DbPhoenix

If you're trading shooting stars off resistance, there's no need to do anything until price nears resistance. Set an alarm.

So why trade any further?

Not exactly. From "The Trading Journal" post to my Blog: Therefore, focus on the setup. One setup. Determine its characteristics, find the markers of buying and selling interest, buying and selling pressure, buying and selling exhaustion. Define it so specifically and so thoroughly that you can recognize it without any doubt whatsoever in real time. Decide provisionally where best to enter, what the target ought to be, where the stop should be placed, and so on. Only after the setup is defined and tested (and it can't, ipso facto, be tested until it's been defined) can one even begin to think about trading it with real money, much less trading multiple setups. Attempting to shortcut this process merely expands the amount of time it will take to develop the necessary skills. Nothing is gained by painting the house before scraping it, cleaning it, and priming it since you'll have to do it all over again sooner rather than later. The strategy is developed after you've defined and tested the setup. Otherwise, you're more likely trading via feelings.

Do you have a setup?

Depends on where you look. Something for you to play with, anyway. . . R for yesterday, in other words, can be found anywhere in this zone. That's where the RT PV analysis comes into play. If P and V aren't providing any clues, then making a decision is that much more difficult. But at least one knows where to look for them. .

Not until the market tells me what to do. This chart, posted earlier, gives me a framework, but the market may find support in several places before it hits 1650. Or it may build a base here and rally. If I see a setup, I'll trade it. If I don't, I'll just watch

I'm not real good at jumping on moving trains, so I stand aside until the market has found support. But that's not for everyone.

While much of your reply is inaccurate, this really isn't the place to debate Wyckoff v Evans v SMI v VSA v MP. I'll stick with Wyckoff's own concepts and explain them the best I can.

Going back to the chart I posted this morning (#52) before the open, let's look at how it played out. Here's a blown-up version of that chart. The outlined portion will be expanded further. . . Let's assume that one overlooks the "swing point" denoted by the red dot. . . When price reaches its first swing point after the open, the trader will of course look to the left to see if and where this fits in to previous action. That's when he'll notice the red dot swing point. . Looking further to the left, he'll look for the midpoint or equilibrium level of the "resistance zone". . . This midpoint is consistent with where price has been and appears to be finding resistance (the resistance zone is, after all, a zone, not a take-it-or-leave-it line). So he draws a tentative supply line. . . When price starts forming swing points on the downside, he can draw a tentative demand line. . . After price drops below the demand line, he rides the trend. He can continue to ride it all the way to support at 1710 (refer back to the first chart) or until the market closes. . .

That markets shift between balancing and trending, that the balancing phases represent a search for equilibrium, that support and resistance will be found where trading activity is at its busiest. Auction market stuff.

That the business of trading is trading, and professional traders have to go where they can find trades. And given the quantities they're dealing with, they drift toward those prices where they are most likely to find the most takers. That is the central zone of whatever range one finds himself in (the mean itself is purely mathematical; practically one looks at a range, tight though it may be, around that mean). The farther one gets away from that "central tendency", the fewer the trades. And when one gets to the extremes, the trading ops virtually evaporate, and you get your turning point. "Resistance", therefore, becomes not just resistance found at a previous trading level but also resistance to further movement.

The first maven I read was William O'Neil, who, in spite of whatever faults he may have (who doesn't), is still the first person I'd recommend to any EOD trader who has any interest at all in melding FA with TA. Later, of course, I discovered that this idea stretches all the way back to Dow. But that's the nature of truth: it keeps popping up of its own accord.

Yes, you have to admire Guy. He's one of the few people who continues to do this stuff for free.

Now that's something that most definitely does not lend itself to a static presentation. It's too easy to cherry-pick examples. Try plotting it in a little window somewhere, not as part of your primary chart display, and glance at it now and then, especially when price gets to the outer reaches of whatever zone you're looking at. It doesn't take up much space. Doesn't require anything but itself: no indicators, no volume.

Into MP now, eh? I find it interesting how MP tidies up some of the more important concepts that Dow and Hamilton and Wyckoff first articulated. I wish it hadn't gone so far into jargon and software, but that seems to be the way of it these days. In any case, it's pushed me to focus more deeply on what support and resistance and the tendency toward a mean are all about. I'm also finding that stuff I sloughed off years ago I'm now re-evaluating in terms of what I've learned in the meantime. Like the TICK. You'd think that after all this time I'd have it all nailed, but I don't suppose that's possible with a market that's continuously and forever evolving. The trick is to get past the jargon and the software and the ranting (much of which sounds exactly like I've accepted Jesus as my Personal Savior only substituting the name of whatever system or method it is for Jesus) and get to those subatomic nuggets that contain the real stuff. Edit: for example, I suppose software could show you at what levels trades are clustering, but is it really that difficult to do oneself? It's certainly cheaper. Note also where those "pivot points" are pointing . . . Further edit before my time runs out: Note that 70 was reconfirmed overnight. .

The pivots do seem to "work", but they are so far off the actual turning points that they can be used only as a guide. I suppose they are most useful for those who have no idea how to located S/R. What I'd suggest for those who want to learn, though, is to plot the points, then extend those lines to the left to find those levels that have been repeatedly tested, then focus on those levels themselves, using pivot points as training wheels.

The blue is support/demand and the pink is resistance/supply. The red is tentative. Dashed is even more tentative. So you figured it all out without me. This is what I use in my book and in the other stuff I write, but it is essentially for me. I'd like to have some sort of Dr Seuss blue and pink intermittent dashed line for those lines that can't decide what they want to be when they grow up. And lines come and go and get adjusted as price sniffs around looking for trades. But that's RT trading.

It can be difficult, yes, but less so if you have a well-defined and well-tested setup and the patience to wait for it. Also if you're selective in whom you listen to with regard to what you're supposed to see. The latter is more difficult than the trading. Incidentally, about the what-to-look-for part, the same dynamic I described above unfolded in 2000. Unfortunately, most people wouldn't listen.

Getting back to the chart posted in #24, it appears that we are going to work this zone for a little while longer since the bulk of the activity is between 1740 and 1830, with the midpoint at 1785. So we focus on possible levels of S/R within this zone. 1750, 60, and 70 were confirmed, and 40 was important again. So this provides us with levels of interest going forward.

Well, since you asked . . . This is a big chart, but you have to see what you're doing. There's nothing remarkable about the volume until August. But the "rally" in July has that tell-tale oval PV relationship. Not a good sign. When price falls shortly thereafter, you have what looks like preliminary support coming in at the first three arrows, culminating in what appears to be a selling climax in mid-August. All this is fine so far, but look at what happens to volume. High volume is not always necessary. In fact, it can be a warning sign. But when you make that higher high, you've got that oval again, and the only remarkable volume here is on a bar that brings price well below the high (which you'd see even without bars). After that, volume picks up, but it accompanies a generally downside bias. When a rally attempt is made, it can't hold above the supply line for more than a day, and there's that oval again. On the highest volume here, price is effectively neutral. Then there are the Transports, which don't even begin to confirm all these rally attempts. It's not just a matter of this bar or that bar. It's also a matter of "waves". Each rally "wave" -- i.e., the whole thing, not just the individual component bars -- shows weakness where one would expect to see strength. None of this may be a signal to you to head for the exits, but it's a signal that you should at least find out where they are.

preliminary support, selling climax, retest . . . (in my little microworld) And the retracement . . . Bulls running into a little trouble here.

Well, it was a thrust all right, tho not a springboard . . .

If this is a springboard, that is likely a thrust. Also notice that consolidation till 1330 on the 29th.

The chart above, the 12th, 15th, and 20th.

However, 72-74 was also tested. It's the nature of the S/R zone that there will be a number of potential levels to watch. That's why one has to wait until price actually gets there before determining what's potential and what's actual. If it doesn't prompt a response from traders, it's not important.