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The long arrows are also manually drawn on personally verified entries. The small triangles and small arrows are from an indicator that tries to point out every entry pattern. Arrows are stronger then triangles, colored are stronger then transparent. They get generated as soon as conditions are met while the bar is in progress, and speak an alert, so that I don't have to be looking at the chart all day. When I hear an alert, I turn my attention to the chart to verify the correctness of the signal. A lot of the time the signals tend to be generated a few bars early, which is good because it puts my attention on the chart right before something happens.
In my opinion this type of analysis is not solid enough to make a decision, instead wait for other traders' errors. Particularly from those traders who try to catch every top but late. It usually produces a good oportunity for the informed trader. Here we had such a case where amateurs feeling the urgency of the moment and not wanting to miss a move have been selling into support. That's the type of mistake you want to exploit.
I would say stay out of this area totally. Tiny little overlapping bars, congestion. It's just the luck of the draw at best in here. If you are a breakout trader, wait til it breaks. I also think the amateur heard would be buying here, as the market has been going up since the UK open, and just had a big surge up. I think amateurs would be thinking they are missing the big up move. Of course, this is all pure speculation on my part, as I am not part of the collective consciousness of every market participant
I think buying pullbacks in a trend is always a good strategy. However, in this case the market was moving sideways (at least it was when I entered). As monpere observed, I figured the market could go either way - I simply placed a bet that the market would roll-over rather than make a final flag pattern (ala al brooks). The offer gave me a premise - a reason to close - once that offer got taken out I covered on the next opportunity.
Post-mortems are always difficult - I was mainly interested in how that offer was going to play out. As I watched the trade, it seemed likely that the market was trying to push into the area above the previous high - all that pressure with no downward correction - just buying buying buying. The traders that were responsible for pushing into the stops were successful - they blew out some shorts and that proved to be the last gasp of the move: Once those shorts were taken out, there was no further reason to push the market higher and it could correct down. At least that's how I interpret what happened. I'm curious what others' views are?
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