Let’s use emphasis that is a bit different and say this again .

We can say that congestion action does two things .

First of all, it creates original confines that are strong .

Second, it creates expanded confines that are strong.

It’s the congestion entrance bar by which the original confines are created, which happens to be the first bar of congestion action, and the second bar of action, which is the next bar , and the third bar if there is no trend run . The confines are determined by the lowest low and the highest high of these bars , as defined by dotted line and block level . These are congestion’s original confines.

We should point out here that in the third price bar of the congestion price , ends up doing one of two things. Price either:

1) Goes into a trend run, going into congestion exit and the reversal of a trend , since the third bar closing on the PL dot’s other side doesn’t confirm congestion action . The original confines then determine the congestion confines , as set out by the highest high and lowest low of the first two bars . OR…

2) Closes on the other side of the PL Dot , and thus continues congestion action . The confines of congestion in this case are determined by original congestion, as is set out by the lowest low and highest high of the very first three bars.

Now, what about expanded confines?

Congestion action can create something known as expanded confines by moving outside the original confines of congestion or any subsequent confines , as long as in the meantime there hasn’t been a trend run . When price moves outside the latest confines it redefines the confines of congestion . From that point on , then congestion exit will deal with this confines that is redefined instead of the original confines .

(We should note, of course , that there is an effect on price by the original confines, because any level or line is able to do so, but in most cases , the true confines can be built up through congestion action that is repetitive, without the appearance of a trend run .)

The confines can be expanded as long as no trend run occurs . Only when congestion is exited and price is in a trend run can we really say that the congestions final boundaries have been defined .

So for Drummond Geometry , technical analysis explained defines congestion in a clear and consistent manner , and gives us a framework that we can work with in identifying the confines of congestion under any circumstance .

In future articles in this technical analysis explained series we will talk about trade entries and exits in congestions . We will find it useful that we have established the clear definitions about congestion .

If we understand the “type of trading” that is manifested by the market at a particular moment, we will be able to come up with the tools and techniques that do the best job for the particular activity going on in the market. Furthermore , if we know which type of trading came before , which is here now , and the following trading, we’ll have an advatnage over other traders. We’ll be able to choose the top tools, and we will be armed for what is going to occur. Sometimes that’s half the battle in trading .

Experience and a technical analysis explained course has shown that our definitions of types of trading must be totally clear , or we lose the value of our analysis. Definitions need to be those that can work with any market, and to any timeframe . Our definitions must be robust and simple .

In this technical analysis explained series some articles in the future will discuss types of trading , and we’ll find that careful observations and simple definitions combined can lead us towards success.

A simple overview will be our starting point , so you’ll be able to get the big picture. Then we’ll look at a trend run in the market . After looking at trends , we will see how the Drummond Geometry tools combined with time period analysis will enable us to find out where the origination of the trend will be, and where it will end . We will also see how our monitoring tools , the envelope and the 1-1 zones , go along with practical observations and theory collections . And finally we’ll suggest some rules for trading that may provide some help as you develop your own trading plan .

Let’s get our start ….

The market activity will be divided into two big divisions : markets in a trend and those in congestion. Congestio will be further divided into congestion exit, entrance, and action . Trend reversal will be added as another condition of the market , bringing us to a total of five trading types .

The definition of a trend is irrevocably attached with the position of the close of the bar vis-à-vis the Pldot . No other element is part of the trend definition, though there will be lots to say about the characteristics of various trends . This rule always defines a trend : If there are three closes on one side of the Pldot , there is a trend. This rule is known as the three close, and there is no kind of trend that can exist without this rule . This will NOT happen. The next topic in the series on Technical Analysis Explained we’ll discuss Congestion Entrance.