lowtrade

[lowtrade]

'cha-ching'

Good subject, retraces.

As always, I have an opinion about retraces also. LOL

The retrace pattern I look for is the FIBs 61/50% retrace point. Here's why. It's once again an eval of the retail mindset.

I find the cherry on top of any TA & chart evaluation is will retail support what I see in the charts & indicators?

When a run comes, emotion takes over. When the emotion stops, retail must find a true fair market value!

Here comes the FIBs,
I call the indicator the run emotion indicator, along with the continuing volume support.

I want to see a 50% adjustment. But most of the time emotion continues it past to 61%. Finnally it balances out at 50%, where it should be.

If I see the retrace go past 61% to 75% or 100% it tells me, the retail herd was taken. Normal emotion spike, deserves logical 50% middle settle point. This not being supported, indicates to me outside pressure.

I feel if there was no manipulation, every run would work like this. So when it retraces past 61% it's trouble for the play to continue the FLAG chart pattern, of run retrace, run retrace, run retrace.

But opens up a possibility of the run to change from run, to up channel climb. 100% retraces seem to create up channel bottom & top line points.

Will try to find old charts showing this, but flag run/50/61% retraces tend to form continuious runs. And run 100% retraces, slower up channel climbs or a breakdown without needed support.

I have not heard of the 75% retrace rule, but here's what my experiences has seen about the succesful FLAG run/retrace pattern.

Oct to Nov = 1 month flag run chart, with 61% retraces.




This one shows the 100% retraces with support to create the up channel. Any one of the 100% flags could have broken down without support. Higher risk level to trade the up channel on flags. Then just short FLAG runs.

I like the flag play. Don't trust, but will play if TA says to, on the ones with over 61% FIBs retraces.