zeon

Sorry, dbphoenix is correct, I shorted at bar 3, not at 1. But why isn't 5 a re-test on lower volume? It's a solid bar, and price fails to break the low established by bar 4, the highest volume bar since. What do you mean by 'pivot low'? A calculated price level? Btw, is the volume coding reversed intentionally? I see red volume on upbars and vice versa.

Sorry, I mixed up some things there. Forget I said that. The pink link on my chart comes from Friday's lows. So when I noticed that "capitulation bar" (short of any better term) it happened around the level I was expecting so this was confluence for me: support, very high volume, a bar closing well off the lows, ànd after a downmove. This has been in the past a good long signal. What I see in the chart is that what happened next, is price went slightly higher, but volume was dropping off along the way. Exactly the same thing happened Friday evening on the ES when price touched 1285 and then hovered around that level. The difference is that on Friday price climbed up almost 20 points off the lows. But if I were to place both situations next to one another, they'd almost look identical! And I believe I am taking context into consideration now. Although I realize every moment in the market is unique, I had hoped the time I spent studying VSA would've made me somehow 'sensitive' to the market.

You are right about the entry. Like on Friday the exit isn't as good as the entry :crap: Assuming I would still be in the trade at that point, for sure at '4' I would be closing out. If not at '4' then definitely at '5'. By that time we've seen two bars on huge volume and a failure to go lower! I can't imagine that not being an exit signal? Unless the trader is just going to "leave it open till the close" without paying any more attention? In all the things I've read (but all of those could be wrong obviously) it's always been stressed that failing to make a lower low is not only a warning signal but in most cases also a reversal signal. A re-entry short at '6' would've seemed like a good option at the time...

I'm sorry if my posts sound confusing. I mentioned 'shooting stars' because that's the only term I'm familiar with to label that kind of action. I'm not aware of any specific names that exists in 'bar theory'. Thanks for your chart, will analyze things when the market closes. Just watching price now trying to understand whether or not what is happening now is the true selling climax.

I'm afraid I'm going to have to disappoint you on this one... I do take trades on the SPY but I don't "daytrade" the tracker because that would require a minimum of 25k by US law and I am not prepared to risk that much money. But the SPY is the equivalent of the SPX and being a big fan of bigcharts I tend to use it as a proxy because the first provides volume while the latter does not. Taking into consideration that I've been trading for almost 5 years but have yet to become consistent (although I do make profits from time to time) I doubt I'll be smarter than anybody you've worked with, sir :\ Thanks for the replies so far, I'll have a look at the end of the day and remember to annotate the date to my charts. Good suggestion.

I take it by context you are refering to important S/R levels. But that's what I do. For example, today the long trade was on possible capitulation off support. I drew a line there because the overnight action was particulary interesting since price went sideways there for a reasonable amount of time. And price reacted heavily, as I noticed by the bar closing all the way off the lows on extreme volume. What else - in real time - was there to identify that this was not capitulation (because price is now a lot lower)?

Back to square zero today Somehow I can't help feeling that sometimes the market is after me. I traded a shooting star on higher volume and shorted at the next bar. I got taken out by the high, next I noticed price goingin the right direction. Typically. Second trade was long after capitulation on support. Again I entered on the next bar according to plan, but got taken out by the exact low! My plan says to put the stop at the low of the capitulation bar. Normally price starts to move higher almost immediately or if it doesn't, it usually stays above the close of that bar. But now we dropped down and then spiked up again?? What the hell is going on? For sure this was a typical VSA-setup, not?

This is all relatively easy to say in hindsight, but how do you know - at that time - that the August 2007 ow was a temporary capitulation and the January low might not be one? Volume is high on both occasions right?

Although I can see this formation on the chart you posted, I don't really agree that the other major averages have been building the same formation. It looks much more like a sideways range than what you call higher lows and lower highs on the S&P. Also on the INDU I need quite a bit of imagination to see that though... you're free to post a chart to prove me wrong though.

I don't mean to quote you out of context, so I quoted the whole paragraph in where you mentioned Dow Theory. In my early days when I wanted to become a long term trader I read some books about Dow and Rhea (I believe one of his followers). But they only mentioned confirmation of the averages: the dow industrials and the dow transports, the nasdaq never come into play. So I'm not quite sure if that "theory" can be applied to another market as well, since the nasdaq only existed since modern times.

I won't after I have closed my second trade. Today I am lucky though, having two trades so early. But these days are rather rare... and like I said, my first trade was a loss, so need this to be a winner, big enough to make up for the loss. There's no knowing if I'll have a trade soon or later each day, or even have a trade at all. I find it very hard to do nothing for hours to be honest. I'm wondering how other people do. As I am trading of 3-minute charts most of the time (or 5-minute) I can't really keep my eye of the screen for very long or I might miss a bar. Edit: just closed my 2nd trade for 8 points.

I believe the description I gave about the setup tells is quite clear about what it is I'm looking for. The problem is, sometimes it doesn't occur whole day. Then I sit there for 6 hours in front of the screen while I have nothing to do. Your mind tends to drift and you want to put a trade on for the sake of it. But I know the exact pattern I want to see and when it does occur it often yields good profits. It's just that I feel I should be doing more instead. How do you manage to take a trade so early in the day? Sometimes the pattern I'm looking for occurs in the first 30 minutes, sometimes in the final 30 minutes. Sitting on your hands all that time can be a hard thing to do. :missy: I've attached an example of today, I shorted twice. First one got stopped out, second one I am still holding as we speak. Second short was better as the volume on the following bar was significantly less in comparison to the "shooting star".

If by setup you mean a strategy, then yes. But I can only put it into motion when the market acts according to my scenarios. And sometimes it does, but a lot of the time it doesn't and then I need to re-think how I'm going to approach the market. Mainly I'm looking to sell resistance levels when price has failed to break through and is coming off. I like to see "shooting stars" at resistance, I know this whole concept of representing bars isn't correct because price is a continuous flow, but I'm not yet capable of identifying the dynamics behind a shooting star in real time. I tend to short on other bars too though. For example when I see an upbar on huge volume, followed by a downbar on very little volume in comparison to the previous one, it usually means price will start falling. Hope all of this does not sound too ridiculous... it's been working okay for the last couple of months. I have other things which I pay attention to, especially patterns like triangles that I read about in Bulkowski's Encyclopaedia of Chart Patterns.

Hmm, not a bad way to trade I guess. In the past I used to think that trading was about making 10-20 trades per day minimum. After all, you read these posts from other traders who say they had "a very busy" day. But you seem to be on the opposite of the spectrum. Whatever makes money, I suppose. I can see the benefits of trading less though, less stress and more time for something else. Meanwhile, while we were all looking down, the market rallied us back into yesterday's territory. Isn't that significant? It looks like some sort of false breach of support now. In other words, I'm confused.

I see, so you are not trading today then?

Thank you for a very informative post. Now you've made it clear that there is S/R all around the place on different timeframes. But this morning (and I don't know how much attention you give to premarket action) the Nasdaq has dropped below 1710. If I look back to the left of my chart, I don't find much support now... how do you determine targets for intraday trading when there is nothing but -how shall I put it- "air" in between here and much lower?

Erierambler, it's not really clear what I'm looking at. What market is that?

Sorry if I missed this elsewhere, but does the colour coding has a special meaning? I understand that the thickness of the lines represent major and minor support, so the red lines are minor and the magenta and cyan line is major (correct me if I'm wrong). Does cyan always represent support and magenta resistance? And if so, is blue always the colour you use to identify the midpoint? Perhaps a short chart legend is in place.

I understand. I also enjoy reading other people's view, to see if they are the same of what I'm seeing in the chart. Here is what I thought of today and why I took two long trades: Ok, so today we had a volume peak at 10 o' clock. There was news released so I don't know how reliable volume is on these moments. Anyway, t he bar closes right up there so there seems to be little supply at the time being. After that price drifts sideways and volume takes of. If you consider the horizontal pink line as resistance and 'a' a breakout then 'e' is a pullback. At 'b' we peak up again but notice how the bar closes slightly above the middle but is immediately followed by a lot of supply. I exited my longs there. If this was good buying it should not have come down so quickly. After that, volume dries up. Not in the same way as in 'e', where volume was relatively flat but equal, now volume dercreases almost on each bar. It's like every trader that is willing to participate is stepping out of the market. Price consolidates on ever lower volume: 'f'. There is a very tiny little volume bar, does this indicate "no demand"? Easy to say in hindsight as price plunges down on 'c'. Notice how this bar closes right near the low. Lot of selling. Selling keeps going on until we reach point d where volume is at it's highest for the day while, but the bar closes off the lows, almost in the middle. Next is an up-bar on very decent volume. 'd' is a selling climax. Incidentally I took a long there. dbphoenix mentioned a re-test, but I'm finding it hard to see one. Probably because this is a 5-minute chart. The difficulty with 1 or 2-min time frames is that volume spikes imo aren't so easy distinguishable from the rest. On this 5-min chart they are hard to overlook. I hope all of this is in touch with what Wyckoff teaches. The chart is only uptil the point I was watching price. I exited my long at 'g'. Yesterday, Eiger gave an excellent analysis. I'm not trying to repeat him, I doubt I could as I'm not so knowledgeable nor experienced, but I hope I'm having some of it right today. Only learning here. PS: sorry for the mixup in the order of the letters...

Hmm... aren't there opportunities later in the day? Personally, I feel today has been much easier to read on the ES than yesterday. I had a long on the open, then sat through the retracement, exited on the volume spike around 1340 and went long again around 1325, again a volume spike. It could be my feed, but the volume peaks are so much more clearer than on other days. I'm reading bars of almost 100k!

Sorry for any misunderstanding, but could you perhaps add a chart of somekind? I don't see 72-74 on my chart, have looked at the futures and the cash prices. Am I missing something or are you perhaps talking about a different day?

Perhaps I understand S/R better than I realized. 1765-1770 is exactly where price just peaked and -if I'm saying this the right way- selling pressure is coming in.

I'm trying to understand a bit better all those lines drawn on your chart, but they are still confusing. I thought I had a reasonable idea to identify support and resistance, but now I'm not so sure anymore. I only trade the ES, but I had a look at the NDX recently because all of your charts are that market and I'd like to understand the concepts better. So here is my question: if I look at last couple of weeks it seems 1765-1770 is more important. That level was "tested" (hope I'm using the right terms here) twice on the 25th and another time on the 26th where it started to rally big time. Then on the 29th it seemed to find support there, but then fell through. Then today (just now) we seemed to find resistance around 1765, which coincides with the earlier levels. That's another question I have. Last couple of days you said something in the line of "today that seems to be...". So this is confusing me, how can you make real time decisions if price is finding support at different levels each time? 1750-1760 is 10 points wide, and although I haven't really a good idea about how wide a stop should be no the NDX, this seems like an awful wide zone to trade from. 5 points on the ES is already wide for my risk threshold:\ Btw, how do you manage to show those images inline in the post?

Just like to say that I appreciate all the feedback everybody's giving eachother here and I am proud to be a member of this board with so many very knowledgeable traders. I'll let things sink in for the rest of the day before continuining my studies of Wyckoff.

I have one more question about today's action. I've attached another chart, this time 5-min. A = selling climax B = test on lower volume C = entry long on volume rise, professional money flows in here Am I not applying Wyckoff / VSA principles here? If so, then why does price not rise anymore? I didn't take this trade because it felt like going against the trend. Despite that, my rules said to go long there :embarassed: