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pjohnm
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Everything posted by pjohnm
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The attached is an attempt to summarise my notes on the chart. Blue dots denote areas where buyers have upper hand, red for the sellers. I have omitted reference to dl's / sl's and mid points to try and keep the focus on the important action, and to make it easier to refer back to.
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Below 27, I'm looking at the July TR which provided S at 20. Beyond that I'd be on the look out for climactic action such as a violent downmove followed by at least equal upmove, i.e, looking for the market to provide a clue, or S to be provided by the big round number at 2500.
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15.11.12 The daily chart shows the trend, with S at 2520 and 2500. The fall from 85 has created a number levels that may act as R in relation to an upmove from the pre mkt lows: 50 swing low from 13.11.12 55 MP of downmove 61 bottom of last trading range
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Following the open, I would also note that price fell back to S at 2560 from the MP of the TR at 2584, rather than test the top of the range after the MP, a clear indication of weakness.
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Although I wasnt able to pay much attention this morning, I did note that after the break of the opening low of 2570 (which was also S of the pre mkt TR), buyers struggled to make it back above this level. This has been mentioned previously as something to look out for and was a factor today.
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14.11 Pre Mkt Price still at the bottom of the trend channel. Buyers appear reluctant to take price above 2600, likewise S at 2560 has held firm, another break below may be significant. R was somewhat soft during the previous days session, with 84 providing the most reliable level.
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13.11.12 The opening was something of a surprise given that S at 2561 and the PDL of 2556 were broken beforehand. (Looking for short opps would be the sensible option given the trend and that we were yet to test the bottom of the trend channel). Post open, the fact that buyers consolidated at 2561 (note cluster of bars) before moving above 61 should indicate that buyers were at least willing to fight their battle in higher territory. 66 was a less obvious level of S/R, and a brief brk of the dl did nothing to suggest that sellers were going to step in here. The larger reaction came at 72, but the pullback could not reach 66 and those looking here to join in the prevailing trend were disappointed. Note that the move up from 66 to 72 did not pause to create a swing point, which meant that there no levels of significance in between. The next upwave from 66 to 75 was almost vertical, and again did not create a swing point along the way, which may be a factor in the increasing length of the downwaves. Price comes back all the way to 67, before expanding almost vertically again to 79. All this suggest that 72 was not an important level, and the PA provides little to suggest where S/R may next form. A dt at 79, followed by a LH, mimics what happened at 75. Buyers are clearly struggling (note fanning of dl's), but the LH's at 66,67,69 reflect the uncertainty of the selling pressure. The break of the hinge to the downside fails, buyers step in to hit 85, a rise of 30 pts from the OL. Exiting and re-entering the long would have led to as much frustration as those looking for a short until the eventual upmove from the hinge. (The chart contains areas where I felt entries were valid, exiting at brks of dl's / sl's).
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Price has been working its way down the trend channel from 2685 on Nov 7th. The rebound from 2560 on Nov 9th failed to make it to the halfway point of the downmove and a db has formed at 2560 pre mkt. S from Nov 12th at 2571 has become R overnight.
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No bounce from the mid point of the TR and moving into oversold territory. Next stop 2520...
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The context for the pre mkt today was that price had made its way towards the bottom of the trend channel which meant looking out for opportunities on both the short (prevailing trend) and long side (bounce from the bottom of the channel). Major R was at 2626 +/-, but buyers were unable to get past the top of the pre mkt TR at 2621+/-. 14:44/5/6 Buyers hesitate at the top of the TR (20-22) and the bar at 14:46 was formed slowly (watching in realtime). Put simply, buyers are struggling. 14:50 We get a dt and a LH, followed by LL at 14:53, confirming the weakness. Buyers aren't done though, but the upmove is weak, further hesitation follows and a hinge is formed. Had a HH been created post 14:57, then that could have been interpreted as strength, but this does not happen and it is the buyers that withdraw. Areas I would consider for entry are marked on the chart. Entry 1 follows the dt at top of pre mkt TR, below the LSL and creation of LH, which allows the sl to be drawn. This fails immediately, but by waiting for the LH, the exit can be made as soon as sl is broken. Entry 2 The hinge equals indecision and again, by waiting for the LH, an sl can be drawn. My preference here for entry would be for the swing low at 16 to be broken. Exiting a short at the break of the sl at 15:11 gives another chance to re-examine. Sellers hesitate and buyers bring price back to 13, but they can only create a LH. A break below the LSL at 2608 would be confirmation that the downside isnt finished, and another sl can be drawn to aid the trading decisions. 2610 is my pre drawn S but 08 is where PA is pointing to. We should now be aware of S that can be provided by the big round number approaching. Noting that we are near the bottom of the trend channel and with a db formed at 2600, a long once the LH is formed with the break of the last swing high would be worth it in my opinion. 15:37 The failure at 08 is obvious and the break of the dl should not be a surprise. Although the exit of the long should be immediate, joining the short side would be difficult as price instantly plunges to 2600.
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With reference to the daily chart, we are near the bottom of the trend channel which could converge with a potential level of S at 2586 (MP of July TR). Pre mkt has provided S at 2610. Major levels of R at 2626+- (A move above may indicate a willingness to test the top of the trend channel) and 2650/60, levels towards the top of the trend channel. S 2586, 2610 R 2626,38,50/60
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14:30 – 14:38 Sellers take control at the open and break pre mkt S at 2646, testing the first major S level at 2638 and poking through to 2636. 14:38 – 14:45 Buying interest increases, breaking the opening sl, sellers unable to make LL’s, although buyers also fail to hold above the LSH as 2641. A test of 38 at 14:42 and we have a db / hl, depending on how you view the poke below S. A pullback at 14:45 creates a hl and is followed by a hh, and those looking for a long have a demand line to rely on. Note that buyers are swimming against the overnight downtrend in play, where price has fallen from 2685. Other point to note: Price has fallen from the top of the trading range at 2685 through the MP at 2660. 14:51 Buyers test the opening high and pre mkt S from below, but the pullback is followed by a LH at 14:53. 14:55 The last swing low is broken as well as most dl’s one could draw on the upwave. Again, the LH gives you a chance to draw a supply line, and we now have a chance to join in with the prevailing trend. 15:11 The sl holds as sellers break through S. Note the bars contract as price pauses before expanding on the way down. 15:30 The next level of S at 28 is broken but we note a change of behaviour as price starts failing to make LL’s, volatility reduces / pace of the down move slows. 15:39 The sl in place from 14:53 is broken, but the bars contract again and buyers fail to make HH’s, nor can they hold price above S, now R at 2628. 15:45 LH following the failure of buyers at R gives indication that more weakness may follow.
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Levels for today: Trading Range extremes 2628 / 2693 MP 2660 Interim S/R 2638/2674
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I was watching this trend channel yesterday but might be clutching at straws.
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26/10 The chart posted by DB pre open prompted some self questioning as to why I did not notice the downward channel developing. I put this down to the way I annotate the charts. Basically, by focusing from left to right, I am drawing the older lines first which impacts my ability to read the chart and the most recent action. Therefore, I must also read a clean chart from right to left as well. The importance of the down channel was that as price had begun moving from its base pre open, one should have been prepared for the potential for price to continue upwards at the open. 14:30 A dt is made pre open, then a LH, followed by a wide range down bar 14:33 The weakness ends at pre determined S/R (47) and a db is formed . Having breached 47 from below pre mkt. we should be prepared for 47 to act as S 14:34 Price contracts, then expands to the upside 2 minutes later, taking price back to the dt (the OH). Sellers appear to have withdrawn, given the ease that price accelerates. 13:48 From here, we break through a 2nd pre determined S/R level at 58, (with minimal hesitation), so again, little resistance from the sell side. (effort v result) 14:44 we get our first pull back at 64, and after a 4 pt reverse, we appear to be continuing on our way up again. 14:50 However, as the LSH is broken, the bars contract soon after and we have our first warning the buyers may be struggling. The pace of the upmove has changed to the point of stall. Demand weakening. 14:53 Another contraction in the bar range ensues, more evidence of weak buying pressure Buyers struggle to create a HH (post 64) and had we a downward channel to refer to on our charts, we would know that we were at the top of a pot'l important level, one where we should be on the lookout for buyers running out of steam. 14:56 Note increasing length of downwaves 14:58 Wide range bars creating LL's. Regardless of whether a down channel was drawn, the action shows the bars expand again and this time confirms increasing selling interest. 15:01 The drop back to 54 is as sudden as the rise was from it, apparently ignoring our 58 level of S/R. Selling pressure has increased and buying pressure has withdrawn. 15:05 The pullback from 54 pauses at 58, the bars contract again but instead of continuing the downmove, buyers attempt another run for the highs and are stopped dead at 64. 15:20 Contrasting the 2nd upwave from 54 to 64 with the first, we can see buyers are having to put in a lot more effort, (4 mins v 13 mins) and the result is a LH. The action has a hinge like quality (LH following HL, price converging to point), and we're now at narrow range bar. 15:25 The hinge is broken to the downside and it is the buying pressure that has receeded 15:33 Having broken 54 from above, buyers are testing it from below, but sellers show interest in defending a level lower than the mid of the mornings trading range (46-66). 15:40 - 15:41 A poke out of the 54/52 range is shortlived, as sellers quickly return price to 52 15:42 - 15:44 Now a contraction in price at the bottom of the mini TR 52/54, and buyers appear to be struggling to hold price above the low of 52 (note open and close of all 3 bars, i.e, the flow) 15:53 Its LH's / LLs from the break of 52 until 42. 15:56 The pullback stops dead at 46, then selling pressure resumes until 38. 16:07 Buying pressure increases post LL at 38 as the downwaves have shortened and the buying waves are lengthening.
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26/10 Pre Mkt. Traders appears to be done with the previous 57/82 TR and a dip to 2605 was made overnight. This was shortlived and a base was formed at 2727, from here, price has risen back towards the bottom of the main TR (57). 47 also looks like a potential area of S/R. So R at 57/70/82, S/R at 47 and S at 27.
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Thank you for taking the time to explain this in such detail. I mentioned yesterday that putting the market into context before the open is where I feel the need to focus. Looking at where price has come from is not something I have even considered. I find it hard to believe that even after reading so much of this forum that something so basic has passed me by.
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Given we are in a TR, I suppose it is perfectly reasonable to expect the majority of trades to happen around the MP and that I should not be surprised by quick changes in direction at the extremes. Or maybe sellers had exhausted themselves on the way down, and buyers now had little in their way. Looking at the upwave differently, maybe its an upward sloping hinge (shortening uphrusts), ready for the next stage in the decline.
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The overnight made new lows and S appeared around 48. It had occured to me post event that we may be moving away from the old trading range to a new (lower) one, and to consider that sellers may not be so ready to let old R be reached i.e, the MP has potential to become R of the next trading range.
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I had 82R 57S and 69/70 as mid, which were the same as the previous day, but did not consider the potential of the trading range stepping down, as hinted by the ovenight break below S.
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I did not pick this up this morning but I should have paid attention to the drop below the bottom of the 2657 / 2682 TR overnight (24/10). This should have at least prepared one for the potential of the MP to act as R on 25/10. Having been sat below the MP pre mkt, buyers propelled price higher 12 mins before the open and one could've expected a test of R (2682). Instead, sellers pulled price back to the MP 11 mins later and we were left looking at a LH at the open, with price back below the MP. Buyers arent done though and Price bounces off the MP from above but the 2nd attempt at a HH fails, and we're pulled back to the MP. The question to ask here is where is the least line of resistance? Buyers have tested 72 twice and failed to make a HH. Is the MP going to hold as S? The answer is a resounding no in the form of a 2.5 pt brk of the line (see first circle), making a new low from the open in the process. Hopes of a test of R at 82 are now put to one side. Sellers hit 61 before buyers show any interest in reversing the tide, and they are able to break the SL from the opening high, but then fail to make a HH after the HL. Instead, another double top is formed. Selling urgency wanes and buyers show potential in defending 63 (see second cirle), and a test of the OL is quickly repelled (db) with a strong bounce off the low. But instead of following through the break of the supply line (see third circle), selling pressure takes over and buyers are done with 63. Sellers now have no trouble taking price to the bottom of the TR. The question is, should one obsess of over the various waystations that price takes when travelling through a trading range? After all the weakness displayed from the open, buyers took less time bringing price back to the mid-point than it took sellers to reach S from the open.
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Hi bloc You're correct, that should read HL at 14:20. I look at volume in 2 ways. One, as a wave in conjunction with the price wave, mainly from one swing point to the other, so from the opening low to the first swing high, then from the retracement (first HL) to the next swing high and so on. I see your point about volume kicking in after the first retrace, but it declines soonafter. One other point to make is that buyers had to fight harder at the 2nd retrace and that to me is the purpose of this i.e, to spot changes in the dynamics and not be surprised that the DL breaks soonafter. I also look at single/ double bars to see if this offers any clues i.e, what is happening to the price bar at the volume spike bar, if price is continously making HH's on volume spikes, then I would see it as strength, ditto, weakness on LL's. As for the angle of the waves, I've yet to determine whether this is worth paying attention to but you can see after the 2nd hinge that the intitial downwave angle starts off much steeper than previous downwaves, and it leads to buyers giving up most of the gains made from the open.
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Hi Nik Your post resonates with me and I unfortunately cant offer much help, as I feel a long way from a meaningful trading plan. I would say that watching price in RT has led to some re-occuring themes appearing to me, even in the space of 2 wks, but what I do think is important is to put the market into context before the open. This sounds simple but I have not achieved it. For example, are we in a trading range or trend or both? Which levels matter to me and why? I find having lots of S/R clouds my thinking, so the question is then, which S/R is more important? I think focusing on the extremes of ranges will help me as it potentially allows more scope for staying in a trade longer (or getting out quicker), and therefore catching bigger moves. I'm looking at the extremes of longer term TR's (4/5/6 hr charts) and then the action as it approaches S/R. From here, the questions stack up, and I know that the only thing that matters is what price is doing now, rather than the lines I have drawn, so what action that I have seen previously would I want to see again as we approach a level I have deemed important? (A db/dt, a lh/hl, a break of sl/dl, activity increasing/decreasing, compressed bars on upwave v wide range bars on downwave, confluence with some long term trend line, a major index also at S/R, some combination of the above?) For now, I continue to watch (and think out loud in the chatroom) in the hope that some of the themes I have seen will become fortified, but the focus is on keeping it simple to begin with (no volume or tickq, but the s&p to help with context). Maybe this is just another road that may or may not get to the hub of being able to understand what price is doing just by watching it on a chart, but the only thing that matters is whether it leads to a profitable plan.
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I was referring to post 113.
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Hi Bloc - Re 2310 Chart. Having watched price action in real time for the past few weeks, I thought it would be interesting to revisit a day with volume switched on. Seeing as you have already provided a chart, I will make my notes on this. Re note 1 - I had been looking at the pre mkt supply line that had been broken and anticipated a LL after the swing high (14:20ish). Instead, price headed down for another test of pre mkt S, so then the entry becomes after a bounce should one occur, in this case the opening bar. We technically make a double top 3 minutes later (which was mentioned in chat) but given the break of SL previously and proximity of S, it would have appeared that the sellers were done. Volume declines on the way up, prices then retraces, but when we do get another shot of volume, price makes a HH. So we had no follow through to the down side and HH’s being created on volume spikes. Re Note 2 - Volume declines again on the way to making a new high but also notice that following the compression bar at the high, price declines. The compression bar and resulting decline indicates a potentially important level. From the high at 2, price breaks the DL (exit long) but volume then kicks in and we get a bounce up. There is therefore no follow through to the sell side, yet. We then have a lower volume test of the high which indicates a lack of demand, and in fact price can only make a LH. Given previous break of the DL from the open and the lack of demand, a short below the low of the LH bar may be justified. Sellers now test the opening SWH, and volume has tapered off on the trip down (sellers have retraced with less effort) The SL is then broken on higher volume, so buyers have shown that they are interested here and are lifting support from the level set at the open. In conclusion, supply failed to generate increasing activity on the way down. Note also the angle of descent v angle of opening upwave, there was less urgency in the downmove. If the above action is enough to make one believe that buyers strength is greater, then one could hang their hat on the swing low, entering after the break of SL, but given the proximity of R, it may be better to wait for a BO. Note when the hinge develops, we eventually get a volume spike and it is enough to send price onto new highs.