bulls versus bears!

[ruski]

you can clearly see the tightening trading range, which is more about market consolidation than anything else (the bids and asks react to the tightening trading range, not the other way around).

the key identifying marker of a triangular consolidation pattern is the decreasing volume throughout, and then the sudden spike of volume which indicates the breakout, accompanied by a price movement outside of the tightening range. a movement beyond the channel bounded by the wide end of the triangle confirms the breakout.

the same words are in my thread about the bearish pennant. this is a very robust pattern.

You should beware of the fact that due to the free trading, swing trading is running rampant and the gap is narrowing. It might not have the magnifying effect the triangle usually does due to this.

[Ichthyo]

I don't believe in things just because I see them.

you can clearly see the tightening trading range, which is more about market consolidation than anything else (the bids and asks react to the tightening trading range, not the other way around).

You can't tell just from looking at a chart who is reacting to what.

the key identifying marker of a triangular consolidation pattern is the decreasing volume throughout, and then the sudden spike of volume which indicates the breakout, accompanied by a price movement outside of the tightening range. a movement beyond the channel bounded by the wide end of the triangle confirms the breakout.

The volume decreases until it increases again. The movement up is confirmed by movement up, unless there is movement down.
And so on.
It is really surprising that you guys talk so much about patterns and don't notice the pattern in your own reasoning. ;-)


The triangle we are looking at could have looked quite different, when the person controlling the bid wall had pulled it in the middle, at the point when the oscillation went down and someone sold a bit into that bid wall. In that case, you would see a different shape after the fact and thus draw different lines and constitute a different "channel" for your "confirmation".

[arepo]

The volume decreases until it increases again. The movement up is confirmed by movement up, unless there is movement down.
And so on.
It is really surprising that you guys talk so much about patterns and don't notice the pattern in your own reasoning. ;-)


The triangle we are looking at could have looked quite different, when the person controlling the bid wall had pulled it in the middle, at the point when the oscillation went down and someone sold a bit into that bid wall. In that case, you would see a different shape after the fact and thus draw different lines and constitute a different "channel" for your "confirmation".

wrong again. you seem to think this is not falsifiable. the triangle consolidation pattern necessarily exhibits decreasing volume. if volume increases during a similar pattern, it falsifies the hypothesis. also if volume spikes before the trend lines converge, it also falsifies the pattern.

you don't seem to understand that the patterns are the emergent effect of the actions of the people controlling the walls. patterns exist and form because when rational players play advantageous strategy sets in various proportions, this creates remarkably consistent patterns in the price data. no one would put a wall up in the middle of the consolidation because it is not advantageous.


and there were no after-the-fact drawing of lines. i posted a figure, the converging triangle, and predicted an imminent "breakout" -- defined strictly as move that passes the upper bound of the wide end of the triangle (which it did) that is accompanied with high volume. it seems like an awfully nice coincidence, at worst.

i defined a "breakout" in the same terms in my TA thread. there is no hindsight bias in effect here.

[Ichthyo]

The volume decreases until it increases again. The movement up is confirmed by movement up, unless there is movement down.

The triangle we are looking at could have looked quite different, when the person controlling the bid wall had pulled it in the middle, at the point when the oscillation went down and someone sold a bit into that bid wall. In that case, you would see a different shape after the fact and thus draw different lines and constitute a different "channel" for your "confirmation".

wrong again. you seem to think this is not falsifiable. the triangle consolidation pattern necessarily exhibits decreasing volume.

...otherwise you would not constitute a "triangle".

you don't seem to understand that the patterns are the emergent effect of the actions of the people controlling the walls.

This conclusion is a bit of a stretch.

To start with, the pattern is the effect of your brain making sense of the data. More specifically, it is the effect of choosing a certain grid width, magnification of the diagram and choosing a certain segment to focus on.

There is nothing wrong with that. Every observation is theory loaded.
But the key point is to account for that theory before applying it. And to show the necessity of applying that theory.


In this example here, you yourself concede that a confirmation is necessary to constitute the "triangle".

This has the consequence that the triangle in the configuration pointed out only exists after the fact, when the confirmation is there. And as such, it is a superfluous theoretical construct, since we don't need a triangle to deduct a move up or down, when we even need to identify that movement in order to allow the triangle to exist.

Thus, after removing this superfluous theoretical construct, the statement boils down to: The volume increases and the price moves, after the volume has decreased and the price amplitude has decreased. This is a correct observation, but as such, without further context, it is pretty much void of any relevance.



Please note, I haven't said anything regarding the actors within the market. Indeed, the behaviour of people is structured and based on patterns, which is closely related to the phenomenon of language. People express and recognize situations and constellations in terms of patterns. And even more important: they teach each other to appreciate certain situations in terms of patterns.

[arepo]

first off, i appreciate the humble and honest critique. you make very good points. this i can respond positively to

This has the consequence that the triangle in the configuration pointed out only exists after the fact, when the confirmation is there. And as such, it is a superfluous theoretical construct, since we don't need a triangle to deduct a move up or down, when we even need to identify that movement in order to allow the triangle to exist.

i think this may be the sticking point. the predictive power of triangles comes after the first confirmation of decreasing volume. when the bounds converge, one can expect a certain kind of price movement.

triangles in general are not good prognosticators of direction, except in certain market contexts like in the case of the bearish pennant.

however, if volume is large in the candle after the convergence point, and one has information about trend direction from other sources, one can combine this information to either sell at the top of the bulltrap, or buy before it breaks the important resistance and makes significant gains (taking an upwards breakout, for example). timing is everything, and trading in a consolidating market makes little money. being prepared for when the market breaks out of consolidation mode is very useful, and triangles being consolidation patterns have that predictive power, at the very least.

[ruski]

To start with, the pattern is the effect of your brain making sense of the data. More specifically, it is the effect of choosing a certain grid width, magnification of the diagram and choosing a certain segment to focus on.

There is nothing wrong with that. Every observation is theory loaded.
But the key point is to account for that theory before applying it. And to show the necessity of applying that theory.


In this example here, you yourself concede that a confirmation is necessary to constitute the "triangle".

This has the consequence that the triangle in the configuration pointed out only exists after the fact, when the confirmation is there. And as such, it is a superfluous theoretical construct, since we don't need a triangle to deduct a move up or down, when we even need to identify that movement in order to allow the triangle to exist.

Thus, after removing this superfluous theoretical construct, the statement boils down to: The volume increases and the price moves, after the volume has decreased and the price amplitude has decreased. This is a correct observation, but as such, without further context, it is pretty much void of any relevance.



Please note, I haven't said anything regarding the actors within the market. Indeed, the behaviour of people is structured and based on patterns, which is closely related to the phenomenon of language. People express and recognize situations and constellations in terms of patterns. And even more important: they teach each other to appreciate certain situations in terms of patterns.

I think you're mixing economics and behavioural neurology a bit too closely there, sport. The symmetrical triangle is as well recognized and predictive as the bubble chart, if not more so. It is not a lagging indicator.

The triangle forms thanks to speculative uncertainty of the price direction. Broad ranges are set where people feel comfortable that the price may be accurate. This range is then narrowed by swing traders and arbitrageurs, trading in lower volume than would be expected of major market participation. The outcome of these strategies is that the range necessarily gets narrower as profit opportunities are eaten up.

When the range reaches a point where that trading is no longer profitable, all trading under the triangle will cease. The market is then taken in one direction or another, very quickly, by anybody wishing to buy or sell, with their movement amplified by the low volume. The short time period after the apex of the triangle is widely viewed as strongly indicative of overall value sentiment since it is for a short time free of speculative sentiment.

That's putting it simplistically. The guess at this point is whether there will be a break up or a break down.

[arepo]

The symmetrical triangle is as well recognized and predictive as the bubble chart, if not more so. It is not a lagging indicator.

this. there are a lot of people here who are in full agreeance with the techniques i use, and ichthyo's and others' self-assigned role as protectors of the people from my 'voodoo techniques' are really the ones with the skewed models.

[Ichthyo]

The symmetrical triangle is as well recognized and predictive as the bubble chart, if not more so. It is not a lagging indicator.

this. there are a lot of people here who are in full agreeance with the techniques i use.

When you use models, graphs, mathematics and locic, you are playing by the rules of science.

Aggreeance is not sufficient.
You yourself must do the counter test. You yourself must proof that the effect exsists and isn't just projected by your perception.You must investigat any alternative hypotheses, you must show why it is necessary to use the hypothesis you are applyng, and you must give a qualified guess on the error of each number you publish.

The last point is the most important here. If you would do due diligence and actually perfrom an analysys of all cases where your observations are confirmend and all cases wher they turned out as error, and if you would actually establish the error on each and every line you draw, then a large part of your "method" just collapses.

[Ichthyo]

I think you're mixing economics and behavioural neurology a bit too closely there, sport.

And aren't phenomena of economy created by behaviour of humans, sport?  

What makes you think you can calculate them like the acceleration of a physical object?

The triangle forms thanks to speculative uncertainty of the price direction.
Broad ranges are set where people feel comfortable that the price may be accurate.

You see a graph of an ongoing market activity.
Please show that in this specific case, speculative uncertainty is the reason driving the action you are seeing.
Please show that in this specific case, people are setting ranges.


You must concede that you can't do that in this situation. Which classifies your observation as hypothesis.


So you must wait until you can confirm it with data which is not questionable. And that happens after the fact.

And at this very point, the "predictions" generated by your hypothesis can be gained by much simpler means, thus you must discard your hypothesis according to Occams Razor. It is not a necessary hypothesis.


To stress that point. When you are in the situation that you can confirm a triangle in hindsight, this does not mean that you have proven the existence of "speculative uncertainty", the existence of "arbitrage activities".

Thus: you are drawing to far reaching conclusions.
And you are drawing these too early.
And you make them look more precise than they are.



It should be added that it is valid to use these patterns as heuristics for your own observations.
Given that you clearly acknowledge the limitations of your knowledge.

[Kazu]

Goodness.

Anybody that has ever traded Forex before knows that none of these patterns are hard-and-fast rules. Some weird piece of news could break, the market could be in some sort of odd state causing the pattern to not apply. And of course it is easier to pick out patterns from historical data than from current data. But that doesnt mean they are 'useless.' Even if an pattern or indicator, is right only 51% of the time, it still is potentially profitable if you can quickly identify when it was wrong and get out with minimal loss.

Why do you think triangles, fibo retracements, macd, stochastic, moving average and SAR are so famous? They have proven to indicate SOMETHING, a good portion of the time.

[Ichthyo]

Anybody that has ever traded Forex before knows that none of these patterns are hard-and-fast rules.

Geat.
But the proponents of TA claim to present a method, which uses precise graphs, produces numbers, creates predictions and can be applied reliably.
And they don't decline to indicate that their methods are uncovering hidden structures which do exist in reality, but can't be seen without employing a specific method of analysis.

Some weird piece of news could break, the market could be in some sort of odd state causing the pattern to not apply. And of course it is easier to pick out patterns from historical data than from current data. But that doesnt mean they are 'useless.' Even if an pattern or indicator, is right only 51% of the time, it still is potentially profitable if you can quickly identify when it was wrong and get out with minimal loss.

pragmatically speking, I fully agree with that.

Any rule set which can be performed quickly and doesn't obstruct you can be helpful with overcoming your doubts and start acting.
And when you combine that with proper risk management, you're fine.

But this doesn't proof anything about the specific rule set used.

Why do you think triangles, fibo retracements, macd, stochastic, moving average and SAR are so famous?

Have you considered that the reasons for that fame might be irrational?

Could it be that they might be a fad?
Could it be that they flatter the trade's ego and make him/her feel to be in control?
Could it be that they help to cover the uncertainty with analysis of fundamentals?

Have you considered that these patterns might be used to teach people observe the market and this way infested into people's behavioural patterns?



The fact that many people stick to an idea indeed proves that this idea exists. In people's minds, that is. 

[dandirk]

Why do you think triangles, fibo retracements, macd, stochastic, moving average and SAR are so famous?

Have you considered that the reasons for that fame might be irrational?

Could it be that they might be a fad?
Could it be that they flatter the trade's ego and make him/her feel to be in control?
Could it be that they help to cover the uncertainty with analysis of fundamentals?

Have you considered that these patterns might be used to teach people observe the market and this way infested into people's behavioural patterns?



The fact that many people stick to an idea indeed proves that this idea exists. In people's minds, that is.  

Ha sorry but that is the biggest bunch of garbage I have ever heard.

"The sky must not be blue because everyone see it that way and irrational for believing so."   Does that mean the sky is really blue?  No.  Does it mean the sky is not blue?  No.  Does it matter if the sky isn't blue?  None what so ever because everyone perceives it as so, for all intents and purposes, the sky is blue.

[alexh]

We need a big buy order!

[Ichthyo]

"The sky must not be blue because everyone see it that way and irrational for believing so."   Does that mean the sky is really blue?  No.  Does it mean the sky is not blue?  No.  Does it matter if the sky isn't blue?  None what so ever because everyone perceives it as so, for all intents and purposes, the sky is blue.

Did it ever occur to you that you can measure the wavelength of the sky light?

And what is the difference between the blue sky and a market graph you create?

[dandirk]

"The sky must not be blue because everyone see it that way and irrational for believing so."   Does that mean the sky is really blue?  No.  Does it mean the sky is not blue?  No.  Does it matter if the sky isn't blue?  None what so ever because everyone perceives it as so, for all intents and purposes, the sky is blue.

Did it ever occur to you that you can measure the wavelength of the sky light?

And what is the difference between the blue sky and a market graph you create?

Did it ever occur to you that measurements of blue sky by eye or by wavelength are pretty much the same in the reality of perception?   The only thing officially measuring something does is negate errant perspectives from the norm.  AKA in this case color blindness.  Reality could be the sky is red, most just perceive it as blue... a wave length measurement will just give a number to that label which in reality is red but we think is blue.  So even though we have this nifty measurement and think we are correct, we might not be.

The fact is perception is more true then almost anything in the real world.   If a graph or indicator is generally accepted, it is true, until it is no longer accepted.

The world was flat for a "fact" for many many years, until people accepted that it wasn't.  At the time they had all the smart ass reasons why it was flat... perception made it reality and was true.

While I do not have the knowledge to say the OPs throughts on the trend or triangle is false... I know your comments I quoted are garbage and really have not basis in arguing against his thoughts and other theories about triangles in markets.

[ruski]

While I do not have the knowledge to say the OPs throughts on the trend or triangle is false... I know your comments I quoted are garbage and really have not basis in arguing against his thoughts and other theories about triangles in markets.

Neither do yours, you're just arguing that "one million people couldn't be wrong."