zeon

Strictly speaking that momentum is changing... slowing down, which was visible on the chart by the sideways movement. And, if I understand the posts in your blog correctly, it signifies a reason to exit longs. Nonetheless, momentum has just picked up again and we jumped higher 5 points.

I've tried drawing a trendline from the beginning of the day, but even that is breached.

I forgot to say that volume is the confirmation of my trade. There needs to be a peak in the volume in order for the signal to be valid. And ehm, yes, that was basically how I traded for several months last year and managed to actually make a profit. Ofcourse at that time I had no idea what the future profitability of the setup would be, but by the looks of it is has had it's time Ofcourse this is just the signal, the complete setup includes where to place the stop, how to determine the target, position sizing, position management, etc... And I also didn't mention that there has to be a sustained directional movement before. So if price is just drifting or ranging, shorts aren't in place.

Ok, I'll try to steer away from comments like going short or long then. But what about the supply then? And I had drawn two trendlines that were broken (see my previous charts), are you looking at something on another timeframe perhaps? The "setup" for shorting was like I said before a shooting star like formation (or by blending candles) into resistance, in this case 1360. Something like this ocurred at 1718 PM on the chart I posted, but on the next bar price went up so no short signal triggered. Note: price has just gone below 1360 again hmm... PS: Something you wrote recently just came to mind. You said you didn't take trend into consideration "per se" when buying S and selling R. This seems a bit contradictory to your above post...?

Trying to be as "real-time" as possible, this is a 1-minute chart of the ES. Isn't this supply coming into the market? Notice how all of the bars close well off the highs. I'm not thinking of putting a trade on, but in all honestly this would probably have been a short ...

Another demandline is now broken... Also, the reaction at resistance looks like price didn't want to see 1360. High volume and bar closes well off the highs...

I agree, there's no reason to short, other than trying desperately to scalp some points. But can you really blame the trader if he's acting on a perfectly valid signal and suddenly some news is released and the market goes in the other direction? I guess I know what to strive for then It does seem like your ability to do so derives from a very fine understanding of where S/R can be found.

Now I see a lower high, but no lower low...

So if a trade goes wrong, this automatically means the trader that has read the market incorrectly? It sounds like you are advocating than you can get every trade right, if you are skillful enough to read the market Sorry if I mistakenly assumed something about your rules. But given the posts in your blog I considered - depending on how much confirmation you want - that either (a) a break of the trendline or (b) a break below the last swing low or high would be a clear exit signal.

I've observed this phenomenon on several occasions. Price breaks an upsloping trendline, goes sideways for a while, but continues much higher. I suppose moving your stop to 1351 (if you were long) would be the best thing to do here?

Price opened a whole lot higher than yesterday, after breaking through several resistance levels overnight. Wouldn't the trader be looking to short the next resistance level then, given where the market opened? I agree, exiting on the breach of a trendline is a good signal, or waiting for last swing low (or high) to be broken. Unfortunately, I've seen price continue much much further after a TL has been broken. For example, today I've drawn a demand line, it is now broken, but resistance is still quite a bit further down the road. By your rules, you'd be out by now, right? Edit: I've drawn a horizontal line, where I think "real-time" support is now being found. There was an earlier volume peak there, than price broke higher and paused at 1351.50, where we are now finding ourselves in some sort of congestion.

Okay, I understand, there are no certainties, only possibilities. So we wait and see if there's any rise in trading activity, displayed by the volume as that is the cause, when price approaches S or R. Correct? Perhaps today isn't the best of examples because price travelled towards 48 on the ISM news. It didn't seem to have much trouble at 46, but then again the news kind of blow through those levels. Let me ask you another question that, suppose there is no resistance at 60 and there is nothing on the left of your chart but blank space above 50, when would you exit your trade then? This probably won't be much of an issue, but last year we were going higher and higher and I had very little reference points. Usually I just left my trade open till the close and made some nice profits. It just seems the market has become much less smoother these days and there are more up & downswings which make it harder to trade. Or is it just my imagination? :\

I guess we have completely different definitions of what makes a "lower low" then For me, a "lower low" is when price breaks the previous swing low, on the chart I posted (5-minute timeframe) the last swing down touched 1322 and continued higher from there. There is no "lower low" until that level has been broken imho. On a personal note, perhaps I should become a swing trader. Last week the "down days" that I observed seemed like little selling and some sort of retracement back to support on a higher timeframe. This week we continued up, so by the looks of it I was right...

I have no problem seeing why 60 is potential resistance, but having three levels 46-48-50 so close together surely must be causing difficulties if you're trying to trade them? I'm not staying one must, but I thought you said support & resistance are "buying zones" or "selling zones", but in your latest posts you mentioned exact numbers. Even yesterday you posted ES numbers with only 0.25 (a tick) difference. They were amazingly accurate I'd have to say. But then do you consider them breached from 1 point on?

:\... Am I the only one who's not finding it "trivial" then? Perhaps you could lay out the numbers for the ES today, and we could compare them to what other people have...

Yes, that's true, but neither did price on the second upthrust?

Actually, I had written 1316 as a potential interesting level before the day opened. But then the premarket action went clearly below that and then through it like a knife through butter, indicating (or at least that was my conclusiong) that that level was wrong. I know, and I observed it in realtime, but that doesn't mean I am able to determine S/R myself using the principles you layed out. Take erierambler for example, he uses volume by price, but despite that each of us seem to come up with different levels each and every day... :\

True erie, but that's talking about the target. If you stubbornly hold on to S/R as a target and don't care what price does in between, I'm sure you'll get stopped out quite often. Take for example the first "upthrust" in my chart, if that was a short (at resistance too) than it'd be a losing trade. Enjoy your holiday.

1315, 1323, 1330, 1335...

Thanks for the explanation. Although to be honest, I think on this particular chart it's fair to say that the "balancing zones" seem easier to spot, than on charts from shorter timeframes, like intraday. For example, last couple of days on the ES seem like more choppy than otherwise...

I don't know which instrument that chart is, but it's very similar to yesterday's action on the ES. I was about to ask the same question, but you saved me the trouble. I'm observing price action at important levels and have often found volume to be an important indicator in whether there's a true reaction or not. However, despite the initial reaction, in some cases the reaction doesn't last very long and the trend continues on it's direction. In other cases, a reversal occurs. I can't seem to find anything conclusive to determine whether or not the trade is only worth a handful of points or has a much greater potential. For example, I observed two "reactions", marked by the two blue rectangles on the attached chart (one at 1322 and one at 1330). At first what looked like price was rejecting a higher level, turned out to be nothing more than a pause before the upmove continued. The second one proved to be much more and price went back to 1322, previously resistance now turned into support.

That makes sense, or at least sort of. Although the overlapping of boxes on your charts is still something that can cause issues in my observations. For example, when having multiple S/R levels close to eachother, I can get caught in shorting three times on a signal although only the upper resistance level for example really provided resistance. A question though: what to do with overnight/premarket action? Do you think it's important enough to provide S/R? Or don't you take it into consideration?

Okay, that makes a bit more sense. Would you, according to the attached chart, then consider 133.50 - 134.00 to be an area of potential support/resistance (depending on the direction that price is coming from)?

I'm sorry but everyone here seems to have different definitions of where to find support and resistance, and I doubt I'm to blame if there's some confusion here, because although in all the PDF files you posted on this site, never once I did see a "box" come up. Then in all the dailies you use boxes,... and to be honest I've tried looking at it in different ways but I just can't seem to find how you come up with those boxes. They seem to be drawn in a very "discretionary" sense.

Levels I'll be watching today : 1300 1316 1334 1346 All numbers are +/-1 point, so the areas are two points wide.