I will outline why COF is a buy here, but a short at lower prices.
Here is another example of how to use 'Time at a Price" to determine trend.
Starting from the low last year in March there are some excellent examples of how time builds at a price and then projects "up" once there is a range that is above the mode or frequent price of the consolidation.
In the first trend there are 20-days near the 55 level and once the market "disconnects" from the 55 level it continues on for 20 days up into the $62 level. Along the way, a 9-day mode is made and once that mode is surpassed, the market continues another 9-days up into the $63 level.
Once $62 is reached, it takes 22 days at one price to set-up the next advance that starts in early July. That rally continues almost exactly 22-days up near $70 a share.
It takes 36 days to set up another range. And just 1-day shy of the 36-days is when COF reported earnings and gapped down from near 77 down to near the 72 level. Note that the rally equaled the price range that the market was in while it was forming its mode at the 69 level (73-64 or 9 pts). Adding 9 pts range to the mode at 69 gives a nice target of 78 which it hits just before time expires. There is a 16-day mode at 72, which is above the 36-day mode at 69, and this sets up a target at 78 and time expired right at the high of the rally at the highest close.
Note that the correction started and pulled back to the major "time support" at the mode of 36-day at 69/sh.
The current bounce off of the 69 level has an uptrend with an 11-day mode at 71. That rally is only in its 2nd day here on Monday, March 3. Once 71 is broken, then the downtrend will be in force I will outline the decline that is then forecast in duration and in price.
For now, you can buy dips to 71 and target an exit at the 11-day marker labeled on the chart. Stop loss is 1 average range on this methodology. (I would suggest $1.50 stop from entry, suggest entry under $72). Target 74-75.
NOTE that I also labeled CCI levels of +166 that COF had reached on Friday, just for reference. Half the time it (the reading of +166, or 1.66 standard deviations above the 21-day moving average) is a top and half the time it is a continuation sign. What is different this time is that the current mode at 71 is BELOW the previous mode at 72, so there is some deterioration in the accumulation.
HOWEVER: IF COF TOUCHES 70, SELL SHORT, target (78-71 measurement = 7 points) 64. Measure 7 points down from 71-mode. Stop loss on the short is 2.5 pts or 72.5.
Tim 2:19PM EST Monday, March 3, 2014
Commenti
littleriver
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Hi Tim
Thank you for sharing your "Time at a Price" system. I am attempting to apply to my own trading. I would like to know if you have any hard rules for where to draw the "price line" during the consolidation phase? I have been shooting from the hip and targeting the middle. Also, I was hoping to clear one other point. Once "price line" is drawn, any candle touching line including candle wicks count towards total "Time at a Price"?
Thank you again for sharing
lr
A_Swissa
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hello tim
is this a right use in the system?
timwest
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Yes. The measured range can include the low in late January too, if you'd like. The time at the mode is 21 bars, as I count it. Nice job :-)
A_Swissa
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Thank you for the halp and for sharing
timwest
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The CCI readings of 166 - top (1st), continuation (2nd), top (3rd), continuation (4th), top (5th), continuation (6th), continuation (7th).
I hope there are some questions here about this methodology.
Thank you for sharing your "Time at a Price" system. I am attempting to apply to my own trading. I would like to know if you have any hard rules for where to draw the "price line" during the consolidation phase? I have been shooting from the hip and targeting the middle. Also, I was hoping to clear one other point. Once "price line" is drawn, any candle touching line including candle wicks count towards total "Time at a Price"?
Thank you again for sharing
lr