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Indicators are liars
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Indicators are liars

  #41 (permalink)
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Fat Tails View Post

But I do not believe in this Universal Laws type of stuff. I have read a load of books and also scientific papers on fibs and markets. Fibs basically work as a self-fulfilling prophecy. Just as pivots. Lots of traders use them as reference points. No black magic or harmonic laws..

I don't believe in the black magic or harmonic laws either, but order in seemingly random chaos I do believe in. That's the beauty of two differing view points. Your use of a "self fulfillment prophecy" reinforces my belief system and in turn contributes to the re-enforcing prophecy theory. Its wonderful, I benefit and so do you from my belief in order in chaos theory.

My view point happens to come from my personal world view that assumes there is order and universal principals throughout nature despite the apparent randomness and the order and universal laws like gravity, the laws of motion, etc, stem from at a minimum, intelligent design as opposed to the theory that everything sprang from a random explosion which by its very nature promotes destruction and disorder instead of creativity and order.

In the final analysis, it is immaterial whether or not one believes in the universal law theory or not, what is important is that the belief exists and many people use them to guide trading. That fact alone is sufficient evidence for me to continue to use them. I think people use them in many different ways which would tend to promote a degree of randomness in the outcomes they produce since in the fib world, every single tick of price movement is a fib number of some larger time frame and this will cause an exponential diffusion of outcomes.

I try to use them in more of a macro manner since using fibs in a more granular level is possible but time consuming and somewhat inefficient in my opinion. Thats why I use the dynamic fib lines for the daily range and a MA for some confirmation. Then the daily range fibs act as possible targets as well as possible S/R. Time will tell if I am right nor not.

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  #42 (permalink)
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syxforex View Post
especially when you consider where the fibonacci trading language is most widely used, at the dealer level. You might replace the word lots in 'lots of traders' with the phrase biggest and best.

I read publications coming off the desks of currency strategy heads at several major houses and fib is the language of choice, in the fx market anyway. Considering that 4 houses control about 80% of the daily cash market flow, it's easy to see how these levels, however they are expressed, become real points of support and resistance where institutional clients of the dealers park huge stops and limits.

Sounds like guff to me.

At least I'm honest about it.

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  #43 (permalink)
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cpi65 View Post
Everyone's right in hindsight and all, but I struggled to get beyond what I have quoted dude...

"support was found at the close" WTF??

Mate, I guess these are daily candles OK? - look at it, it opened and traded DOWN DOWN DOWN all through the session, and closed very near the lows. Support has left the building bro! Add to that what was going on in the fundamental scene and I gotta say it seems crazy to call the low/close of that candle as support.

I reckon don't **** around trying to pick where the next support/resistance will be, just take your chances at where it was. simples :-)

Sorry just my opinion.

Yes support was found at the close because that's where the bottom was. If it went down 50 points less or
more that's where the selling stopped.

Yes daily candles, sorry for the omission. I used the BigCharts site so I can't confirm it's really top notch data.

Sometimes support/resistance works and sometimes not. If one looks at the 9th bar (bullish) from the
left and look at the three bars before that, one can see that the move up on the 9th bar went to the
previous resistance level.

Sadly, prices often crash through support or fly through resistance. I'd just thought I'd post on the
subject since I know a little about it.

- Stephen

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  #44 (permalink)
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How do you know the only reason the bottom was there was because the bloody exchange closed!!??

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  #45 (permalink)
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cpi65 View Post
Everyone's right in hindsight and all, but I struggled to get beyond what I have quoted dude...

"support was found at the close" WTF??

Mate, I guess these are daily candles OK? - look at it, it opened and traded DOWN DOWN DOWN all through the session, and closed very near the lows. Support has left the building bro! Add to that what was going on in the fundamental scene and I gotta say it seems crazy to call the low/close of that candle as support.

I reckon don't **** around trying to pick where the next support/resistance will be, just take your chances at where it was. simples :-)

Sorry just my opinion.

Don't agree with you here. The larger participants in the market cannot get out of their positions at the top or the bottom. Applied to last Friday this meant that they needed to buy at some stage, if they wanted to cover. If you look at the volume there was strong churning around the floor pivot S2 for ES. This revealed that some of the market participants were happy to exit their positions here. Price then went further down on lower volume to reach the pivot S3 and prior week's volume weighted average price, which also is a pivot. Starting from the churning point you could also observe a wedge, indicating that the downmove was losing strength.

Thursday's low worked both as support and resistance on Friday, and you could have made two profitable trades off that line.

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  #46 (permalink)
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cpi65 wrote: How do you know the only reason the bottom was there was because the bloody exchange closed!!??

==========================================================================

2 attachments showing so-called flash crash of May 6, 2010. One can see
a FAR greater downward move in that trading day (with it stopping at
support and rebounding).

Everyone knows that the exchange closes at a given time (unless circuit
breakers go into effect) yet some days the Dow will close at its lows and
be down 150 points, yet on another day closing at it lows being down 175
points, or 217, or 242, or whatever.


- Stephen

Attached Thumbnails
Indicators are liars-so-called-flash-crash-wikipedia-may-6-2010-.jpg   Indicators are liars-dow-chart-includes-flash-crash-day.jpg  
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  #47 (permalink)
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Fat Tails View Post
Don't agree with you here. The larger participants in the market cannot get out of their positions at the top or the bottom. Applied to last Friday this meant that they needed to buy at some stage, if they wanted to cover. If you look at the volume there was strong churning around the floor pivot S2 for ES. This revealed that some of the market participants were happy to exit their positions here. Price then went further down on lower volume to reach the pivot S3 and prior week's volume weighted average price, which also is a pivot. Starting from the churning point you could also observe a wedge, indicating that the downmove was losing strength.

Thursday's low worked both as support and resistance on Friday, and you could have made two profitable trades off that line.

Who's talking about last friday? Or about pivots or whatever?

Look at that candle on his chart. It is long and red.

End of.

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  #48 (permalink)
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stephenszpak View Post
cpi65 wrote: How do you know the only reason the bottom was there was because the bloody exchange closed!!??

==========================================================================

2 attachments showing so-called flash crash of May 6, 2010. One can see
a FAR greater downward move in that trading day (with it stopping at
support and rebounding).

Everyone knows that the exchange closes at a given time (unless circuit
breakers go into effect) yet some days the Dow will close at its lows and
be down 150 points, yet on another day closing at it lows being down 175
points, or 217, or 242, or whatever.


- Stephen

Sorry dude but I don't really see what you are getting at here - at all.

I'm talking about that long red candle on the chart you posted, and you said "support was found at the bottom".

I disagree. I think anyone calling the low/close of that candle as support must be smoking crack or summit. Look at it, what on earth is supportive about that candle? the fact that it closed??!!!!

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  #49 (permalink)
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cpi65 View Post
Who's talking about last friday? Or about pivots or whatever?

Look at that candle on his chart. It is long and red.

End of.


The red candle fell below support, as a trendline was broken. Trading is a multi-facetted game, and sometimes the inherent feedback mechanisms of the auction process prevail over the psychological feedback mechanisms, as was the case for the mini crash. But if you look at the price action following that wild day, you can see that both the upper and the lower end of that candle served as resistance and support.

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Indicators are liars-long-red-candle.jpg  
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  #50 (permalink)
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Fat Tails the candle I guess you are referring to (flash crash) isn't the one referenced in the original chart.

You can say what you like about red candles, long or otherwise, on any other day in history. My point is that the first candle in the first chart posted isn't anything like supportive.

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