Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
The more contact points a trendline has, the more meaningful it is. There's no reason to go for a version that follows the price less closely over the same period.
Actually, not sure if that's a 'hard rule' of trendlines.
Anyway, the triangle looks fine to me. Broke out upwards. Don't know what porcupine's problem is with it... I think he just doubts that TA could ever dominate fundamentals, news, sentiment, etc.
If there is an actual glitch in the exchange data or it is due to some form of illiquidity (then again, you don't chart illiquid exchanges), then that's ok, but it's a bad idea to assume you can say which is valid and invalid, which is to be included and which ignored. It's the same thing with news, you don't have a framework of judging that, so might as well draw some dinosaurs.
I really don't think I know this as a 'hard rule'. Can you find me a quote on it?
The way I understand it, there are two ways to go about trendlines, in the most general sense: 1) not allowing any violation (in which case, only candle extrema are possible points of contact), 2) minimizing the no. of violations and only allowing candles that /closed/ above the trendline.
In the latter case, you can mix up extrema and closing points of candles. But like I said, I can be corrected on this.
http://www.babypips.com/school/elementary/support-and-resistance-levels/trend-lines.html
I suppose that can be interpreted such. I never read it anywhere, but it's my experience and it's the same way I approach all other things in technical analysis. If you start cherry picking, the only thing that will happen is for your bias to dominate the analysis. If you already know what is meaningful and what is meaningless, then you probably have no need for trendlines in the first place. The point is that once you judge the validity of data itself, then you have (except in special circumstances) departed from the realm of analysis and entered the realm of wishful thinking. You should take the data as is. But if it worked for you in the past, who am I to judge you?
The other things I'd say about trendlines aside from contact points and consistency is, like many other things, disregard all that is short term, because almost all of it is noise.
Yours is arbitrary because it uses all candle wicks but one for the trendline. Either you do it by closes, or you do it by high/lows, not both.
Actually, not sure if that's a 'hard rule' of trendlines.
Anyway, the triangle looks fine to me. Broke out upwards. Don't know what porcupine's problem is with it... I think he just doubts that TA could ever dominate fundamentals, news, sentiment, etc.
I really don't think I know this as a 'hard rule'. Can you find me a quote on it?
The way I understand it, there are two ways to go about trendlines, in the most general sense: 1) not allowing any violation (in which case, only candle extrema are possible points of contact), 2) minimizing the no. of violations and only allowing candles that /closed/ above the trendline.
In the latter case, you can mix up extrema and closing points of candles. But like I said, I can be corrected on this.
Quote
And most importantly, DO NOT EVER draw trend lines by forcing them to fit the market. If they do not fit right, then that trend line isnt a valid one!
I suppose that can be interpreted such. I never read it anywhere, but it's my experience and it's the same way I approach all other things in technical analysis. If you start cherry picking, the only thing that will happen is for your bias to dominate the analysis. If you already know what is meaningful and what is meaningless, then you probably have no need for trendlines in the first place. The point is that once you judge the validity of data itself, then you have (except in special circumstances) departed from the realm of analysis and entered the realm of wishful thinking. You should take the data as is. But if it worked for you in the past, who am I to judge you?
The other things I'd say about trendlines aside from contact points and consistency is, like many other things, disregard all that is short term, because almost all of it is noise.
Yeah, I added an EDIT later, making it clear that I don't claim you should declare candles "outliers" and ignore them (unless for technical reasons).
The idea runs down to the following principle, I guess: a violation of a trendline through candle extrema is overall less significant than a violation through a close above/below it.
Whether that is empirically motivated or not, is a good question.