I wonder with interest, on how useful is chart pattern trading when what I see is also what you see?

On positive side, if I act earlier than you, I will benefit from your later push. Then, if syndicate were to believe many are waiting what they "deem" to be waiting for some "break", ending with a surpise attack.

Interesting... probably market is too efficient to be manipulated by 1-2 houses.
You tip-toe, I tip-toe, everyone tip-toe. How? I still can't see what's in front.

I just chip in my thoughts, and hopefully more people can share their view.

If I have not mistaken, your question is similar to buying before breakout or after breakout. Buying before breakout you enter at a better price but have to wait, and the breakout may not come. Buying after breakout we saw the breakout already in place, but we enter at a worse price.

Your question is also similar to buying breakout without confirmation. Buying without confirmation you enter at a better price but the breakout may fail. Buying after confirmation we have confidence, but we enter at a worse price.

So the choice is very personal. I don't know what you will do, neither do you know what I will do.

As for pattern failure, we better respect the final decision of the market ( syndicate + all market participants ) and scrape the pattern trade.

And to avoid sydicate become the market majority, try avoiding less liquid counter.

You will always find perfect examples in the books you read. That's because the
authors are selling the ideas in the book, hence their books. I believe that they
should also have included negative examples of when the pattern did not work.
But then if they do then who will buy their books?

For good education it is always good to learn that there are also times when they
did not work. This is reality. But human they don't want to face reality so we have
what we have in books today.

So much have been taught about support resistance. So common you learn
buying above support and put your stops below the support. Or sell just below
resistance with your stops above it. So often do not work.

The locals on the CBOT and the CME, they lowball you and they highball you. So
many who leanrt the theory without the negative examples, so many go long just
above support and lump their sell stops just below. The locals love these
sitautions. You buy they sell to you. You put your stops there at chart points they
lowball you and buy from your stops.

Doesn't always work but work many times. It is about the market sentiment at
that point in time. When people are bullish they buy so they are long, they
expended their buying power. So what's left is they have to sell whether good
price or bad price.

So this is the sad reality. Of course the locals can't keep price there. At most they
can push momentarily but enough to take out the stops. And then the market price
structure returns to rule.

If you are trading just based on price pattern this is the problem. But if you are
trading according to a plan then it can be different. You may still be hit but that's
not going to shake you.

June 1993, this was the story. I was working in a local bank and USDSGD was my
forte together with USDJPY and USDDEM. The USDSGD was in a downtrend. It
was nearing a crucial round figure - 1.6000. But I know the style of "Ah Ma", the
lingo for MAS. At important levels they were bound to come in to support the
USDSGD. Their style was to take out all the offers in the market and then stick
their bids in for the rest of the day. They wait for you to hit then they strike. They
know when you are short you have to scurry to cover, to buy. Good strategy for a
central bank.

So it was that a very senior person sold the USDSGD when it broke the 1.6000
level. It broke but by only a few ticks, to 1.5995!!! And Ah Ma came in. See chart.
Granted it was a matter of time that the market would return to its trend. But only
after a big loss. And he did not return to ride. He could not do it emotionally.





Things can be different if you are trading with a plan. One that you have tested
and you are aware of how it may perform. Nothing is perfect like what they teach
you in books. Ther will be profits and there will be losses. Just how your plan
handle them.

The same June 1993 with the Turtle System was still a loss. But the entry was
earlier, not the theory text book type. But if you know your system you would not
miss that two good moves you see in the chart even as June 1993 still book you a
loss. See chart below.

But if you trade without a plan, a hit like that is going to shake you until you
freeze on the trigger the next time you are suppose to squeeze it.

The DJIA is near to the historical high. Perhaps it can be used here to observe
how the market react at this important major chart point.

But first do note this:
The industry has more than one source for the DJIA data. Yahoo! uses two such
sources: one for their historical database (which has a bigger daily range) and
another for their current day price (which has smaller daily range). Different data
vendors are potentially going to give slight differences. There is no way to know
who is right and who is wrong.

The DJIA historical database that Yahoo! uses is similar to the one from CSI. This
is the one with the bigger range. CSI is the most popular (and expensive) and one
of the oldest EOD data vendor. Being so, it can't be argue that their data is wrong
otherwise how to explain that they are still providing it until now?

So depending on which data vendor, the historical high from Yahoo! for 14Jan2000
is 11908.50 and 11750.28. This is the all-time historical high. Let's see how the
market react.

Based on the Yahoo! DJIA data with the smaller range, the DJIA made a new
historical high of 11758.95 (vs 11750.28) yesterday. The close at 11727.34 is also
the historical highest close.

The Yahoo! DJIA data with the bigger range did not make new historical high.
However, yesterday's close is still historical highest close.