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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: KymarFye who wrote (67834)	1/28/2001 11:35:07 AM
From: Michael Watkins	Read Replies (1) \| Respond to of 99985

KymarFye, I think the wedge, however drawn, is a reasonable enough formation to be aware of and cautious about. They aren't always perfect, and certainly I view the current chart with caution either way. Its worth noting the futures as well as cash indicies. Tick volume on the futures is a little more consistant, esp. on the SP futures, with a wedge or rising consolidation zone whatever name you want to give it. Day by day is the way I play anyways. We can see if the folks screaming 'hammer' from Friday's action are rewarded or punished this week.

To: KymarFye who wrote (67834)	1/28/2001 1:27:54 PM
From: HairBall	Read Replies (1) \| Respond to of 99985

KymarFye: If you're indicating a wedge with a lower trend line starting 1-8 and breaking down 1-22, that's not much time to form a wedge, the volume patterns don't fit (generally strong rather than dropping off), and the breakdown would have come virtually at the apex, suggesting a weak move from a weak version of a pattern that, as patterns go, is already fairly weak. Even if it is a wedge breakdown, the drop from the 1-24 high to the 1-26 low isn't far from about normal for an average breakdown from a rising wedge. Just my take... Most books or web sites example daily time interval wedges I have seen. However I am not a student of any so I could be wrong. IMO wedges can and often do build intraday to days. It happens all the time. The shorter the time period the less reliable and if they get to drawn out they become less reliable as well, but that doe not in and off itself make them invalid. By the way more often than not wedges are formed with declining volume not increasing volume. However, even that has to be looked at in the context that intraday trading volume patterns often reveal higher volumes at the open and close with a volume trough near the middle of the trading day. You are right IMO, the break to the norm of the rising wedge formed off the 1-8 pivot low to the 1-24 high has already satisfied a minimum retrace. Let's see if it backtracks more...<g> I posted a chart of the wedge earlier today (as I see it). I called the "topout" real time 15 to 30 minutes before it occurred (depending on the major index you look at) on this thread on 1/24. I think the wedge pattern worked just fine and has been very tradable on the way up and at the breakdown...<g> I do think that there's potentially a better wedge still being formed on the bottom side from the 1-03 low through the 1-26 low (with a slight penetration on 1-08), on the top very neatly from 12-22 to 1-24. Drawing a trend line from the 1-3 low to the 1/26 low chops off the price action that occurred on the 8th. A very important price action pivot point should not be ignored. You are correct to watch for patterns to segway from one to another it often happens, I call it morphing. However, there is often no pattern in play and some seem compelled to come up with one. The other major problem I see out there is indiscriminately drawing trends lines. All of the above is in my opinion. Regards, LG