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Stig:
Sorry for the delay. You know how long those sandbox visits can be! My
answers are under each question:
> 1211.00 gap top on 4/18/01
>Why do you use top of the gap? Do you always use top?
>Why not bottom?
No, I don't have a real preference. In the context of this particular
trade, the gaps were fairly close, so what I am looking for is any sort of
action, as we approach either the top or bottom of the gap, that the move
may be terminating as soon as one or both are filled. Sometimes, price
fills both, sometimes it fills only the closest one and sometimes, it
approaches the nearest but doesn't touch either [look back at the open gap
at 1200.75 to 1211 from 4/17 and 4/18...price went as low as 1212.75 on
4/25, but didn't touch the top of the gap or fill it]. In my post, I was
trying to show the areas of concern ahead of price once I got short. To me,
once the top of the gap was filled and then the gap was filled and then
price began trading lower, we were going lower until we found an up sloping
attractor--namely, up sloping ML.
>What about falling markets?
Really no difference to me. And I can't remember the last time we had so
many unfilled gaps on both the S&Ps and the NDs--though, we have been in
trading markets that have generated huge daily ranges, so I guess you
expect to see some gaps.
>Tops or bottoms of gaps?
Depends on the context. Only really important if the gap is large. Another
reason that might help you decide which is more important would be if
either the top or the bottom was in the vicinity of a ML or a fib
retracement/projection.
>When do you offset 50%?
I am a visual trader. When I cannot find a good ML set [one that price
tests and bounces off here and there], I will then try an offset or schiff
ML. OR if I have what I consider to be a ML that has a good frequency for
the particular market and then price drifts out of the ML to the right, I
will immediately put up a schiff using the same A-B-C [where the A pivot is
the 50 pct offset].
>Do you have a rule? Or is it a gut thing?
There are no hard and fast rules per se. Sometimes you can draw very pretty
'pitchforks' that are basically useless for trading. By that, I mean that
some folks want their pitchforks to never be violated. But pitchforks that
aren't touched and tested and violated are useless. It's better to see how
price interacts with a given pitchfork. There are rules that explain how to
use a pitchfork that has been violated to the outside once, for example.
>Thanks
>
>stig
My pleasure. It's a privilege to exchange ideas and thoughts with other
traders. I hope some folks are interested in these techniques.
Best,
Tim Morge
www.medianline.com
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