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Sledge

Real Time Price Action- Clue to Puzzle?

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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.

 

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.

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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.

 

However, 72-74 was also tested. It's the nature of the S/R zone that there will be a number of potential levels to watch. That's why one has to wait until price actually gets there before determining what's potential and what's actual. If it doesn't prompt a response from traders, it's not important.

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However, 72-74 was also tested. It's the nature of the S/R zone that there will be a number of potential levels to watch. That's why one has to wait until price actually gets there before determining what's potential and what's actual. If it doesn't prompt a response from traders, it's not important.

 

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?

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Interesting how little volume it took to break quickly above the earlier highs and that the trading activity increased as it reached that peak.

 

 

 

Edit: Ignore that, just checked elsewhere and my feed is wrong. Very wrong.

Edited by tune
Edit that, just checked elsewhere my feed is wrong.

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Well, it was a thrust all right, tho not a springboard . . .

 

Just a comment on today's action. Shoulda , coulda. If price would have continued right up to 1344-5 on the $Spx this morning, I would have had a trade, but since price waffled , I just sat today out.

erie

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preliminary support, selling climax, retest . . .

 

(in my little microworld)

 

And the retracement . . .

 

Bulls running into a little trouble here.

Edited by DbPhoenix

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Just a comment on today's action. Shoulda , coulda. If price would have continued right up to 1344-5 on the $Spx this morning, I would have had a trade, but since price waffled , I just sat today out.

erie

 

 

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!

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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!

 

Not for me, not today. As I gain more experience this may change, but for now I just don't ( haven't seen anything ) see where I like the price action.

erie

P.S. I do like reading what other's see, but lots of times it just doesn't find favour with me........

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Not for me, not today. As I gain more experience this may change, but for now I just don't ( haven't seen anything ) see where I like the price action.

erie

P.S. I do like reading what other's see, but lots of times it just doesn't find favour with me........

 

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.

 

 

attachment.php?attachmentid=5419&stc=1&d=1204748923

 

PS: sorry for the mixup in the order of the letters...

es_march5.thumb.PNG.70160c6cc581666bdb095c6277ce0703.PNG

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Ok, so today we had a volume peak at 10 o' clock. 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.

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. 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.

..

 

Ok for me. "a" is an upbar with volume activity not at "R", so I'm not interested. After that price drifts sideways so now I'm really not interested. "b" is a thrust with volume activity. I should have paid attention to this but it doesn't matter to me today. That's why I review after the day's price movement. The top of "b" will be an important potential R for tommorrow. "d" is a potential selling climax at potential support form the previous day's morning session from 5-10 AM. Then the test 5 bars later that confirms support.

erie

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You know, as arbitrary as it may be I find that S/R normally finds itself pretty much spot on with classic daily pivot formula on the YM. Previous lows and highs on the chart barely seem to affect price action. Or maybe it's just me... shrug.

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Getting back to the chart posted in #24, it appears that we are going to work this zone for a little while longer since the bulk of the activity is between 1740 and 1830, with the midpoint at 1785. So we focus on possible levels of S/R within this zone. 1750, 60, and 70 were confirmed, and 40 was important again. So this provides us with levels of interest going forward.

attachment.php?attachmentid=5422&stc=1&d=1204768413

Image12.gif.e9819182e761d114b98d25dc218ddefe.gif

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Getting back to the chart posted in #24, it appears that we are going to work this zone for a little while longer since the bulk of the activity is between 1740 and 1830, with the midpoint at 1785. So we focus on possible levels of S/R within this zone. 1750, 60, and 70 were confirmed, and 40 was important again. So this provides us with levels of interest going forward.

attachment.php?attachmentid=5422&stc=1&d=1204768413

 

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.

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Price action is "it". Everything else is secondary. Sounds simple, but its ridiculous how often it's forgotten. PPM - Price Pays Me. A rally on weak volume with no interest from buyers that hits resistance left right and center is STILL a rally that pays you if you were long, and gives you a loss if you were short.

 

Studying anything - VSA, tape reading, etc. - needs to be referenced in context to which MARKET we are talking about.

 

When you read the tape, you are analysing what other traders have DONE.

 

When you study the depth of market, you are studying what you THINK traders are ABOUT to do.

 

 

Man, you are sooo right about these points. So many people are caught up in technical analysis (of which 99% is myth, stupid conclusions and wrong interpretation) that they can't see the simple truths of trading. Great post!

 

The DAX has every man and his dog trading it - retail guys across Europe and America, big funds, automatic trading, the lot. In my opinion, it is a very good candidate for reading price action. I like to know my S&R levels, and then "live in the depth" of that market, and glance at the chart occassionally.

 

I disagree, if you want to trade the DAX, look at what the Dow Jones Euro Stoxx 50 is doing since the DAX is following it "tick by tick" (each tick in the Dow Jones Euro Stoxx 50 moves the DAX by 4 - ticks on average - 0.1 seconds later). Just watch the DOM of both side by side and you'll see it.

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Consider, Sledge, that price is continuous, as is volume (that is, trading activity). Therefore, there is no "close", at least until everybody goes home and turns out the lights. What we perceive as a close is merely a function of whatever bar interval (time, range, constant volume, etc) we choose to display the movement of price and is entirely irrelevant to that flow. What matters more are the ebb and flow and their character: pace, extent, range, etc.

 

To better see this ebb and flow, you may want to use an even smaller interval. A tick chart may look like flies circling over poop, but something like a 5-second chart will enable you to see this ebb and flow without being distracted by the OHLC. Once you become attuned to this, you'll detect the flow even in an hourly or daily or weekly chart.

 

Some will object, of course, that whatever goes on in these teeny tiny timeframes is "noise" and is irrelevant to the larger, more "important" moves, but this is akin to saying that ocean currents are noise and irrelevant to the larger, more important moves. It all starts somewhere, and the trader who is attuned to these seemingly insignificant changes in price movement is going to be virtually shockproof when price suddenly starts hellbent in some new direction.

 

Db

 

I absolute agree with each and every word in this post.

 

Time periods (with the exception of the open to close of a trading day) are completely arbitrary. Imagine the time on your computer being off by just a second or your data feed lagging by a second, all of your chart patterns and indicators might give you completely different values even though the actual trading that took place has not changed at all.

 

I've also found that there is no noise in the market. I could even say that longer term price movements are more random than short term price changes since long term price movements are just a function of all this 'noise' in the short-term. Each trade is significant and can change all trades following it (like the bufferfly effect). Imagine one contract changing the best/bid ask price because there is only 1 contract left in the limit order book on one side. This price change could trigger buy/selling by other traders which could trigger even more orders. All of the sudden, the market is going down/up hard while you're still waiting for your bar to close.

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I vividly remember the first time I had a multiple tick chart line running side by side with live 5 minute candles. I was amazed to see this little world working away inside. All the same things were there, just much smaller. Like an intraday chart is to a daily.

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I disagree, if you want to trade the DAX, look at what the Dow Jones Euro Stoxx 50 is doing since the DAX is following it "tick by tick" (each tick in the Dow Jones Euro Stoxx 50 moves the DAX by 4 - ticks on average - 0.1 seconds later). Just watch the DOM of both side by side and you'll see it.

 

Correct, sorry I should have been more specific. The difficulty with the DAX following the ESTX50 is that many people are too slow to implement it. I trade through a fixed leased line to the Eurex, but I'm still never going to be faster than a local.

 

Anyone trading out of Europe is looking at around 300 millisecond delay on a good fast connection through TT.

 

Worse, if you're a retail trader trading through your own internet PC at home with any common broker, you literally will be trying to hit prices that are no longer there.

 

I execute through TT, and have ladders for ESTX50, DAX, Bund, EUR futures / Pound Futures, S&P and the FTSE.

 

Something a little different, but I watch thinner (closed) markets like the night Nikkei. If a move is a fundamental 'shift' in the direction, you'll see the bids/offers flow into closed Asian markets as they are arbed up/down.

 

When it's just locals in the DAX running stops, it's unlikely you will see any confirmation from other less-related markets.

 

SMW

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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.

 

The blue is support/demand and the pink is resistance/supply. The red is tentative. Dashed is even more tentative. So you figured it all out without me.

 

This is what I use in my book and in the other stuff I write, but it is essentially for me. I'd like to have some sort of Dr Seuss blue and pink intermittent dashed line for those lines that can't decide what they want to be when they grow up. And lines come and go and get adjusted as price sniffs around looking for trades. But that's RT trading. :)

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You know, as arbitrary as it may be I find that S/R normally finds itself pretty much spot on with classic daily pivot formula on the YM. Previous lows and highs on the chart barely seem to affect price action. Or maybe it's just me... shrug.

 

The pivots do seem to "work", but they are so far off the actual turning points that they can be used only as a guide. I suppose they are most useful for those who have no idea how to located S/R. What I'd suggest for those who want to learn, though, is to plot the points, then extend those lines to the left to find those levels that have been repeatedly tested, then focus on those levels themselves, using pivot points as training wheels.

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