Real Time Price Action- Clue to Puzzle?

[zeon 10]

FWIW, using the volume range "boxes" from my Blog, the first resistance area is 23-23.25 and the second is 26.5-.75.

 

 

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.

[DbPhoenix 42]

Simply a variety of ways of describing the same thing. The common theme in everything I've posted is price and volume and the dynamics between demand and supply, or buyers and sellers, or buying pressure and selling pressure. It's all the same thing. Beyond that, one looks for those areas where price is trending and where it's "balancing" or seeking equilibrium. These areas or "zones" of balancing present potential levels of support and resistance. I've posted dozens of charts with support and resistance lines above and below these zones. All one has to do to make a box is plot vertical lines on either side of the zone. If one doesn't understand how or where to locate these zones of greatest trading activity or highest volume, he can plot volume at price. If that makes no sense either, he can try the MP software.

 

What one calls all of this is irrelevant. The objective is to locate those areas where the greatest trading activity has taken place. One can then draw lines above and below it, color it, draw a circle around it, draw a box around it. Doesn't matter. What matters is locating the zone. That's what I had been doing for three weeks in my Blog. As for today's numbers, those were derived from the chart I posted last Friday.

 

One can, of course, limit himself to "points" and "levels" without regard for where those points and levels lie. But if they don't work, the logical conclusion is that they don't represent support and resistance after all.

 

This is a chart I posted several weeks ago. The only difference is that I've enclosed the zones:

.

 

.

Edited March 31, 2008 by DbPhoenix

[zeon 10]

Simply a variety of ways of describing the same thing. The common theme in everything I've posted is price and volume and the dynamics between demand and supply, or buyers and sellers, or buying pressure and selling pressure. It's all the same thing. Beyond that, one looks for those areas where price is trending and where it's "balancing" or seeking equilibrium. These areas or "zones" of balancing present potential levels of support and resistance. I've posted dozens of charts with support and resistance lines above and below these zones. All one has to do to make a box is plot vertical lines on either side of the zone. If one doesn't understand how or where to locate these zones of greatest trading activity or highest volume, he can plot volume at price. If that makes no sense either, he can try the MP software.

 

What one calls all of this is irrelevant. The objective is to locate those areas where the greatest trading activity has taken place. One can then draw lines above and below it, color it, draw a circle around it, draw a box around it. Doesn't matter. What matters is locating the zone. That's what I had been doing for three weeks in my Blog. As for today's numbers, those were derived from the chart I posted last Friday.

 

One can, of course, limit himself to "points" and "levels" without regard for where those points and levels lie. But if they don't work, the logical conclusion is that they don't represent support and resistance after all.

 

 

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)?

[DbPhoenix 42]

33.5-34 and 33-34.5.

[zeon 10]

33.5-34 and 33-34.5.

 

 

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?

[DbPhoenix 42]

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?

 

As I've asked several times, why do you continue to trade this if you don't understand it? Study it. Try to understand it. If and when you think you understand it, then paper-trade it. If you never understand it, then don't try to trade it.

 

You're never going to understand the object if your entire focus is limited to what you're going to do about the object. The former is about the object. The latter is about you. This is not about you.

[erierambler 10]

Approaching r at 1:09 with a TD. Yes I might start a blog when I get back in 6 or so weeks.

erie

[erierambler 10]

1295, 1306, 1317-1320, and 1334. Will be my last post here for a while, see you's in May........

erie

[BlowFish 10]

The discussion has seems to be centring on drawing the levels or zones of potential S/R. I'd like to ask how people use the 'real time PA' of the thread title to determine whether S/R is holding or breaking?

 

I have noticed that price will often react to the first 'edge' of the zone and in fact retrace some way. It may then push a bit further (perhaps to the midpoint) and then finally turn from the outside edge of the zone.

 

Using lower time frames seems a common approach to detect the turn. Looking harder and closer at price where you anticipate this might occur if you like. The problem is that often (very often) you will get a change in trend on the lower time frame that is actually just the first reaction.

 

One of the answers seems perhaps to be through tactics (e.g. enter 1/3 first edge 1/3 centre 1/3 outside edge). However how does one recognise whether you have a reaction or the final turn?

 

Heres a picture that hopefully might illustrate what I am talking about.

[zeon 10]

The discussion has seems to be centring on drawing the levels or zones of potential S/R. I'd like to ask how people use the 'real time PA' of the thread title to determine whether S/R is holding or breaking?

 

I have noticed that price will often react to the first 'edge' of the zone and in fact retrace some way. It may then push a bit further (perhaps to the midpoint) and then finally turn from the outside edge of the zone.

 

Using lower time frames seems a common approach to detect the turn. Looking harder and closer at price where you anticipate this might occur if you like. The problem is that often (very often) you will get a change in trend on the lower time frame that is actually just the first reaction.

 

One of the answers seems perhaps to be through tactics (e.g. enter 1/3 first edge 1/3 centre 1/3 outside edge). However how does one recognise whether you have a reaction or the final turn?

 

Heres a picture that hopefully might illustrate what I am talking about.

 

 

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.

[zeon 10]

 

This is a chart I posted several weeks ago. The only difference is that I've enclosed the zones:

.

.

 

 

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...

Edited April 1, 2008 by zeon

[zeon 10]

1295, 1306, 1317-1320, and 1334. Will be my last post here for a while, see you's in May........

erie

 

 

1315, 1323, 1330, 1335...

[erierambler 10]

The discussion has seems to be centring on drawing the levels or zones of potential S/R. I'd like to ask how people use the 'real time PA' of the thread title to determine whether S/R is holding or breaking?

One of the answers seems perhaps to be through tactics (e.g. enter 1/3 first edge 1/3 centre 1/3 outside edge). However how does one recognise whether you have a reaction or the final turn?

 

 

To me it doesn't matter, it depends on one's plan. If one has resistance as a target he/she simply sells, and that's that. Who cares what price does after that. One may need to define what a reversal is. One example would be the upthrust bar just below your red trendline after the top, could define a reversal ( has the element of weakness in it ). Just my thoughts.

erie

[zeon 10]

To me it doesn't matter, it depends on one's plan. If one has resistance as a target he/she simply sells, and that's that. Who cares what price does after that. One may need to define what a reversal is. One example would be the upthrust bar just below your red trendline after the top, could define a reversal ( has the element of weakness in it ). Just my thoughts.

erie

 

 

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.

[DbPhoenix 42]

The discussion has seems to be centring on drawing the levels or zones of potential S/R. I'd like to ask how people use the 'real time PA' of the thread title to determine whether S/R is holding or breaking?

 

I have noticed that price will often react to the first 'edge' of the zone and in fact retrace some way. It may then push a bit further (perhaps to the midpoint) and then finally turn from the outside edge of the zone.

 

Using lower time frames seems a common approach to detect the turn. Looking harder and closer at price where you anticipate this might occur if you like. The problem is that often (very often) you will get a change in trend on the lower time frame that is actually just the first reaction.

 

One of the answers seems perhaps to be through tactics (e.g. enter 1/3 first edge 1/3 centre 1/3 outside edge). However how does one recognise whether you have a reaction or the final turn?

 

Heres a picture that hopefully might illustrate what I am talking about.

 

These questions are what the three weeks' worth of real-time commentary in my Blog were intended to address. Since your particular chart does not show where the S/R levels or zones came from nor provide volume, it's impossible to answer your particular questions -- at least from the standpoint of how I detect the turns -- using only this chart.

 

If you're genuinely interested in this, I suggest you review the charts posted in Dailies in my Blog and ask specific questions about specific charts. In this way, you'll be better able to transfer whatever you learn to whatever it is you're trading.

[erierambler 10]

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.

 

Zeon,

Again , you need to watch and learn more before you post things like this...........

erie

[DbPhoenix 42]

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.

 

That's because you're placing "resistance" incorrectly. Nor, apparently, are you paying any attention to support (which would have placed you in a long trade at or around 1315).

 

I should also point out that each resistance level shown on the chart I posted last Friday and reiterated yesterday was hit exactly.

Edited April 1, 2008 by DbPhoenix

[heretodaygone... 10]

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.

 

yeah, but....that first upthrust on your chart didn't show any weakness. On the swing upto resistance, price hadn't even made a lower low.

[heretodaygone... 10]

That's because you're placing "resistance" incorrectly. Nor, apparently, are you paying any attention to support (which would have placed you in a long trade at or around 1315).

 

I should also point out that each resistance level shown on the chart I posted last Friday and reiterated yesterday was hit exactly.

 

Support was 1317, but then again thats subjective to some.:o

[zeon 10]

That's because you're placing "resistance" incorrectly. Nor, apparently, are you paying any attention to support (which would have placed you in a long trade at or around 1315).

 

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 should also point out that each resistance level shown on the chart I posted last Friday and reiterated yesterday was hit exactly.

 

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...

:\

[BlowFish 10]

I should have been more specific I had assumed (never assume!) entry at the resistance zone rather than exit (though the same question is relevant).

 

Yes this can cross over to tactics as I mentioned. However I think if you just 'blindly' sell every potential S/R you'll go bust quick, well thats my observation. Determining potential S/R is the easy bit I'd go as far as saying its trivial. There is a bit of 'art' involved but with some diligence its easily accomplished. It's also done 'unreal' time in the calm reflective phase well away from the trade.

 

Erie I would humbly suggest it does matter in fact I would suggest that monitoring to see if potential S/R is really becoming actual S/R is what determines success or failure. I would be interested to hear your take on it, do you just enter at the zone or wait for some sort of price confirmation? Either way you would have been short off of the first edge when price started making LH LL. I figure I can't have expressed too well as it appears clear that not only does it matter its critical.

 

I guess scaling in is an option that obviates the need to monitor quite so closely until price approaches the 'last line in the sand'.

[zeon 10]

yeah, but....that first upthrust on your chart didn't show any weakness. On the swing upto resistance, price hadn't even made a lower low.

 

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

[DbPhoenix 42]

Support was 1317, but then again thats subjective to some.

 

That's why I said "at or around". Point is that the day began at support and the long side was first up in the queue.

[zeon 10]

Determining potential S/R is the easy bit I'd go as far as saying its trivial. There is a bit of 'art' involved but with some diligence its easily accomplished. It's also done 'unreal' time in the calm reflective phase well away from the trade.

 

:\...

 

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...

[BlowFish 10]

I should have been more specific I had assumed (never assume!) entry at the resistance zone rather than exit (though the same question is relevant). You will notice I talked about entry later on in the post.

 

Yes this can cross over to tactics as I mentioned. However I think if you just 'blindly' sell every potential S/R you'll go bust quick, well thats my observation. Determining potential S/R is the easy bit I'd go as far as saying its trivial. There is a bit of 'art' involved but with some diligence its easily accomplished. It's also done 'unreal' time in the calm reflective phase well away from the trade.

 

Erie I would humbly suggest it does matter in fact I would suggest that monitoring to see if potential S/R is really becoming actual S/R is what determines success or failure. I would be interested to hear your take on it, do you just enter at the zone or wait for some sort of price confirmation? Either way you would have been short off of the first edge when price started making LH LL. I figure I can't have expressed too well as it appears clear that not only does it matter its critical.

 

I guess scaling in is an option that obviates the need to monitor quite so closely until price approaches the 'last line in the sand' that is.