Beginners' club - Candlestick analysis

[timepass]

You asked about the ideal 1-2-3. They happen very infrequently, but when they do (Bookmark this sentence.), drop everything you are doing and make sure you get in. The pips/ points are going to be monstrous:

1. It is formed at the end of a trend. In other words a bullish 1-2-3 at the end of a downtrend or vice versa.
2. It has perfect symmetry, which is approximately the same amount of candles from 1>2 as 2>3.
3. It forms a gartley-- 2>3 is 78.6% the distance as 1>2

Anything less than an ideal 1-2-3 will still work, as long as it is a 1-2-3.
Anytime you feel a market is nearing the end of a trend, then look for a 1-2-3 formation going the other way. You can even scope down on lower TF's to find a 1-2-3. As an example, it might a long trend on the daily. If you see a 1-2-3 on the hourly, then take it. That may have been your entry for a terrific trade heading in the opposite direction. Here's the nice thing! Even if you are wrong in estimating the reversal, you will still be a winner on a smaller trade.

I think I am getting it a bit now... a 1-2-3 is a double top/bottom or a "V" or inverted "V" - all with a lopsided right shoulder.

 

[4xpipcounter]

Timepass, as long as the TL's are drawn right, they are there for a reason, all though, there could be some validity in drawing a branch or 2.
The other thing is if price has drifted too far from one drawn on the weekly, then scope down to the daily or 4-hour, and then draw one on those TF's. You will see they will be closer to the action.

Also, if the price is getting too far from the TL, is it the time to reconsider the TL ?? Or time to reconsider the price action ?? All TLs break, can it be predicted, maybe by drawing some branches etc.. I don't know, but hope you get the gist of my query.

 

[4xpipcounter]

IYB, everything I've espoused is from personal experience. None of it came from a book. I talk about 1-2-3's, TL's because I've made a ton of pips using them. I've observed carefully how they operate. Everything I've mentioned is based on strong foundational principles. This is why I also tell people to never take my word for it, but at least respect what I say, then go use it practice with it, and observe it, and then see if it works for you. You will never know if the ABC pattern will ever work if you don't observe it and do all the necessary homework. You cannot just take someone's word for it. My silent mentor was "The Great One", Max McKegg. I cannot heap enough adjectives on him. Yet, I refuse to just believe him because he said so. There were things about his trading style I observed, and to this day, it has helped me.

Price action is watching the action with price. We watch the action with price as we see it break swing lows and highs, or watch them form, or watch TL breaks, then watch the corrections, or watch candlestick patterns and formations. There are people who trade naked, which means they trade price action with no indicators.

yes...i think so. im just learning to draw them. but the source from whr i learnt my abc says so and it all seems pretty logical. but would like to hear it from someone who does it day in and day out.

on a related to note? what exactly is price action, ive travelled ard in the forum but still in a fog. is it price-vol study?

 

[4xpipcounter]

That's why I like the internet. It makes me look young. Then I got to give it all away and mention my 6 children and 16 grandchildren.
Funny thing, still. You're not that far off. I'm 55. My oldest grandchild is only 10.
Oh, did I mention Tucker. Forget it. I better not go there. :lol:

no prob at all! - take ur time mr.grandpa (JK, lol - never imagined you being old, my guesstimate would at best have been late 40s ) the internet can throw up funny instances :lol: :rofl:

 

[4xpipcounter]

Sanjivdhir, that is exactly what you are looking for. The only disappointment was the strong correction on the same candle that broke it. The recent swing high on the chart will not be broken until this market heads lower.
There's some live action for you.

Hi....Iam posting a chart of gold guinea ..on Friday it made a hammer on daily chart...but it has also broken the earlier swing low....so what conclusion can be drawn from it....will someone please help me out.....

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[4xpipcounter]

Actually, IYB, that is a very good guess. He might be 280 pounds and you might meet him one of those days.
If that was the case, I would not want him to be 35 and I guess him at 50--lol.

uh oh.....long shot eh?

 

[4xpipcounter]

Keep going. He'll be 18 in no time.

his age shd b 20-23 now

 

[4xpipcounter]

IYB, I bet you will never guess how old my boss is. Unless you already know who he is, you won't even come close.

 

[4xpipcounter]

I'll say it as simple as it gets, and let's use the example of a bullish 1-2-3.

1 is the low point
2 is a swing high
3 is higher than 1, but lower than 2.
Enter long once the 2 is broken.

We have talked about ideal 1-2-3's, etc. But that is a 1-2-3 as described above.
TP, I think you nailed it the other day. In a trend, it is a series of swing highs and swing lows. The most important 1-2-3 it the one formed going the opposite direction of the recent trend.

I think I am getting it a bit now... a 1-2-3 is a double top/bottom or a "V" or inverted "V" - all with a lopsided right shoulder.

 

[murthyavr]

Timepass, as long as the TL's are drawn right, they are there for a reason, all though, there could be some validity in drawing a branch or 2.
The other thing is if price has drifted too far from one drawn on the weekly, then scope down to the daily or 4-hour, and then draw one on those TF's. You will see they will be closer to the action.

Dear Mr Paul,

I am sure you must have gone through DeMark's trendlines also? How do you
feel about them?

These two things appear to be somewhat interesting:

- that they eliminate the subjectivity in drawing a trendline

- that they focus on the recent price action, and ignore the history.

I would like to hear what you felt about them, since you have your own
method of drawing the trendlines.