Thank you for sharing that info.

Today I had good luck in trading your method. Today on the ER2 I believed I had a good trading channel with anchored lines from 7/04 10:15cst high to 7/05 09:00cst high.

When the ER rejected the trading channel at 7/05 9:33cst and the $tick posted extremes of +800 but failed to hit $tick extremes of +1000 I took a short position.

Well, I rode the trade to the bottom of the trading channel where the $tick then hit -800 at 10:00cst.

See, you can teach an old dog new tricks

Thanks again,
john

I learned my basic trendline technique from Technical Analysis of Stock Trends by Edwards and Magee. They used a concept of “three days away” to define pivots, but since we’re working on intraday charts just change that to “three bars away.”

Once it looks like a pivot has been made, wait until there are three bars that do not touch the range of the pivot bar. Then use that top or bottom as an anchor or touch point for a trendline. As soon as you have two points for a valid trendline, draw a parallel from the furthest price point opposite that line to create a channel.

The charts you see on this blog can be somewhat misleading, since I’ve often erased many of my temporary trendlines, leaving only the ones that worked. But the “3 bars” rule will do a good job.

I’m not going to even guess how many thousands of charts I’ve drawn trendlines on, so I now just draw my trendlines where they look “right.” But I developed that skill by following the rules for many years.

Where I differ from many is I keep trendlines on my charts long after they have been broken by price. Even broken trendlines seem to have an effect when price returns to that area.

Here’s a post from last year called Trading By The Numbers that shows how I work.

I’m always intrigued at how you draw your trendlines. Would you share how to determine at which pivot points to start drawing your trendlines and trading channels, in real time trading?

Thanks in advance