Thursday, January 20, 2005
Intraday Bisects and Support & Resistance
I think today's price action provided a number of good opportunities for selecting non-standard bisect pivots. As a reminder, I call Andrews median lines bisects (
click if you don't know why). Traditionally, one looks for "market structure highs" (or lows) for pivot sets, which makes good sense, in partic. for longer time frames (daily and up). Intraday, however, is more influenced by momentum and, during chop, by local support and resistance (S&R). Today's chart shows some ideas for exploiting common intraday S&R points.
Black Bisect: The first bisect uses gap down open price as Pivot 1. Pivots 2 and 3 are the first Low and High after the open. When it makes sense, I prefer High Pivot bars that close high, and Low Pivots that close low. The first thing to check with a bisect is whether price is above or below, ie, the 50% balance. More on this bisect in a bit
Red Bisect: This is similar to the black, taking the first 60 minute Range
(*) High and Lows as pivots. Again, the candles close high or low. The second rebuff by the 60m H suggests a decent short opportunity with a stop 1-2 ticks above the 60m L. Various target opps, using lower time frames, are presented: the red bisect itself, 50% parallels of the black bisect, and 60m range fibonacci extensions.
White Bisect: The volume spike as price hit the confluence of the 1.62 extension with the red bisect proved a rebound point and allowed me to draw the third bisect. This is too big a bisect for the range, so....
Lime Bisect: a mini-bisect became obvious on the 3m chart, which I then place on this chart. Mini's can be used as potential trajectories and are useful for price objectives only in a lower time frame. Price moved quickly into the white bisect and a reversal was indicated by the spike volume bar, also confluent with a white bisect 25% parallel.
Salmon Bisect: The volume spikes, accompanied by CCI reversals (the black/white iMojo indicator), are like bookends and provide natural momentum pivots. The origin, however, is slightly unusual in that it takes the prior bisect point as its pivot. It initially projected a move lower, but price first moved to test the now-old green bisect. It then reversed a few ticks above the open, and closed towards the 1.27 range extension, confluent with the white bisect lower parallel. There is likely pressure on the open as price is still below both the white and salmon bisects. However, best to review the higher time frame where the odds are clearer.
(*) While 30m and 45m are other intervals used, I've settled on 60m due to the increasingly popular CBOT Market Profile program, which calls the first 60 minutes of trading "initial balance". So, a good start is to standardize to something likely in use by more people. In time, no doubt it will shift as traders try to get a jump on each other (that's maybe a joke).
Labels: bisects-forks-medianlines, chart-analysis
