MrPaul

Hey everyone just wanted to post up a chart of the daily ER2 for a heads up on Monday. We do not have any economic reports or chatter scheduled Monday so we could see some technical trading. Daily ER2 chart for Monday March 19th We see here on the daily time frame that price has tested the low area after the sell-off a couple weeks back. In that area we see a bullish engulfing (blue arrow) followed with a hammer (red arrow) on the test. What make this area interesting for Monday is that we have a cluster of support levels across different time frames. We have The daily S1(black line), Monthly S1(dark red line), Previous Days Low(Light Green line) and the Weekly Pivot(purple line). This is significant, there are traders from different time frames with different objectives that could be support or resisting that level. This cluster could leave us a temporary support to bounce up or if price trades lower a temporary resistance level for the day. What I'll be looking for tomorrow is demand rising near that level or lots of supply coming in after that level is traded.

Mike, Here are some links to look over: Pivot Points - What are Pivot Points and Support/Resistance Levels? Pivot Strategies: A Handy Tool Pivot Point Trading Tutorial I have uploaded A scanned article from stocks and commodities magazine on pivot points alongside the links. Also don't forgot to check out Soultrader's video's on pivots in the video section. Pivots.pdf

I'll throw my two cents in here and give an opinion and an answer. In my opinion the time frame used 764v is much to myopic a candle length to lend an edge using traditional reversal/continuation candles. Brownsfan brought up an interesting question where he wrote... "where and how do you exit?". I utilize candlesticks not so much for patterns in a cursory manner but for gauges of supply and demand. Therefore my exits are completely designed around change in that way. As soon as my mic comes in it should be easier to explain though a video but for now I tried my best with a chart. Nison is absolutely correct when he says candlesticks don't offer profit targets but they do offer something much more logical and relevant, a portrayal of momentum/sentiment shift between market participants... Let's look at a 10min YM chart (the same day as Tin posted). A.) A half hour into the trading session price forms a shooting star candle indicative of supply (and more importantly in some cases trapped late buyers) B.) After the Shooting star a doji forms displaying indecision and momentary equilibrium. This is where I start thinking very hard about selling price, logically if price cannot find buyers at it current level or above it it will auction lower in search of sellers. What we need here is a trigger, a signal that can mechanically verify that the odds are price is going to be trading lower. C.) that trigger/signal comes in the form of a candlestick close below the low of the shooting star. Selling on the close of that bar. D.) This candle could be used for a more conservative play for the close below the last indecisive point (doji). E.) Notice here that although price trades up and down it's *close* is always below that of the last candle. Lots of tight stopped traders got shook out during the leg down displayed by the wicks. That what I look for with sell momentum continuation, lower *closing* lows. F.) At this juncture price has capitulated and volume has risen dramatically (relative). Price has found demand indicated by the lower wick and now any signs of strength or indecision is an exit signal. G.) As we can see now indecision has entered the marketplace by price and volume made like Elvis and left the building. In a perfect world we could all pretend that the lows were covered but in reality anywhere between 12220 and 12205 is an area where you have confirmation that in all likelihood the leg has finished it's run down. So we have an initial stop above the highs @ 12285 after a signal to sell @ 12265 (20 point risk/contract) with a conservative estimate of gain near (40-50 points/contract) after we exit. The thing about using larger charts with candlestick analysis is that you are going to get more valid signals, and you can mechanically enter,exit, and set risk. Once again everyone has their own way to trade and that's the best there is for them, I just wanted to throw out an example of how I think when I am watching price trade.

Today was quadruple expiration but Candles did light the way. I did not trade today but these signals were good and could have been taken advantage of. The 15min chart today was the winner, the 5,10, and 30 were more foggy and didn't print clear signals like the 15 minute did. Chart for March 16th 2007 15min ER2 An hour into the trading day price approached the "Previous days high"(black line) and formed a shooting star (red arrow) and was confirmed with a lower closing low (blue arrow) therefore displaying that demand for higher prices had dried up at a resistance level. Price traded lower until the daily S1 was reached (black line), breached S1 trapping late sellers and forcing them to liquidate forming a hammer (red arrow) then confirming the hammer with a higher closing high (blue arrow). Although it must be noted that momentum was weak after the hammer so smarter/quicker profit taking was warranted. Thats all for the day hope everyone has a fun weekend

Brownsfan, Really enjoying this thread..how did you intially come across volume candles, any educational resources out there?

Good Idea Walter, I'll do that from now on...

Today was a great day to be using Candlestick and volume analysis. There were many setups today that could have been taken, some very high probability,some medium...Looking at a few charts here you may notice something interesting. First chart May 14th 2007 5min period ER2 Right at the open on a 5 minute chart we see a rejection of price formed by a hanging man candle (red arrow). A hanging man candle shows that although price traded lower during that period long positions were accumulated by some of us and if price trades any lower we might have to liquidate therefore fueling any downward momentum. In the case of a hanging man it is essential like all other candle patterns that you wait for confirmation. That confirmation was made by a close below the low of the hanging man (blue arrow), basically putting any one who was long in a bad spot. A good place to take profits was when the supply started to dry up and demand began to pick up forming a hammer like candle near the bottom on the swing. The next pair of red arrows shows us that higher prices are not really making us feel good and we wanted to wait and see what might happen before committing too much money. A few narrow range candles kept us waiting until we finally decide that lower prices is where it's at. This is indicated by a close below the doji (blue arrow). Second chart May 14th 2007 10min period Lets look at that second trade on a 10min chart, it's much more clear and is the reason I like to monitor the 5,10,15, and 30 minute charts at the same time. You never know on what time frame the best signal will appear. On this chart we see much more clearly a doji candle form (red arrow) and a close below it (blue arrow) indicate a trigger to sell. It is also very clear that price at that level was not attracting the attention it wanted because volume was like "See ya later, I'd rather be headed South..catch ya' then". Of course if your charts actually talk to you that may be a cause for concern. None the less I wanted to stress the importance of watching multiple time frames in real time together to find where the clearest signals for that day are being produced throughout the day. Third chart May 14th 2007 30min period Speakin' of, remember yesterday where the 30min popped off a doji and never closed above it's last period highs after closing below it? Today it was on vacation and didn't feel like giving much indication at all. The 30 minute time frame trader was left scratching their head while the 5 and 10 minute traders were filling bank bags. Much the opposite of yesterday... Oh and on a side note some of you may be thinking well that's great but what about all that other action that happened after the moves you pointed out! Well all I can say is that movement really caught me off guard and as I read on Dr. Steenbargers blog earlier today you shouldn't be confusing market movement with market opportunity.

Thanks for the input guys I will typically only take a reversal trade on a confirmed long wicked hammer,shooting star, or engulfment at a cluster of S/R, pivot levels, or range fade. I have a good example from Friday. Range bound day with premarket news. Market forms a high wave and then shooting star candle (blue arrow) indicating lacking demand for higher prices, I wait until a lower close confirms the star (red arrow) and go short. Price trades down until long wicked hammer forms showing demand accelerating and supply drying up near that area, price trades up until a bearish engulfing (blue arrow) takes over indicating that supply is greater than demand and short sellers have stepped in. I will typically trade the close of an engulfing candle but in a low volume environment it is often best to get extra confirmation of momentum through a closing candle (red arrow). Once again price trades down unto an area of known temp support and a hammer forms(blue arrow) confirmation is made a couple candles after that (red arrow) and short sellers get squeezed into the close. Hope that helps the people who are still getting an idea of how to use candles intra day. The important thing Walter and Trader273 mentioned was that price is not reacting to the candles and you always must consider the overall sentiment and trend of the market. Price does not reverse because of a hammer, thats just the imprint price leaves behind when an overwhelming number of buyers enter the market and the sidelined players then join in to fuel the momentum upward. The secret to candlestick trading is not just being able to identify a hammer vs a flying zebra (haha), it is knowing when to use them as a tool in an overall scheme.

Hey Everyone, I'm going to post a chart here every time a valid day trade-able candlestick trigger appears on the Russell 2k futures. This thread is intended for people who want to learn about day trading with candlesticks and also because I am bored easily and this is fun for me. All charts I post here will be off actual signals I take during the trading session so thats why it will be mostly limited to the ER2 contract. But if anyone has any other ideas feel free to post up. First chart May 13th 2007 10min period ER2 Within the red circle we see a shooting star candle, confirmation of this bearish candle is made with the second red arrow 2 candles later. This is important; In order for the shooting star candle to be deemed valid it must have a candle close below it, not just penetrate the lows "intra-candle". The stop is placed mentally above the shooting star. If you miss that because you were takin' a pee and then your grandma called and you had to chat just for 40 minutes that's okay because there was a continuation pattern OR for you a second chance signal made by a doji and a close below it marked by the third and fourth red arrows. Remember for any signal to be made valid a CLOSE must be made by the candle after it. This is the technical signal to take action. The stop here is a few ticks above the doji high. Second chart May 13th 2007 30min period (for you patient people:p ) A spinning top/Doji type candle form showing indecision among us traders exemplified by the blue arrow. The next candle makes a close below that low signaling a short. Why is this? Because doji's show indecision and we have made up our minds that price is better off below that point by closing it below the doji (there are still many of us waiting to join in that sentiment!) shown by the green arrow. Notice that on the 30 minute price never closes above it's previous 30min high! Okay, thats it for today these post should get better as time goes on and I become less stupid...

Welcome to the the forum Norman!

Dude did you just tell Chuck Norris that he owes YOU a favor? You're brave. If I recall... Chuck Norris's girlfriend once asked him how much wood a woodchuck could chuck if a woodchuck could chuck wood. He then shouted, "HOW DARE YOU RHYME IN THE PRESENCE OF CHUCK NORRIS!" and ripped out her throat. Holding his girlfriend's bloody throat in his hand he bellowed, "Don't @#%$ with Chuck!" Two years and five months later he realized the irony of this statement and laughed so hard that anyone within a hundred mile radius of the blast went deaf.

No, there is no uptick rule being introduced to futures of any type, SSF's or ETF's

I do not believe that (IN MOST CASES) dissemination of a method or system leads to dilution in the marketplace. The Grey area lies within whether the system is highly programmable, but even then a system will not be used in the same market at the same time with large enough contract/share numbers by enough people every single time. A discretionary method is even harder to muddle into the marketplace due to the subtleties. Many people have given out their systems/methods in books/courses and there hasn't (as far as I know) been a blunting of the edge. Most market participants even given strict rules that mold an edge will typically destroy it by tweaking it and/or using it incorrectly. Now another thing to keep in mind is that most people who think they have a fantastic magical edge that they just can't disclose really don;t have more than something that works well and makes allot of sense for them... Thats my 2 cents on the subject.

Dalby, Great post, how do you like to judge the degree of confluence? Such as If you have a sample of 12200,12225,12201,12250 etc. How do you define the confluence? Chart them all and use the mini clusters? Or just the ones that are within X amount of points from each other? I keep my cluster levels to a max of 3.5 point separation on the Russell.

Here are a few links to CME product volume charts. You can use this useful tool to identify volume profiles for last trading day's volume at price to the previous day, week or month. Very cool tool to keep in the bookmarks... Pick a product: CME Volume Charts Example of the Russell 2k (ER2) CME Volume Charts How to Use Chart-Ex volume charts: How to Use Chart-Ex For the YM and other futures contracts you can go here,they are also free (make sure to note current contract month). Futures Trading Charts by Chart-Ex

Check it... Got it from Dr. Steenbargers blog

ST, Thanks allot for the followup! I'm gonna keep an eye on that index over the next few weeks for sure

I'll be interested to hear what he has to say I am a bit confused because I thought he did use fibs and MA's and S/R etc. etc. in his trading. Is this just to get an idea of what everyone is looking at?

Post away my friend, we enjoyed the wrap-up:D We just have to keep any adverstisement off the forum to avoid spammers etc. Thanks allot for understanding:cool: Please Follow this link: http://www.traderslaboratory.com/forums/f64/creating-commentary-1245.html

Hey Freddie, I know that Sierracharts or Investor R/T work well with IB data. A good, free time and sales window can be created with Ibcharts.com software if you use one. These are the only two I have used with IB's data.

Thanks for the rundowm, the analysis is appreciated! I did have to take down your solicitations though

Awesome. Thanks man:cool:

Hey Robert, Yes there is an automatic pivot level plotter on most charting programs. I'm just trying to figure out if I'm getting the correct values lol. They just don't seem correct and I knew someone on TL! would be able to verify for me. As far as changing daily, yes they do. They also change weekly, monthly and quarterly (if you use those). I like to look for clusters of daily/weekly/monthly pivots, Market Profile levels(VAH, POC, VAL), Support/Resistance (such as a prior swing high) and fibonacci retracements ( 50% & 61.8%) to find areas where a larger number of participation from across timeframes and studies will be either supporting or resisting a price area. As far as being a noob, no worries...I'm always here to help out

Hey all, Can someone provide me with the monthly YM pivots I have a value of 12405 (low) 12674 (high) and 12660 (close) for January but I think this is off? Thanks:cool:

Richard, Firstly welcome to Traders Laboratory! I'll have to concur with Torero and Tingull on their points and I'll add a couple of my own... I agree, this forum is one of a kind! What makes it so special is the dedication to quality by it's founder, that same dedication shared by it's moderators, and the appeciation and contribution of quality content from it's users. It's "like attracts like" in action:) Simply the opposite of what is actively happening at Traders Laboratory in my opinion. You have Founders with big ego's that rarely participate, lack of quality moderation and users that want to act out at new users and "noobs" who just want a simple question or two answered. You won't ever see a member of TL! put down another member for asking a "dumb" question or being a little redundant. Everyone is here to help, not act like they are too important. Eventually a forum structure erodes once the founder skips out, moderation of spamming and disrespectful posting is not enforced, and the user base shrinks to a few whom think they are super-traders. I joined this forum initially for it's content and will stay to help further the cause.