Tops and Bottom (Peaks and Valleys) - Letters of the Market Language

[medo]

hellow again...............

i want really to discuss this point with u because its the back bone of the market analysis or if we can consider the chart as words tops and bottoms can be considered the letters of these words .

top is the a pont where sellers (bears) r more than buyers(bulls) in the marketso simply the market start to go down from that pointthe reverse is right to bottom.

theoritically top can be estimated at the chart as the higher point of bar or candle that is higher than 4 candles 2 before and 2 after of that candleand the reverse is right to a bottom.not all the tops r equal and not all bottoms r equal.

top means the there r wide group of traders decided to sell at this point for some reasone and bottome means that wide group of traders decided to buy at this point for some reason.

the reasone it self is not important but the important thing is to know the power of that reason or motive that decide the strength or weakness of the market and from here we will start to know whats the trend and whats support and resistance and we will start to understand the marketi hope thise thread will be of some benifite to uits not mumpo jumpo :-) but its the corner stone of technical analysisand we will collect the letters together to read the maket

[EugeneFXI]

Hi Medo,

Moved your post from General Discussion to Strategy Think Tank which I think makes more sense. Also added some paragraphs for readability - hope you don't mind

You are absolutely right - a lot of technical analysis techniques rely on tops and bottoms to track the overall market movement, divergence from oscillator trends, fractal behavior, and more.

Letters of the market language, or building blocks, its definitely important keep it in mind.

[medo]

thnx eugenefxi do what u want with the thread...........the most important is the ideas inside pleasure to be with u

[medo]

today we will talk about the size of top and bottom inside the market and its indications.

the tops can be defferentiated from each other by measuring 2 points.
first-how many points does the price retrace from that top?
second- how much time the price stayed under that top before exceeding it

for those two important points we can say with the increase of the number of the crowd selling from that top the points of retracement increase in points or the price stay under that top for long time.

and logically the reason of the selling action at the top is stronger when the retracement and time is more.

at that point there r some reason that make the traders think that markets will not go further high and this point is the higher point that market can reach.

and by exceeding that point(top) the traders decided that the market is healthy to continue it way to higher prices , and we can notice that the price start to rise from a bottom(logic) and after exceeding the top that top became a history and because the market became more healthy to exceed that point then when the prices come back to the top again traders tend usually to go in long positions (buy positions) because as they thought formerly the market is healthy enough to go higher than that point

this is the philosophy of support and resistance and later we will continue to expand till reaching the full understanding of the market talk
to be continued

[AhmedSamir]

Originally Posted by medo

today we will talk about the size of top and bottom inside the market and its indications.

the tops can be defferentiated from each other by measuring 2 points.
first-how many points does the price retrace from that top?
second- how much time the price stayed under that top before exceeding it

for those two important points we can say with the increase of the number of the crowd selling from that top the points of retracement increase in points or the price stay under that top for long time.

and logically the reason of the selling action at the top is stronger when the retracement and time is more.

at that point there r some reason that make the traders think that markets will not go further high and this point is the higher point that market can reach.

and by exceeding that point(top) the traders decided that the market is healthy to continue it way to higher prices , and we can notice that the price start to rise from a bottom(logic) and after exceeding the top that top became a history and because the market became more healthy to exceed that point then when the prices come back to the top again traders tend usually to go in long positions (buy positions) because as they thought formerly the market is healthy enough to go higher than that point

this is the philosophy of support and resistance and later we will continue to expand till reaching the full understanding of the market talk
to be continued

hello medo great topic and please tell me when you ready for my questions

[medo]

just wait dear ahmed till i finish ways of measuring of tops and bottoms and ask....
thnx

[ahmed mohy]

thanks for this good points but i have alot of ques too (hahahaha)

ahmed