Masterforex-V trading system explains how to make use of slanted channels in details. The dealing with slanted channels is one of the most effective instruments at Forex. Here the author submits just the basic principles of working with slanted channels. Learning to understand them, the trader can regularly gain profit at Forex.
For this purpose, the author recommends to study the problems unsolved by the “the classicists of Forex” – such as J. Murphy, T. Demark, J. Schwager, E. Neiman, etc. (see the previous chapters).
Below, the author enumerates the problems concerning the slanted channel technique, unexplained by “classicists of Forex”. In addition, the author demonstrates how these problems are solved within Masterforex-V Trading System.
The first difference between the approaches of “Forex classicists” and Masterforex-V World Trading System to the slanted channel technique consists in applying different timeframes.
*T. Demark prefers to work with D1-charts.
* In Masterforex-V Trading System, it is recommended to work within the timeframes to start from M1 and up to W1. This approach permits us to settle down certain contradiction. The latter is mentioned by E. Neiman. According to this specialist, trend lines and models examined in various timeframes can differ. For instance, the weekly trade can look as the “bull’s one. At the same time, the daily trend can be regarded as “bear”.
In addition, the author of this book would like to emphasize the following. Within H4-chart timeframe a flat can occur. Within H1-chart timeframe, a trend is possible – and so on – up to M1.
That is, the reader must see that a lot of tricks can be played by rulers of the game of Forex with an individual - particularly, due to the difference in timeframes (M1¸W1, etc).
Thus, the reader must understand that there exits a certain correlation between trends of different kinds (within M1¸W1). An individual who works within the only timeframe does lose his game for sure. As it had happened before, at least 19 of 20 traders had lost their money. Such traders had confidence in basic plots of Forex – in D1, or H1, or M1.
Below, there is given an example of the slanted channel behavior within M1-timeframe.
In addition, there are plots that depict the slanted channel behavior in M5-timeframe.
Examining such an example of a heavy “bear” trend (GBP/USD pair movement), one can make the following conclusions.
· The session trend can play the role of the correction of a heavy “bull” trend in the H1-timeframe.
· The session trend is going on until the price is still remaining on the left of the slanted channel, turned downward.
Thus, in practice, each trader who works with 3 screens (according to A. Elder’s technique) - or with four screens (according to Masterforex-V trading system) – gets the better of an individual who opens just a single screen in his terminal. A chart can be plotted in any timeframe – whether it is M1, M5, H1, H4, D1, etc. – it does not matter.
· The slanted channel technique is one of the ways of comprehending the essence of the trend development.
· For watching the charts, the quantity of 3 or 4 screens is optimal. So to say, in this way it becomes easier to trace out the correlation between trends examined in different timeframes.
For instance, a trader can prefer working with H1-charts (see the figures submitted above). In this case, an individual can detect the “bull” trend correction tending downwards in H1- timeframe charts presented.
The second difference between the approaches of “Forex classicists” and Masterforex-V Trading System to the slanted channel technique consists in the fact that the slanted channels do indicate different important levels.
· “Classicists of Forex” (D. Murphy, T. Demark, D. Schwager, E. Neiman, etc.) pay attention just to the trend levels.
· According to Masterforex-V Trading System, a trend, its correction and a flat must be taken into account.
In a way, “classicists of Forex” make a kind of mistake. That is, they use the slanted channels technique just when they deal with a trend. This point issues (originates) from the problems unsolved before. The trader must learn to watch the correlation between various timeframes.
According to Masterforex-V Trading System, there exist at least four kinds of the trend:
· the intersession trend;
· the intraweek trend;
· the trend of duration to start from several weeks;
· the trend of duration to start from several months and longer.
Thus, one can see that special slanted channels are inherent in the intersession trend (M 1-15). In the timeframe of a longer trend (e.g., such as H 1-4), these slanted channels just play the role either of the trend correction or a flat.
Let us dwell on the value of this circumstance for the trade at Forex.
The trader must trace out when the correction (recoil) will come to the end in the H (1-4) charts. After this a new wave of the trend starts within the H 1-4 chart timeframe.
In fact, this happens when there occurs the true breaking through the slanted channel correction H1-4 chart – it is equal to (the equivalent of) the trend slanted channel within M 5-30 chart timeframe.
Taking this circumstance into account, the reader can see the problem of slanted channels in its essence. This problem is formulated by E. Neiman in the following way. This author emphasizes that the direction of the real trend and the direction prognosticated analytically don’t coincide. This contradiction becomes especially important under the condition of the trade reversal.
Briefly, to say, the conclusions are the following.
· The trend reversal in a small timeframe makes the start of the chart correction in a larger-scale timeframe at Forex.
· The trend correction reversal in a smaller timeframe can indicate the possibility of the beginning of a trend in a larger timeframe. The possibilities of the trend existence – or its absence – are analyzed with the help of other instruments of the work at Forex.
There exists the third difference in the approaches of “the classicists” and Masterforex-V Trading System. The problem is to detect whether the breaking through slanted channels is true or false.
This is the keystone problem – i.e., one must detect whether there becomes the end of a given trend or its continuation.
· The true breaking through slanted channel borders is the tendency reversal within a given timeframe.
For instance, the development of such events is illustrated in the chart presented above. On July 25, 2006 one can see a heavy “bear” session trend M5 within the heavy “bull” trend. The downward-turned M5-trend is the exact equivalent of the downward-turned H1-trend. The true breaking through the slanted channel upwards in M5-trend is one of the criteria of opening a deal on “buy” – before there can start a heavy trend recoil within H1-timeframe.
· The false breaking through slanted channel borders is just the trend correction. After such false breaking through slanted channel borders, the given trend tendency starts to continue to evolve again.
Any “classicist” of Forex has not resolved the given contradiction. Anyone of them has not submitted clear criteria of the difference between the true and false breaking through slanted channels.
Let us examine some series of examples.
J. Murphy could not understand the “enigma” of false breaking. The corresponding chart is depicted in his book.
J. Murphy emphasizes that within a day the prices can break through the trend line. However, up to the moment of the closing the situation can be restored. Consequently, the analyst must be sure whether the breaking does have happened. For pity, in this case, there are no certain advices. As in many other areas of the market, the intuition “gains the all”.
However, E. Neiman has not explained why the downward-directed slanted channel breaking was false at the chart presented below.
One must admit that E. Neiman has not submitted any logical pattern of the chart behavior. Instead of this, E. Neiman just recommends to traders just the following – not to search for trend figures where they are absent. It can be just your fancy.
T. Demark has confessed that he doesn’t understand these contradictions in the slanted channel aspects. To illustrate, his viewpoint, he submits the following chart.
T. Demark recommended paying attention to the following fact. In the chart 1.30, the price guide post is prescribed by the projector #1. After the breaking of TD-line of demand A-B downwards, this price guide post has no time to be realized (to come true, to be put into effect). This is conditioned by the upward-directed breaking through the descending TD-line of supply C-D. As the result, the price guide post, based on the breaking of TD-line of demand A-B downwards becomes invalid.
Comments. This problem, formulated by T. Demark, was not solved by him. However, students of Masterforex-V Trading Academy have found out the solution within an hour.
The reader should try to find out the solution by himself. For this purpose, the author of this book recommends to answer the following questions.
· Why couldn’t T. Demark resolve the given contradiction? Proceeding from this, the reader can understand (detect) the weak and strong points of T. Demark trading system.
· Why does the price guide post, based on the breaking of TD-line of demand A-B downwards become invalid?
· What are the conditions, under which this conclusion made by T. Demark, becomes invalid? This is concerning his statement that the breaking of TD-line of demand A-B downwards becomes invalid any more.
D. Schwager has examined the following aspect.
The descending trend line double correction: continuous futures per the French obligation index in MATIF bourse (exchange).
As one can see, Chart 3.14 is identical with Charts 3.6 and 3.13. The only difference is that the period depicted in Chart 3.14 is prolonged for 4 months. The lower lines are copied from Charts 3.6 and 3.13. These lines depict the trend development till May and July, respectively. The breaking through these lines does not cause the tendency reversal but just the trend line correction becomes necessary. This example clearly demonstrates that under certain conditions the trend line must be corrected several times.
Schwager has not admitted that he does not know the difference between the true and false breakings through the levels. Instead of this, Schwager has stated that the role played by slanted channels is overestimated. That is, he insists that slanted channels are of secondary importance.
Schwager has agreed that trend lines and corridors are useful (handy). However, according to him, often the value of these instruments is overestimated. This can easily happen such lines are charted post factum. Often an individual doesn’t take into account the necessity of correction in the course of the trend development (whether the trend is of the “bull” or “bear” type – it doesn’t matter). Sometimes the breaking through the trend line can indicate the forthcoming reversal of the tendency. At the same time, with the equal probability this course of events can result just in a trivial correction of the trend line. For instance, Chart 3.11 contains the further development of Chart 3.4 for the next 2 months. The lower line in Chart 3.11 depicts the trend line that could be drawn issuing from all the data available. Respectively, the upper line in Chart 3.11 is the continuation of the trend line in Chart 3.4. The corresponding trend line in Chart 3.4 is plotted on the basis of price data available before June. In June, the breaking through this line hasn’t caused the tendency reversal. The trend line correction just becomes necessary.
D. Schwager’s conclusions are the following.
The above-given examples testify that the breaking through a trend line rather makes the rule than the exception. It goes without saying that trend lines must be broken through in the course of heir development – sometimes more than once. So to say, often trend lines are under correction during the course of their development.
The most important conclusions that issue from this observation consist in the following. Trend lines are more “reliable” post factum than within the real timeframe. Quite often breaking through trend lines plays the role just of false signals.
Thus, as the various charts given above indicate, nobody of the “classicists” has solved the following problems.
· When the false breaking, equivalent to the recoil from the level and prolongation of the previous trend, is equal to an optimal position for opening a deal along the previous trend?
· When the true breaking, equivalent to the change in the previous trend, is equal to an optimal position for opening a deal against the previous trend?
Comments. The above-mentioned “classicists” do have dedicated dozens and hundreds of pages to the problem of slanted channels. However, the author of this book cannot help wondering how it can be possible if those specialists don’t know an answer to the principal question – i.e., generally speaking, why do they build slanted channels.
· The true breaking through the slanted channel corresponds to the change in this trend development.
· The false breaking through the slanted channel corresponds to the recoil and the trend continuation.
The author of this book keeps on wondering at the following aspect. T. Demark has titled his book as “Technical analysis as the new science”. This edition is based on the slanted channel technique. However, there it is stated that, dealing with slanted channels, an individual must rely just on his intuition.
The author of this book does insist that the reader must by himself try to answer the question, not explained by the “classicists” of Forex. The stake makes the trader’s deposit. Not getting the answer, the trader can lose the deposit easily. Otherwise, one can gain profit regularly.
The reader can find the corresponding prompts, elaborated in Masterforex-V Trading Academy (see the chart given below – September 4, 2006).
The reader should pay attention to the following questions.
· Why in the on-line regime anybody of Masterforex-V Trading Academy participants hasn’t opened a deal on “buy” under the condition of the false breaking through the slanted channel at the point 1.9060. How one can see that in the on-line regime the breaking through the slanted channel is false.
· Why in the on-line regime Masterforex-V Trading Academy participants have opened short deals within the area of the point 1.9033.
There are the examples of the two possible ways of the currency pair further movement from the view point of the slanted channel technique according to the concept of Masterforex-V Trading Academy.
The fourth difference between the approaches of “the classicists” and Masterforex-V Trading System consists in the following. Slanted channels cannot be studied independently of other significant instruments of giving analysis to forex market.
· There exists the notion of moving averages.
· Besides, one must keep in mind Elliot’s waves.
In this connection, the author of this book recommends to a trader elaborating the tactics of his own. The slanted channel can be broken through at the ends of the 1st or 5th waves – otherwise, this can happen at the beginning of the 3rd wave. A trader must decide by himself when it would be preferable to stay out of the market. On the other hand, under certain conditions it would be preferable to open either a short or a long deal. Besides, it is important where the stop-lock must be located in each of the cases enumerated.
· The horizontal levels and sublevels of the support and resistance.
· Allies of the trader’s “working” currency pairs.
· The time of the deal opening – in the beginning, middle or the end of the session.
· 3-4 screens in various timeframes are necessary (for understanding where the trend, its correction or a flat is).
· The news record.
In addition, a series of other important aspects are elucidated within Masterforex-V Trading Academy. Besides Masterforex-V Trading Academy, any where all over the world the problem of synthesis (combining) of several instruments of giving analysis to the market is still not submitted. Intersection of the corresponding signals indicates objective (optimal) points of entering the market and going out of it (leaving it).
For instance, synthesis just of two elements – the resistance of horizontal and slanted channels – just in one timeframe (H4) demonstrates the recoil from the slanted channel upper level in its essence.
Comments. This chart is made (taken) on September 1, 2006 in Masterforex-V Trading Academy. GBP/USD currency pair, reaching this local peak, has reversed downward by 500 points. The reader must scrutinize the given chart. The goal is to determine the signs that can point out to the possibility of GBP fall in the next week.
Slanted channels in Masterforex-V Trading System. General Conclusions.
1. Slanted channels are one of the most important indicators at Forex. The reason is that slanted channels earlier indicate changes in the trend direction than moving averages.
2. There exist at least 6 techniques of plotting slanted channels. This statement is indirectly confirmed by the existence of unsolved problems in each of these techniques.
3. Authors of new techniques of plotting slanted channels see drawbacks of the predecessors. All the same, there remain all previous drawbacks. That is, the answer to these principal questions is not found out yet.
· Under what conditions the given breaking can be considered to be true? Respectively, under the conditions of the ascending trend, the trader must drop a deal on “buy” and make a deal on “sell”. The reason is that the slanted channel directed upwards has turned into the downward-turned slanted channel.
· Under what conditions the given breaking can be considered to be false? That is, when the breaking can just correspond to the trend common correction (recoil).
4. In Masterforex-V Trading System, the slanted channel technique is based on the following.
· First, the inner contradictions that arise during the slanted channel charting technique are solved. The “classicists” of Forex had not succeeded in doing this.
· This technique, combined with other instruments of making analysis to Forex, indicates optimal points of entering the market and leaving it.
You can discuss the chapter with the Academy members by following the link
Chapter 1. Trend definition in the Masterforex-V Trading System >>
Chapter 2. Levels of resistance and support in Masterforex-V Trading System >>
Chapter 3. Actual and false breakout of the resistance and support level. Rebound from technical level.>>
Chapter 4. Technical levels of Forex by Dow Jones agency. >>
Chapter 5. Pivot point of currency pairs >>
Chapter 6. Slanted Channels, as a tool of the Forex market analysis >>
Chapter 7. Opening of positions when using Slanted Channels >>
Read more:
Chapter 9. Classic figures of technical analysis - Trend Reversal >>
Chapter 10. Classic figures of technical analysis - Trend Reversal (ending) >>
Chapter 11. Technical analysis - patterns of continuation of trend - rectangle >>
Chapter 12. Patterns of continuation of trend - Gaps >>
Chapter 13. Patterns of continuation of trend - flag, pennant and wedge >>
Chapter 14. Models of the Forex technical analysis - triangles >>
Chapter 15. Symmetrical triangle - regularities and traps >>
Chapter 16. Ascendant and descending triangles - secrets of the strong signals for opening the positions >>
Chapter 17. Expanding triangle - unresolved problems of classics of the Forex technical analysis >>
Chapter 18. Trading On News: mistakes and unresolved secrets of classical analysis >>
Chapter 19. Trader's code of good practice by news under the Masterforex-V trading system >>
Chapter 20. Ally pairs: which gauge at forex is the most unbiased (impartial) and precise. >>
Book 3. Points of opening and closing of positions at the Forex market (basic course) >>
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