Bi-Fi Roll

There is a scene in the Asterix the Gladiator, where they invent a new, less bloody game.

The rules are simple, you are not allowed to say black, white, yes and no. If you do, you lose.

My intention with this blog entry to call attention on a self-imposed imprisonment that comes with drawing too many trendlines.

See the world is not black and white, it isn’t left or right and trading isn’t merely buying or selling.

When people draw a correction, this is what they always seem to do uniformly.

There are a lot of problems with this, even if you are conscious of the possibility that wave C does not always make a high beyond Wave A.

Here’s the recent ABC up.

Not only that the end of A did not coincide with the swing high, B, that was “supposed to be” a counter move, went completely sideways, it took out the high made by A, it ended more than half way up of its range, with way higher than the low that it made in the first hour. Some down wave that was.

Wave C made a high, Wave c of Wave C failed that high as well, but Wave C did not end until volatility wore off. Thus the end point and the furthest point did not coincide again.

As shown by the Market Stifle indicator.

If you want to count this wave structure up as 5 waves, be my guest.

So yeah, just about everything you think you know of waves is wrong, and I hope you are starting to get the picture that putting trendlines in the way of a corrective wave structure will get you nothing. They will walk back and forth through them like they never existed in the first place.

Does Smart Money understand, that sudden-found volatility will reverse on itself?

Smart money activity is always cyan. Check the doji resolution above. They may have dumped some higher, but in volume only when volatility choked.

Does Smart Money understand that they command the new market direction after volatility dries up and act right after a hourly doji?

Is their favorite song called: Move Any Market?

Could it be that Smart Money is a bunch of opportunistic dudes of similar thinking?

Could it be that Smart Money is reading my blog?

Believing that the market can do anything at any given moment is absolutely the wrong approach.

The market can do a limited number of things and everything is the function of the underlying volatility.

Alright, here’s another one for you. How does a wedge look like?

Like this?

What if I told you that this below was a wedge.

And this.

The price movement does not have to resemble a wedge shape. You know, I hold your chin, you hold my chin, whoever smiles first is gonna get slapped..

A wedge is a period (10 hours plus would take my attention) lacking relative strength extremes, so the first extreme showing up is an instant fade. See there you go again with that narrowed in straight-line-jacket thinking.

Good thing I was here for you to pump you up with lithium.

if ((RSI2[i+11]>88.7 || RSI2[i+11]<9.5) && RSI2[ArrayMaximum(RSI2,10,i)]<88.7 && RSI2[ArrayMinimum(RSI2,10,i)]>9.5 && 
    !((RSI2[i+12]>88.7 || RSI2[i+12]<9.5) && RSI2[ArrayMaximum(RSI2,10,i+1)]<88.7 && RSI2[ArrayMinimum(RSI2,10,i+1)]>9.5)