Practic Lesson 02-1
Stratching and folding on the charts
Yesterday's situation on BTCUSD made me think of writing a continuation of the previous lesson. Start here...
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In the picture below, I marked the combinations of dots on the M30 TF in accordance with the way I did it in the previous lesson. That is, the yellow rectangles highlight the correct combinations of dots of the same rank, after which the position should be opened, the green color marks the correct combination of dots of different ranks, after which the position should be opened, the red color indicates an invalid combination of dots. Although we see that after the green quadrangle it is highly undesirable to open down. How to filter out such undesirable situations will be discussed in the next lesson, I will say in advance that there is a solution.
Now look at the right side of the picture... The red arrows show the dots that complete the folding phases, but are located inside the channel, not on the line. It can be seen that the first two arrows point to the dots, after which this principle successfully filtered out unwanted entries, it can be seen that the price movement was insignificant and it is hardly worth opening at such moments. But then there are three arrows at a row that show the dots that complete the folding phases, after which it would be very desirable to enter the market, but the principle of ownership of the last dot to the channel line, did not allow this. As a result, good potential entry opportunities were missed.
Now let's move on to the next picture... Here is the situation on the M15 TF. As can be seen from the picture, all three combinations of dots satisfy all the conditions and it would be possible to successfully trade this downward movement.
So what happened? The answer is simple - the dynamics of the market has changed, the speed has increased and, accordingly, the M30 (4n) has ceased to be in time due to the fact that the main development of the situation took place on the M15 (3n).
From the pictures it becomes obvious that yesterday it was necessary to work on the M15. A quite logical question arises... What to do with it and how to understand in advance what the current dynamics of the market is and on which time frame its better to monitor chart today? Unfortunately, I don't have a definitive answer at the moment. I'll think about how to solve this issue, maybe the Master will tell me something ...