Learning About Trading Congestion Action with Technical Analysis Explained Part 1
Congestion action trading is the topic for today. A market in congestion action is one that goes back and forth between congestion confines , between resistance and support ( or between the block level and dotted line in the terms of Drummond Geometry ). It is market action that occurs within congestion itself , and when no trend run is occurring . The level that was created by the preceding up trend’s highest high is what is referred to as the Dotted Line, or in a down trend, the lowest low . In an uptrend the first bar that closes on the PLdot’s opposite side is known as the first Block Level, or the high of the very first bar on a down trend that closes on the other side of the PLdot.
Once you have a sufficient understanding of congestion action trading theory, patterns, and characteristics , you can make a lot of money in this type of market . It is much like crop harvesting . You can earn your bread and butter with congestion action trading….and what’s more , you can buy the table to hold the bread , and a house for the table , and then an estate for the house , and the car, the driver, and the boat, and the plane, and all the other toys or essentials you may or may not desire . Basically , there is a lot of potential in congestion action trading , if you learn and apply all that is to learn about congestion action trading .
What exactly is congestion action trading anyway?
One result of technical analysis explained this way through Drummond Geometry is that the definitions are clear . There is a trend run for prices or there isn’t . When after more than three closes are on the PLdots one side and then it closes on the PLdots other side, this is not a trend run . The market is in congestion if it is not in a trend run . It’s very clear and simple .
When the price ends up closing on the other side of the trending dot, the first bar is known as the congestion entrance bar. Then, but definition, there is congestion in the market. When congestion is first entered we know that this creates a dotted line and a block level . This block level is the first block level of the congestion . So , the name for this market action is congestion action which starts with a congestion entrance bar and continues for an indefinite period of time until we see three closes on one side of the PLdot , which is the start of another trend.
Let’s take a look at how congestion limits are defined with technical analysis explained, as well as how expansion can occur .
Congestion action defines the parameters of congestion , also called the confines of congestion . Remember that the confines of congestion are defined by the dotted line and the block level , and the congestion entrance bar is what establishes the first block level . But these levels can be expanded . If the price goes outside of the block level or dotted line , while still in congestion ( without three closes being on the PLdot’s one side ), then the confines of congestion are being redefined by price and a larger congestion can occur. This can happen several time before you see a new trend run .
This discussion of congestion trading will be continued in the technical analysis explained series.