Continuing on from yesterday and the relationship between the angle or pitch of a ML, RL and the effect is has on price action, i saw this excellent illustration today to post: Its the emini S&P and the blue fork is the one we are interested in for this example.See the extreme angle created by the pivots used in the blue fork and the almost vertical RL?
Here it is again and this time we have dropped down to a lower time frame. I also have drawn over the RL
( which is drawn automatically using the MT4 custom indicator tool) with a segment line bang on top of the RL as it appears in this time frame
As we drop down even lower suddenly you see that the original automatically drawn RL has moved and yet the simple segment drawn on top of it in the previous chart above remain in situ.
Finally we drop to the 1 min. This problem of actually understanding where lines are in individual time frames is due to the constraints of charting. We all use bars, candles or other styles to represent the raw market data graphically, however the anomalies of such a data presentation system always have limits and a deep understanding of what I call 'line location' is essential. Sadly there is no one single time frame that reveals the truth and i build up a picture of the linear market structure using all time frames using historical PF's (ML's) and RL's. What someone may call a 'multipivot line' I will always be able to know what its exact location is as part of a historical PF or RL from a higher TF. Lastly people ask me "is it not true that the most recent past effects price more efficiently ( as in the case above) than the distant past and thus we should confine our efforts to drawing in the daily time frame and lower"? The answer I believe is that the higher the time frame the greater the magnitude of effective pivot formation.
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