DbPhoenix

And, as I said, all four present the same information. In any case, if you're interested, here's what you should have for today, at minimum. If you don't know in advance what you're going to do at each point, then you're not prepared.

It would be difficult to post Wednesday's and Thursday's action ahead of time, but this is what one would have plotted Tuesday evening, if he were to plan out all of this in advance, which is, after all, the whole point. The support and resistance levels for tomorrow, as well as the midpoints, are now done, in the previous post (though the truly prepared will want to include Friday). Anyone who's noted them can now plan out his trades. In advance. As to the first two being "OK", all four present the same information.

Regarding resistance, there are several ways of looking at it. One can, for example, plot a volume distribution (the hinge is circled): Drawing a line below the bottom of the middle distribution gives one a zone on which to focus, particularly when price opens below this zone (price also opened below this zone the previous day, leading to another profitable trade): Or one can draw a box around the congestion: Or one can use plain ol' S/R lines, noting the test of the previous day's high: All ways of illustrating the same thing. And it doesn't require special software.

Fortunately, FW posted the first one in real time: This isn't a box, of course, but it does illustrate a different type of range-bound compression, which is what the boxes are all about anyway.

I'm agreeing with you. You're putting into practice and profiting from the ideas I've been posting here and elsewhere. And the week's "beginning chop" was the prior resistance I was referring to. In other words, there are frequently several levels of support or resistance that require attention. The fact that price gets there means nothing in and of itself. What matters is how price (traders) behaves there. Today, one could expect some resistance from the bottom of yesterday's range, then the top, but all that was taken care of prior to the open. Next level was yesterday's high, but that didn't provide too much of a barrier either. Next level was the Monday-Tuesday chop, which is where price finally found some serious resistance. You picked up on that, and good for you.

And, as it turns out, the potential resistance offered by yesterday's trading range was not too formidable, nor was yesterday's high. However, the potential resistance offered by the preceding trading range, which is more formidable given that it occupies a day and a half (Monday thru Tuesday), appears to provide that key resistance you were looking for. Does this mean the downtrend is over (if there was one)? Or that there's been a reversal? Or that we're now in an uptrend? Does it really matter? One can easily miss the directional moves by focusing too much on "trend".

I posted what I did in order to address the question of why price turns where it does when it does rather than suggest a trade. It seems that this was in large part the purpose of FW's post as well. However, this may not be what charcoal is looking for. Perhaps he'll chime in and state whether this is off-track or not. Edit: Incidentally, your comment about shorting because you sense traders selling into the rally is a good example of what I mean by making decisions based on what one sees rather than on what one believes should happen or ought to happen.

Actually, there were perfectly good short trades in both. The market didn't turn until 15m later. But that's the nature of RT trading. Rather than wonder about what traders are going to do, you instead watch them do it.

Incidentally, those who are trading the ES real-time will note the bouncing between 49 and 52.5.

Rollover. Futures contracts rolled over yesterday and prices are somewhat different. More in the NQ, not so much in the ES.

May as well post this now before it becomes hindsight. I've used bigcharts since that's available to everybody. I've also stuck with the S&P in keeping with FW's post. Note here that there are several trading ranges (or "congestions" or "consolidations" if one considers them too narrow to trade) on the way down from the top. Some of them act as support or resistance to subsequent ranges. What is unusual about yesterday is that it "broke out" of the previous range, but then fell through it to end up below it, which is where we are now. The question one has to ask himself, then, as he prepares for the day is how all those people who bought the breakout and didn't get out now feel about price coming back into that trading range and whether they are going to continue to hold their losing trades or get the hell out at the first opportunity to come anywhere near breakeven. This is, after all, the nature of trend in general and support and resistance in particular. As to trend itself, it's helpful for the trader to ask himself whether he's addressing trend or directional moves since the two are not necessarily the same thing. Joseph, in post 11, attempted to clarify this, and making these distinctions may help the trader to organize his thoughts. There can be many directional moves within a trend, some going with the trend and some going against it. Whether a given directional move is profitable or not depends on its power and its extent (yesterday's opening long trade, for example). But determining whether or not a directional move has begun or ended is not the same as determining whether or not a trend has begun or ended. To a large extent, determining whether or not a trend has ended and reversed is largely a matter of intellectual curiosity since -- as charcoal pointed out -- by the time one has determined the trend has reversed, it can be far too late to enter. Here is a repost of the above chart with trendlines: Note here that the trend is clearly not over, but there are many directional moves that are technically counter-trend but nonetheless profitable. Note also, however, that momentum has slowed dramatically, which is generally a precursor to trend reversal. So, does one want to pinpoint the "end of the trend" and nail that reversal? Even if he was able to do so, where would he exit? If he's going for only a few points on his trade, why bother worrying about it? On the other hand, if he's more concerned about (a) the likelihood of a directional move and (b) its direction, he has more options available to him, all of which are more pertinent to real-time trading than concerns about how to determine the end of the trend and the point of trend reversal.

Since supply won the day, I wouldn't say that a lot of it was eliminated. In any case, the problem with the ES now is that it's under the trading range which was established Wednesday. The NQ is stuck between the bottom of one trading range and the top of another. The long side may be a difficult row to hoe.

Only now all the numbers are different due to the RO. In any case, that initial long trade yesterday was quick, easy, and profitable. But then we hit resistance and the long side was done. If one was able to find a good short entry and hold onto it, he did even better. However, short entries were not nearly as clean. This goes back to what I was saying -- or trying to -- about going long in a downtrend even though the market may be "oversold". There's much more to push against in this situation, so using the opposite side of whatever channel there may be is over-optimistic. This is not to say that there won't be profitable long trades, as was the case yesterday. But one must be especially attentive to signs that there's just too much supply for demand to absorb and break through.

You neglected to point out the hinge which you posted in real time yesterday (though the post was of the NQ, and the ES hinge is not quite as pretty, the elements are nonetheless there). And the move out of that hinge was worth around 20 ES points. I bring this up because someone short into that hinge might have thought that the "trend" was "over". It was, however, a springboard into a further decline, which one might not even notice had he not known what to look for.

I agree. The point is to shed a little light on how to determine a change in trend, much less a reversal, not to trade pithy barbs.

Ends of trends occur outside of support and resistance only if one doesn't know where to look. The shortening of the wave itself is a form of resistance to further movement. Perhaps the VSA reinterpretation of Wyckoff has this confused. Actually, MC's chart was posted in response to the chart to which I linked. Nonetheless, you are correct that this isn't about me. Rather it's about end-of-trend, and, again, the mechanical climax, rally, test catechism isn't nearly enough in and of itself.

High volume, large rallies, and tests occur all the time. But if these don't occur at some important level, i.e., support or resistance, they will likely mean nothing at all. The original chart was a 1m intraday chart. Yours is a 15m 5d chart. Apples and oranges. Clearly the kind of volume, etc, that one looks for over the space of a half hour or so will have a different character than what one looks for over a period of a week. As to reaching the supply line, correctly-drawn supply lines would already have been broken twice.

I trade behavior, so it's important to me to understand what it is that I'm trading. If I didn't, I'd have to trade mechanically, and that would be boring. As to how long it takes, I can't say, though with the availability of replay, it should take a lot less time than it used to. One possible advantage of the YM, though, is that the underlying is comprised of only 30 stocks. This beats the hell out of trying to understand the S&P. How long it takes also may depend on where one begins. I began with stocks and all the various indexes. But this was long before affordable software, much less RT streaming prices. So my understanding of the minis may be more grounded than it would be otherwise. (On the other hand, I haven't the slightest understanding of currencies, so I don't find forex the least bit tempting.) I imagine that this also accounts to a large extent for what I understand of support and resistance. Without it, I suspect that support and resistance would be a giant mystery.

Is this the new contract?

That would depend on conditions, including how important the support was. If there was nothing to indicate a move one way or the other, I'd probably maintain the short and go long the Q. There's a difference between trading for a living and trading for some other reason. Since I trade for a living, I trade far less often than most of the people who frequent message boards. I also hold the trades I take far longer, partly because I trade for a living and partly because I'm no longer afraid. Therefore, you are the only person who can answer the question you asked. If you understand the YM and you know its tells, then you'll know whether to exit and reverse or to stand firm. What somebody else does or doesn't do is completely irrelevant.

That would depend on (a) how it's managed and (b) whether or not one saw a reversal. Technically, or mechanically if you will, there was a reversal. But a reversal made no sense, so I didn't take it. I just continued scaling out according to more or less the same process as I posted in the Trend thread.

You know how I feel about "making calls", so I'll just say "nice job". I used S at 1920 for the NQ rather than a channel (too steep), but it all comes out the same, just the way it's supposed to .

Your and FW's approaches appear to me to be pretty mechanical, though I may not fully understand what you're doing. But being mechanical is something that just about everybody goes through at some point. In any case, I haven't read the thread, so I don't know whom "anyone" encompasses.

And it happens. However, an exit in and of itself is not sufficient reason to SAR. The fact that price has stopped moving in the desired direction does not necessarily mean that it's going to reverse. It may simply be done. Which is more often the case. Being "confident" that price is going to do something is another matter and largely irrelevant. What matters more is being able to interpret what's happening at the time. There is a further question, of course, of being mechanical vs being discretionary. The mechanical trader is going to have to stick to his rules, even though they may lead to far more trades than necessary.

According to those who keep track of this sort of thing, price will more often settle at or near the opposite end of the range. AMT appears to confirm this.