The very logic of this approach came to me in 1988 after I discovered Market Profile from a friend and floor trader on the CBOT (Chicago Board of Trade) who made a living in the soybean trading pit. I started plotting markets this way and found a remarkable way to monitor markets and trends that has been uniquely powerful since that time.
One of the tenets of my methodology, again which involved making hand-drawn charts in order to find the pattern, involves determining what time frame any market is operating in. What I found is that if there are more than 20 time periods at any one price, that is when the market is telling you that the current time frame is not strong and not in control.
Starting from the low in 2008, I had to go up to the quarterly time frame to fine a time frame that allowed me to stay under 20 time periods across the rally phase through 2014.
What we see is that there are 13 quarters that ends in the year 2013. The first quarter of 2014 marks the blast-off phase of the post-accumulation phase and begins the uptrend and 13-quarter distribution pattern that logically follows a 13-quarter accumulation. The 13th quarter is the current quarter, which means next Friday is the end of this uptrend.
Had you been sharp enough to buy $NVDA at any point in the past 8 years, you could rationally exit your position here at the end of March.
What is your gut reaction to this analysis? How about the logic of the methodology?
3:25PM EST 3/24/2017 107.01 last $NVDA
Basically, a trend UP starts the moment there are 5-bars without a new low. Then, you count the number of bars at one price and if you are above the most frequent price, then the market is in an uptrend. Once you get a "range expansion" bar up from the mode or an "entire bar" above the mode, then you can COUNT the number of bars at the mode and look for a top once that amount of time has expired, starting with the range expansion or the "entire bar above the mode" as bar #1. The fascinating part is that you can get a price projection too by measuring the price range around the bars that touch the mode and add that range to the mode itself to get an upside projection.
Therefore, this "trend identification" method gives specific price targets and time targets. The method works for uptrends and downtrends. There are additional concepts and trading techniques to capture smaller moves within the larger trend, but first it is important to understand the basic tenet of trend which is again: First, downtrend ends with 'no new lows for 5 bars', then uptrend is in effect. Then a mode forms along the way. Then a move away from that mode occurs. Then the trend has "expired" and the only remaining method is to use trailing stops for any long positions using a multitude of techniques.
This is of utmost importance.