We speak here of congestion action trading . Congestion action in a market is one that swings back and forth between the confines of congestion, between resistance and support ( or between the block level and dotted line in the terms of Drummond Geometry ). This is action in the market that happens in congestion , 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 the lowest low created by the preceding down trend . The low of the very first bar that closes on the other side of the Pldot within an uptrend is the first Block Level , or in a down trend, the high of the first bar to close on the PLdot’s other side .
Once you have a sufficient understanding of congestion action trading theory, patterns, and characteristics , it can be quite lucrative . 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 for the table you can buy a house, and the estate to hold the house , and a car, driver, plane, boat, and anything else you want . Basically , you have a huge potential to make money with this type of trading, if you learn and apply all that is to learn about congestion action trading .
Congestion action trading – what is it ?
One outcome of technical analysis explained in this way with Drummond Geometry is that the definitions are clear . You either have prices in trend runs, or not. It is not is a trend run when after three or more closes on one side of the PL Dot it closes on the other side of the PLdot . The market is in congestion if it is not in a trend run . It’s all quite 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. We can say that by definition the market is then in congestion . When congestion is first entered we know that a dotted line as well as a block level get created. The block level is the congestion’s first block level . Thus , the name for this market action is congestion action which begins with a congestion entrance bar and goes on for a time that is indefinite until we see three closes on one side of the PLdot , which is the start of another trend.
Let’s have a look at the limits of congestion and how they’re defined with technical analysis explained, and how they can expand .
The congestion action is what defines the congestion’s parameters, which is also known as the confines of congestion . Remember the confines of congestion get defined by the block level and dotted line, and the first block level gets set up by what is known as the congestion entrance bar. These levels can be expanded upon. If the price ends up going outside the dotted line or block level, while congestion is still in effect ( without three closes being on the PLdot’s one side ), then price redefines the congestion confines and a larger congestion can occur. This can happen several time before you see a new trend run .
Next time we’ll talk more about congestion trading in the technical analysis explained series.
