharing what I've learned. Always my own work and views.
Content: amg
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