Consolidation patterns and breakouts - Traders Hideout | futures io social day trading
futures io futures trading


Consolidation patterns and breakouts
Updated: Views / Replies:1,603 / 11
Created: by TickedOff Attachments:2

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 2  
 
Thread Tools Search this Thread
 

Consolidation patterns and breakouts

  #1 (permalink)
Normal Wizard
Sydney, NSW, Australia
 
Futures Experience: Intermediate
Platform: NinjaTrader with Jigsaw DOM
Favorite Futures: CL, 6E, ES, Piano
 
TickedOff's Avatar
 
Posts: 191 since Nov 2014
Thanks: 163 given, 195 received

Consolidation patterns and breakouts

Ok say price spikes upwards and then starts to consolidate, would the consolidation pattern be an important factorin determining whether or not the momentum will continue to the upside? Like say its an ascending triangle, theres a horizontal resistance and price keeps making higher lows, this looks to me like buyers are more eager to get into a long, vs a descending triangle where you have a horizontal support but price keeps making lower highs, looks like sellers are more eager to get into a short so youd think maybe it will break lower instead.

Reply With Quote
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
Trading for Fun
Bodoe , Norway
 
Futures Experience: Intermediate
Platform: Fxcm tradestation II
Favorite Futures: Forex
 
sharpshoota's Avatar
 
Posts: 142 since Jun 2014
Thanks: 843 given, 117 received


A littlebit hard to grasp your question.... But a consolidating triangle is often called "a coil" because price coils up , collecting more power before it explodes further along with the trend.
The angle of the move with the trend is most of the time much sharper than the angle of the consolidation.
I used to trade theese before when I traded stocks and options. the tricky thing was to get in when the breakout bar closed and place the stop below it.


Last edited by sharpshoota; December 15th, 2014 at 03:45 PM. Reason: spelling
Reply With Quote
 
  #4 (permalink)
Elite Member
Nanjing, NJ
 
Futures Experience: Intermediate
Platform: CQG/TOS
Broker/Data: Optimus/CQG
Favorite Futures: CL
 
Posts: 102 since Jun 2010
Thanks: 33 given, 71 received

be careful to rely on chart pattern in determining whether the momentum will continue. a large order/strong thrust will invalidate an otherwise “perfect and pretty” pattern. in fact, it’s the momentum, or the lack thereof, that creates chart pattern.

Reply With Quote
 
  #5 (permalink)
Elite Member
Austin, TX
 
Futures Experience: Intermediate
Platform: F-16CM-50
Favorite Futures: JDAM
 
tturner86's Avatar
 
Posts: 5,781 since Sep 2013
Thanks: 9,848 given, 11,151 received
Forum Reputation: Legendary


TickedOff View Post
Ok say price spikes upwards and then starts to consolidate, would the consolidation pattern be an important factorin determining whether or not the momentum will continue to the upside? Like say its an ascending triangle, theres a horizontal resistance and price keeps making higher lows, this looks to me like buyers are more eager to get into a long, vs a descending triangle where you have a horizontal support but price keeps making lower highs, looks like sellers are more eager to get into a short so youd think maybe it will break lower instead.

Post a chart of what you are talking about. Easier to see and understand.

Reply With Quote
The following user says Thank You to tturner86 for this post:
 
  #6 (permalink)
Membership Temporarily Revoked
Calgary Alberta/Canada
 
Futures Experience: Advanced
Platform: TDWaterhouse
Favorite Futures: stocks (long term)
 
Posts: 934 since Feb 2014
Thanks: 180 given, 777 received


TickedOff View Post
Ok say price spikes upwards and then starts to consolidate, would the consolidation pattern be an important factorin determining whether or not the momentum will continue to the upside? Like say its an ascending triangle, theres a horizontal resistance and price keeps making higher lows, this looks to me like buyers are more eager to get into a long, vs a descending triangle where you have a horizontal support but price keeps making lower highs, looks like sellers are more eager to get into a short so youd think maybe it will break lower instead.

Chart patterns in themselves are not indicators of "momentum". An ascending triangle pattern is usually considered a bullish pattern. You are establishing the resistance/support boundaries in the fight between Buyer and Seller. For example this is a chart with an ascending Triangle that is quite well defined.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Here the Buyer has steadfastly avoided spend more than a maximum amount of money per share (about $45.40) for about 6 months.... eventually the Sellers (who have been able to raise their minimum over the same time period) get there way and it seems that they have successfully breached that upper triangle resistance.

It does not always happen that way though so spotting an ascending triangle and buying it because of it general bullish nature can trap the unwary.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Here when the apex of the triangle was neared the sellers were the losers here and the buyers successfully broke the support .

It has little to do with "momentum" the charts establish resistance/support boundaries that you pay particular attention when approaching said boundaries

In general it is not a good practice to make a purchase when falling to a support line.... the support may breach .... However it is much better to buy when rising from a support line.

Similarly, selling as you approach a resistance line (unless you are of course taking profits for other use) or shorting a stock as it rises to a resistance line is not a great practice as it may breach that line and continue rising... in the first place you lose additional profit (placing a stop-loss would capture your profit normally at that point if it were to fall) in the second you would be scrambling to cover your short (better to wait for the direction to be revealed before shorting)


Last edited by Underexposed; December 15th, 2014 at 11:03 PM.
Reply With Quote
The following 2 users say Thank You to Underexposed for this post:
 
  #7 (permalink)
3rd times a charm!
San Francisco CA
 
Futures Experience: Intermediate
Platform: Ninja
Broker/Data: CQG
Favorite Futures: ES
 
Zxeses's Avatar
 
Posts: 139 since Jun 2014
Thanks: 90 given, 171 received


Underexposed View Post
Chart patterns in themselves are not indicators of "momentum". An ascending triangle pattern is usually considered a bullish pattern. You are establishing the resistance/support boundaries in the fight between Buyer and Seller. For example this is a chart with an ascending Triangle that is quite well defined.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Here the Buyer has steadfastly avoided spend more than a maximum amount of money per share (about $45.40) for about 6 months.... eventually the Sellers (who have been able to raise their minimum over the same time period) get there way and it seems that they have successfully breached that upper triangle resistance.

It does not always happen that way though so spotting an ascending triangle and buying it because of it general bullish nature can trap the unwary.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Here when the apex of the triangle was neared the sellers were the losers here and the buyers successfully broke the support .

It has little to do with "momentum" the charts establish resistance/support boundaries that you pay particular attention when approaching said boundaries

In general it is not a good practice to make a purchase when falling to a support line.... the support may breach .... However it is much better to buy when rising from a support line.

Similarly, selling as you approach a resistance line (unless you are of course taking profits for other use) or shorting a stock as it rises to a resistance line is not a great practice as it may breach that line and continue rising... in the first place you lose additional profit (placing a stop-loss would capture your profit normally at that point if it were to fall) in the second you would be scrambling to cover your short (better to wait for the direction to be revealed before shorting)

Your logic and explanation is perfect, right up until your conclusion.

Both charts show perfect elliot wave theory bullish and bearish ascending triangles. The most important parts of each triangle is the price action back in march and april. Triangles are consolidation periods of the previous major moves, and when they break, they break in the direction prior to the triangle. Both charts show that.

Depending on how you count the waves, both triangles broke out on wave 9 of the mini waves in each triangle, or mini wave 8 being the waves to long/short.

-D

Reply With Quote
The following 2 users say Thank You to Zxeses for this post:
 
  #8 (permalink)
Membership Temporarily Revoked
Calgary Alberta/Canada
 
Futures Experience: Advanced
Platform: TDWaterhouse
Favorite Futures: stocks (long term)
 
Posts: 934 since Feb 2014
Thanks: 180 given, 777 received


Zxeses View Post
Your logic and explanation is perfect, right up until your conclusion.

Both charts show perfect elliot wave theory bullish and bearish ascending triangles. The most important parts of each triangle is the price action back in march and april. Triangles are consolidation periods of the previous major moves, and when they break, they break in the direction prior to the triangle. Both charts show that.

Depending on how you count the waves, both triangles broke out on wave 9 of the mini waves in each triangle, or mini wave 8 being the waves to long/short.

-D

I stand by my conclusions in that post.

I don't use Elliot wave theory. I find that a simple watch of breaking of resistance/support suffices for me. the QUESTION of the OP was regarding use of Ascending Pattern charts and momentum. And I answered it correctly. To my albeit limited knowledge of Elliot Wave theory it is a mathematical model of ebb and flow of pricing... it has no momentum component to it.

So my answer to the OP was correct and my general observations of buying and selling when approaching resistance/support lines are also prudent... especially since I don't use Elliot Wave theory in my analysis. One day I may do so but until this time I will follow my current practices.

Reply With Quote
The following user says Thank You to Underexposed for this post:
 
  #9 (permalink)
3rd times a charm!
San Francisco CA
 
Futures Experience: Intermediate
Platform: Ninja
Broker/Data: CQG
Favorite Futures: ES
 
Zxeses's Avatar
 
Posts: 139 since Jun 2014
Thanks: 90 given, 171 received


Underexposed View Post
I stand by my conclusions in that post.

I don't use Elliot wave theory. I find that a simple watch of breaking of resistance/support suffices for me. the QUESTION of the OP was regarding use of Ascending Pattern charts and momentum. And I answered it correctly. To my albeit limited knowledge of Elliot Wave theory it is a mathematical model of ebb and flow of pricing... it has no momentum component to it.

So my answer to the OP was correct and my general observations of buying and selling when approaching resistance/support lines are also prudent... especially since I don't use Elliot Wave theory in my analysis. One day I may do so but until this time I will follow my current practices.

You make a good point; and like I said I do agree with you about resistance/support lines.

I know this is a tangent, but as an aside for anyone else reading the thread:

There are two major working trading "families" related to Fibbonoci. Elliot Wave theory was the first fibbonoci trading model or system (outside of just measuring fibbonoci directly and trading off that)

The second, which I dont know how far back it goes, is the recent upsurge of "Harmonic Patterns", which I'd call the modern-day outcome of its Fibbonoci source and wave theory brother.

I personally like trading from Harmonic Patterns more then trying to number waves, since I find the numbering process to be WAY TO subjective, whereas with HP's, the pattern is either there or its not.

Merry Christmas everyone :-)

Reply With Quote
The following user says Thank You to Zxeses for this post:
 
  #10 (permalink)
Membership Temporarily Revoked
Calgary Alberta/Canada
 
Futures Experience: Advanced
Platform: TDWaterhouse
Favorite Futures: stocks (long term)
 
Posts: 934 since Feb 2014
Thanks: 180 given, 777 received



Zxeses View Post
You make a good point; and like I said I do agree with you about resistance/support lines.

I know this is a tangent, but as an aside for anyone else reading the thread:

There are two major working trading "families" related to Fibbonoci. Elliot Wave theory was the first fibbonoci trading model or system (outside of just measuring fibbonoci directly and trading off that)

The second, which I dont know how far back it goes, is the recent upsurge of "Harmonic Patterns", which I'd call the modern-day outcome of its Fibbonoci source and wave theory brother.

I personally like trading from Harmonic Patterns more then trying to number waves, since I find the numbering process to be WAY TO subjective, whereas with HP's, the pattern is either there or its not.

Merry Christmas everyone :-)

I understand.... there are many ways to skin the TA cat. I have not learned Fib's or Harmonics or Elliot wave stuff. You may have studied it for a while and made some sense of it and that is all good.

If you look at my journal (icon in the bottom left of the signature) you will see that I have developed a suite of indicators and I understand their interactions.... I have tried to show how I use them... I have been quite detailed in my approach. I have a long term fantasy portfolio which is fantasy only in the fact that the stocks in it are not physically traded in reality but the trades I announce beforehand are made based on real data of the day following so it is as close to reality as I can make it... I record on a biweekly basis how well this portfolio and trades are performing.... I am open as to the gains and losses in the week and do not hide anything from the reader.

If you follow this journal you will see as of Feb/2014 I am a little over 8% to the good in a rather ragged market (Canadian stocks)... have not lost any dollars from the original poke and if January goes well I will finish about 12-15% gains for the 12 months...as a long term trader.

So ... it is not bragging to say that my approach to TA has some merit... and my conclusions are not WRONG, though sometimes they can be improved perhaps.

Different strokes for different folks.... there is not just one form of TA. If one is smart, one can cobble together a pretty good strategy by observing what others do and adapt some or all of it to your strategy. That is what I have done over the past 10-12 years....

Reply With Quote
The following user says Thank You to Underexposed for this post:

Reply



futures io > > > Consolidation patterns and breakouts

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Linda Bradford Raschke: Reading The Tape

Elite only

Adam Grimes: TBA

Elite only

NinjaTrader: TBA

January

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
How do YOU enter breakouts? SammyD Currency Futures 5 July 27th, 2012 03:29 PM
Indicator to check consolidation danjuma NinjaTrader 4 February 26th, 2012 01:48 PM
Trading stocks based on breakouts of chart patterns MichaelWesten Trading Journals 25 February 24th, 2012 02:47 AM
Consolidation alert a la tzachi Saroj NinjaTrader Programming 35 August 21st, 2009 05:01 PM
consolidation lines? rassi Traders Hideout 1 June 16th, 2009 06:37 AM


All times are GMT -4. The time now is 07:06 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-11 in 0.17 seconds with 20 queries on phoenix via your IP 54.92.194.75