Learning About Trading Congestion Action with Stock Trading Strategy Part 1
We speak here of congestion action trading . A market that is in congestion action is a market that oscillates back and forth between the confines of congestion , between support and resistance (or, in Drummond Geometry terms, between the dotted line and the block level ). It is market action that occurs within congestion itself , and when there is no trend run . The Dotted Line is the level created by the highest high of the preceding up trend , or the very lowest low that the preceding down trend created. 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 first bar that closes on the other side of the PL Dot in a down trend .
Once you have a sufficient understanding of the theory, characteristics, and patterns of congestion action trading , it can be quite lucrative . It’s a lot like harvesting a good crop. Congestion action trading can be real bread-and-butter trading ….and what’s more , you can purchase a table for the bread , and the house to hold 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 . Essentially, congestion action trading holds a lot of potential for you , if you take congestion action trading and learn all you can.
What exactly is congestion action trading anyway?
One outcome of stock trading strategy this way through Drummond Geometry is that you get definitions that are very clear. Price is either in a trend run or it is 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 . If there is no trend run, then the market is in a congestion. It’s all quite simple.
The first bar when there is a close on the trending dot’s opposite side is the entrance bar of congestion . Then, but definition, there is congestion in the market. We know when the market first enters congestion a dotted line as well as a block level get created. This particular block level if the very first block level of this congestion. So , congestion action is the name for that market action which starts with a congestion entrance bar and continues for an indefinite period of time until on one side of the PLdot there are three closes, showing the beginning of a new trend .
Let’s have a look at the limits of congestion and how they’re defined with stock trading strategy, and how they can expand .
The parameters of congestion are defined by congestion action , also called the confines of congestion . You will remember the block level and the dotted line are what define the confines of congestion , and the congestion entrance bar is what establishes the first block level . There can be an expansion of these levels . If prices goes outside the dotted line, or outside of the block level , while still in congestion ( without three straight closes occurring on the one side of the PLdot), then the confines of congestion are being redefined by price and we can see a larger congestion area established . This can happen several time before you see a new trend run .
Next time we’ll talk more about congestion trading in the stock trading strategy series.
