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quark
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Describe what you are seeing as the climax (meaning give us a chart example). You may not be seeing a climax. Also, some can be minor climaxes & other major. Remember, according to Wyckoff, climaxes can be like snowflakes. You may never see an identical one.
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Not to split hairs here, but according to Wyckoff a stock is over bought if the price breaches the upper channel line (in an uptrending stock) & oversold if it breaches the bottom channel line (in a down trending stock). He uses these to describe when a stock is in a technically weak or strong position. For example, if a stock in an uptrend is overbought it is in a technically weak position. However, if a stock in a downtrend breaks the upper line (known as the supply line), this is considered a bullish indication (AKA potential trend reversal). These are just one of many ways indications & should not be used alone. Hope this helps.
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DB. I will stand down & watch this one. However, a question. What is the standard rule of thumb for each case? Blast through - do you buy the pull back after? Sideways - Stand aside? Reverse - Sell the rally? I'm just curious if the trend is trumped by S/R, then how would a Wyckoffian respond. Thanks
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Ok thanks for your comments. You answered my real question. Support & Resistance trump the previous trend. As far as the study of Wyckoff goes, is that always the case, or just in this case since volume is low while price is rising?
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DB. Given what you just posted, what are your thoughts on the S&P daily chart. We just hit the supply line & resistance line. Do you simply watch for signs of distribution here & then decide after you see signs of it or no signs?
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DB in regards to hinges your response was this. Can you give us a pointer on what the bread-and-butter Wyckoff setups are?
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There really wasn't much on exact entry of hinges throughout this thread, nor much about it on your blog. I could have missed them. The one thing that I'm confused on & you were going through this with Atto is: 1) how do you know which direction the trade is going? Or do you not, & is that why you said preferably both. It seems in one of the posts that you elluded to clues of which direction a chart he pulled up would go. Also, Atto mentioned hinges "tend" to be continuations. 2) Are you referring to the hinge, or the WTF as for what only happens in the 1 minute or less interval? My interest in hinges is to apply them to daily charts. The NQ example was just something I found after looking & looking at charts. It turned out nicely.
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Ok, so I have a question regarding the entry of hinges. So, if I'm inside & there is no break yet. What am I looking for? Am I waiting for a break of the supply or demand line & trade in the direction of the break?
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Copy that. So the supply line is something like this? I've left the original to keep for my records of how to annotate a hinge.
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Here is an update with unaltered supply line. Thoughts?
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So this looks like it could form a setup in the NQ 1 min chart.
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By this you me before the supply & demand line touch forming this shape: > Ok. Got it I have no interest in this stock or which group it belongs to & the groups performance. My study upon hinges is completely seperate from my study of other aspects of Wyckoff. I saw your reference to this thread, read the entire thread & then began to search for charts that formed a hinge. This is one that I came across. You & Atto did such a great job at explaining it, I felt compelled to get some feed back from you guys on what my understanding of a hinge is.
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So here is one I spotted. If I'm understanding correctly, DB tried to get people to recognize what is going on in realtime. So, DB, it finds resistance at the 1st horizontal red bar, then it finds resistance lower at the 2nd horizontal bar. So, in realtime, when we reach the 2nd horizontal line, I could infer that the price is going lower?
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Man, what a great thread. How did the interest fizzle? I've been searching charts, does anyone have any recent examples of hinges?
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LOL. Got it now. You know you raise a great point that I read in the Hoyles book, "The Game in Wall Street", whom some think was the precursor to Wyckoff's work. He states, that for those selling systems, tips, stock picks, brokers, etc. If they have the answers & know how much & how easy it is to make money in the stock market, then why would they bother telling you about it instead of making their own fortune (this is paraphrased, but fairly accurate excerpt). In other words, the pimp is making all the money, not the prostitutes. So, I agree with you on that topic.