New PLAY in my VFI arsenal – trendline
Recently I have been playing with the new PLAY I have incorporated into my trading. It is a very very simple concept that makes sense to me. Surprise, surprise – it is a trendline :). Of course there is not a trendline like a trendline. After observing market patterns testing them and actually trading them live (for a few years now) I have noticed that if my “supbreak play” (another play from my VFI arsenal) was supported by a break out of the trendline the success rate increased. There are two MUST elements and one optional that the trendline must have (speaking of a ascending trendline in this case):
- it has to have three bounces which have to be nicely technical (no closes below the trendline, max. wicks)
- after the third (or any higher) push-back from trendline the price cannot create a new HIGHER HIGH (but LOWER HIGH only)
- optional: important MA’s, levels holding nicely (in this case price holding below some level), accumulation of orders, nice weather and full moon 🙂
If it does create higher high then I have to wait again for a push-back towards trendline and creation of a new LOWER HIGH. Third variable which plays an optional and discretionary role is the AREA (zone) where the trend final stopped rising. If it is an important level it might signal that the current trend needs a break just to regain strength and come back even stronger (that is a loss scenario for us). This variable decides how much size I would go in with. For example if the LOWER HIGH (in the uptrend) is bouncing of from some zone back to test the trendline level that is the good sign of trend weakening. Again, after this setup is established there are discretionary aspects under which I decide. But if the trendline does have first and second criterion I am pretty much ready to see if the LEVEL is ready, after that it is just looking at VOLUME, ACCUMULATION and STRENGTH of the trendline break (some important MA’s can be handy as well). So you are probably wondering, is this it? Yeap, that’s it. No fancy charts, no indicators just a dumb trendline. Anyway most of my plays are based on simple price action and how I call it “strict technicity” around an intraday levels.
Here are some examples of realized live trades (profitable and not profitable):
Leave a Reply