Rationale for the existence of support lines - page 4
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SZZ: I still have not asked who thinks about the origin of the price: is the price a discrete or continuous value?
It turned out that I built two parallel lines. After that, price reflected off the top line 6 times with amazing accuracy (even made a profit on it). And from the bottom line 5 times, also with high accuracy.
In total more than 10 exact points in the future. This is, if anything, a much less likely coincidence than 10 eagles in a row of coins.
Anyway, it will be the research that will give the verdict.
For the research to be useful, you need to answer (or try to answer) some very clear questions:
1. When can we consider that we have the right to build a channel? Apparently when there are three identified price extremum points - for example, two highs and a low between them. Then the line between the highs will be the resistance line, while the line passing through the low will be the support line. The price at the time of the identification of the second high is moving downwards, to possibly reflect off the support. The moment the second high is confirmed is the "signal" for the channel to be built.
2. Once the channel is constructed, a second question arises: does it often reflect this way? Hypothesis: often, of course. About half the time. In the other half it breaks the support line.
3. With what accuracy are all these lines drawn and with what accuracy can we state that the price has reflected from the support? It is possible for the price to go a little further, but end up reflecting just outside the channel. But we'll still assume it's moving in the channel. Or vice versa: it might fail to reach the support and go back up again - but we will consider it reflected.
In short, the study is conceptually simple, but technically it can be much more complicated.
You are complicating things.
The method given at the beginning builds lines, not channels. A channel, like two parallel lines, is a particularity. You only need to be able to draw lines, and it doesn't matter if it is a channel, a triangle or something else. The accuracy of construction is entirely set by the Alpha criterion.
The rationale for sloping support/resistance levels could be to change the target levels for buying or selling in direct proportion to the change in time. But this is somehow unlikely for a channel, especially on a shallow timeframe
more likely is that the trend is linear in time and the channel is formed almost randomly around the median trend line.
Discrete is like everything else in this world. Continuity is a convenient mathematical abstraction.
Already, better - in the sense that the topicstarter's monologue promises to evolve into a dialogue
then let's move on.
1. How are extrema better? If the price is discrete, then who promised you that at that point where the extremum was the price of the exchange? If the volume of orders is sufficient, a certain vacuum will occur and the price will jump to the remaining orders that were 10 points below the current price and if the price does not meet a sufficient resistance it will jump over the vacuum formed. It is a bit more complicated to describe, but the principle is the same if these orders are not just removed from purchases, but transferred to sales.
ZS: thanks for noticing my question, now I have the following question: when predicting price, what is more important levels or vectors of price movement?
Yes, found a clear channel, could make some money.
As Saneeek said, sellers/buyers, supply/demand, waiting, bulls/bears blah blah blah, then a clear break of support at 1-2-3 and a move down... probably at 161 or 261...
Yes, found a clear channel, could make some money.
As Saneeek said, sellers/buyers, supply/demand, waiting, bulls/bears blah blah blah, then a clear break of support at 1-2-3 and a move down... probably at 161 or 261...
There are such lines on SB (if there weren't, the randomness of straying would be violated). And there are some on the WAC as well. The point is that lines drawn on SBs cannot be used profitably in practice.
Why can't it be?
Why can't it be?
Well, it's obvious that you can't, so you have to prove it if you think you can.
channels rule ))