Real Time Price Action- Clue to Puzzle?

[BlowFish 10]

Sorry edited the original post and it double posted as I went back to many browser pages.My bad.

[heretodaygone... 10]

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

 

 

sure it did....at around 18:10

[DbPhoenix 42]

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'.

 

Again, I've never suggested "blind" entry or exit at S/R. The predetermined levels are only potential S/R, and the trader must apply what he knows regarding demand/supply dynamics to the activity that takes place at those levels. If he doesn't understand those dynamics, then he will have no idea what to look for. This is why zeon is continuing to have so much trouble. And, again, explaining those dynamics and what to look for at the various S/R levels was the point of my making those Blog entries.

 

Your note to Erie regarding determining in real time whether potential S/R is going to become actual S/R is of course critical to trading S/R successfully. If one learns how to do that, the hit rate of this approach is unusually high, and there are few stopouts. But if he tries to trade this via a list of instructions, the trader will not only be stopped out regularly but will also spend most of his time on the wrong side of the trade.

[erierambler 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.

 

.

 

There are three things here:

1. I need more price info (previous)

2. Our approaches are very different.

3. We do not trade the same instrument.

That may be cause of any confusion. My attempt to answer your question is feeble at best when I am not familiar with your instrument and would be only relating to what I look for in the ES futures.

erie

[heretodaygone... 10]

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

 

easy in hindsight. not really too hard in real time either

[BlowFish 10]

:\...

 

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...

 

Maybe calling them trivial is trivialising things It's not the lines/zones that matter anyway its how you monitor and trade them that matters

 

I have been trading FTSE last few weeks but threw these on an ES chart this morning (europe). They may not be "right" but they will keep me right side up

 

Edit I should say they are relatively 'short term'.

[BlowFish 10]

With the benefit of hindsight the top line is a little low Clearly found resistance at 50 which has held so far. The key thing now is to monitor to see if the bears can sieze control

[BlowFish 10]

A lower time frame chart to monitor the turn around 46.25 was the first hurdle.. I was late to the party 47.75. (short of course) edit: Looks like a re-test might be needed before any decent sort of move.

[DbPhoenix 42]

Maybe calling them trivial is trivialising things It's not the lines/zones that matter anyway its how you monitor and trade them that matters

 

 

Edit I should say they are relatively 'short term'.

 

Actually, it's both. However, the baggage that one brings to the task will in large part determine how he addresses it. Someone coming from an MP background, for example, will likely have far less trouble understanding this than someone from a VSA background.

 

Incidentally, R levels -- again shown on the chart I posted last week -- are 46, 48, and 50, eventually 60.

[BlowFish 10]

Actually, it's both. However, the baggage that one brings to the task will in large part determine how he addresses it. Someone coming from an MP background, for example, will likely have far less trouble understanding this than someone from a VSA background.

 

Incidentally, R levels -- again shown on the chart I posted last week -- are 46, 48, and 50, eventually 60.

 

Indeed, though as I said the levels can be comfortably drawn the night before without the pressure of the live market. Actually I know traders that trade successfully with just one or the other though. Furthermore of the vanilla 'levels' guys some trade break outs some trade them as S/R.

 

Anyway I wonder if you spotted my original question concerning corrections that look like reversals off the 'front edge' of a zone? I would be interested in your take on that.

[DbPhoenix 42]

Indeed, though as I said the levels can be comfortably drawn the night before without the pressure of the live market. Actually I know traders that trade successfully with just one or the other though. Furthermore of the vanilla 'levels' guys some trade break outs some trade them as S/R.

 

Anyway I wonder if you spotted my original question concerning corrections that look like reversals off the 'front edge' of a zone? I would be interested in your take on that.

 

Drawing them in advance without the "pressure" of the live market is the whole point of preparing for the day.

 

And, yes, I spotted your original question, but you must have missed erie's and my responses to it. Without context, what you have is just bars on a page, and shorting at 47.75 or thereabouts is essentially a jump in and hope for the best entry.

[zeon 10]

Actually, it's both. However, the baggage that one brings to the task will in large part determine how he addresses it. Someone coming from an MP background, for example, will likely have far less trouble understanding this than someone from a VSA background.

 

Incidentally, R levels -- again shown on the chart I posted last week -- are 46, 48, and 50, eventually 60.

 

I have no problem seeing why 60 is potential resistance, but having three levels 46-48-50 so close together surely must be causing difficulties if you're trying to trade them? I'm not staying one must, but I thought you said support & resistance are "buying zones" or "selling zones", but in your latest posts you mentioned exact numbers. Even yesterday you posted ES numbers with only 0.25 (a tick) difference. They were amazingly accurate I'd have to say. But then do you consider them breached from 1 point on?

[zeon 10]

easy in hindsight. not really too hard in real time either

 

 

I guess we have completely different definitions of what makes a "lower low" then

 

For me, a "lower low" is when price breaks the previous swing low, on the chart I posted (5-minute timeframe) the last swing down touched 1322 and continued higher from there. There is no "lower low" until that level has been broken imho.

 

On a personal note, perhaps I should become a swing trader. Last week the "down days" that I observed seemed like little selling and some sort of retracement back to support on a higher timeframe. This week we continued up, so by the looks of it I was right...

[DbPhoenix 42]

I have no problem seeing why 60 is potential resistance, but having three levels 46-48-50 so close together surely must be causing difficulties if you're trying to trade them? I'm not staying one must, but I thought you said support & resistance are "buying zones" or "selling zones", but in your latest posts you mentioned exact numbers. Even yesterday you posted ES numbers with only 0.25 (a tick) difference. They were amazingly accurate I'd have to say. But then do you consider them breached from 1 point on?

 

No difficulty at all because, yet again, these are only potential levels of S/R. I monitor the balance between buyers and sellers at each of these levels and act accordingly, even if that means not acting at all. I don't "try to trade" anything. I focus on what the market is telling me. If you never get past this, you're never going to understand it.

[zeon 10]

No difficulty at all because, yet again, these are only potential levels of S/R. I monitor the balance between buyers and sellers at each of these levels and act accordingly, even if that means not acting at all. I don't "try to trade" anything. I focus on what the market is telling me. If you never get past this, you're never going to understand it.

 

Okay, I understand, there are no certainties, only possibilities. So we wait and see if there's any rise in trading activity, displayed by the volume as that is the cause, when price approaches S or R. Correct?

 

Perhaps today isn't the best of examples because price travelled towards 48 on the ISM news. It didn't seem to have much trouble at 46, but then again the news kind of blow through those levels. Let me ask you another question that, suppose there is no resistance at 60 and there is nothing on the left of your chart but blank space above 50, when would you exit your trade then?

 

This probably won't be much of an issue, but last year we were going higher and higher and I had very little reference points. Usually I just left my trade open till the close and made some nice profits. It just seems the market has become much less smoother these days and there are more up & downswings which make it harder to trade. Or is it just my imagination? :\

[BlowFish 10]

Drawing them in advance without the "pressure" of the live market is the whole point of preparing for the day.

 

And, yes, I spotted your original question, but you must have missed erie's and my responses to it. Without context, what you have is just bars on a page, and shorting at 47.75 or thereabouts is essentially a jump in and hope for the best entry.

 

Actually that wasn't the question. the question was 10 or so posts before and had a chart of the FTSE attached to illustrate it. It was not about trades per se but about real time monitoring of price action

[DbPhoenix 42]

Okay, I understand, there are no certainties, only possibilities. So we wait and see if there's any rise in trading activity, displayed by the volume as that is the cause, when price approaches S or R. Correct?

 

Perhaps today isn't the best of examples because price travelled towards 48 on the ISM news. It didn't seem to have much trouble at 46, but then again the news kind of blow through those levels. Let me ask you another question that, suppose there is no resistance at 60 and there is nothing on the left of your chart but blank space above 50, when would you exit your trade then?

 

Whether or not there is a "rise" in trading activity is in itself irrelevant. What matters is the dynamic between buyers and sellers and its influence on price. I assume that even VSAers would agree with that.

 

As for when to exit a trade when actual S or R are unclear, what did I say about TDs and trendlines and higher lows/lower highs?

 

And, incidentally, I'm not long today. Price bounced off S at 3 o'clock this morning, and I wasn't about to jump in 35 points later.

[BlowFish 10]

In the spirit of the threads title here is a DT on a lower tick chart also with a line around 52.50 that must break to 'confrm' the DT.

[DbPhoenix 42]

In the spirit of the threads title here is a DT on a lower tick chart also with a line around 52.50 that must break to 'confrm' the DT.

 

If by "DT", you mean downtrend, that's not a downtrend until you have a lower high.

[zeon 10]

Whether or not there is a "rise" in trading activity is in itself irrelevant. What matters is the dynamic between buyers and sellers and its influence on price. I assume that even VSAers would agree with that.

 

As for when to exit a trade when actual S or R are unclear, what did I say about TDs and trendlines and higher lows/lower highs?

 

And, incidentally, I'm not long today. Price bounced off S at 3 o'clock this morning, and I wasn't about to jump in 35 points later.

 

Price opened a whole lot higher than yesterday, after breaking through several resistance levels overnight. Wouldn't the trader be looking to short the next resistance level then, given where the market opened?

 

I agree, exiting on the breach of a trendline is a good signal, or waiting for last swing low (or high) to be broken. Unfortunately, I've seen price continue much much further after a TL has been broken. For example, today I've drawn a demand line, it is now broken, but resistance is still quite a bit further down the road. By your rules, you'd be out by now, right?

 

Edit: I've drawn a horizontal line, where I think "real-time" support is now being found. There was an earlier volume peak there, than price broke higher and paused at 1351.50, where we are now finding ourselves in some sort of congestion.

[zeon 10]

In the spirit of the threads title here is a DT on a lower tick chart also with a line around 52.50 that must break to 'confrm' the DT.

 

 

I've observed this phenomenon on several occasions. Price breaks an upsloping trendline, goes sideways for a while, but continues much higher. I suppose moving your stop to 1351 (if you were long) would be the best thing to do here?

[DbPhoenix 42]

Price opened a whole lot higher than yesterday, after breaking through several resistance levels overnight. Wouldn't the trader be looking to short the next resistance level then, given where the market opened?

 

Yes, he would, if his conditions for a short were met. If his conditions were met and he were stopped out anyway, then his conditions are incorrect.

 

I agree, exiting on the breach of a trendline is a good signal, or waiting for last swing low (or high) to be broken. Unfortunately, I've seen price continue much much further after a TL has been broken. For example, today I've drawn a demand line, it is now broken, but resistance is still quite a bit further down the road. By your rules, you'd be out by now, right?

 

And what are my rules?

[BlowFish 10]

If by "DT", you mean downtrend, that's not a downtrend until you have a lower high.

 

No double top, my bad not defining terms. DT warning LH LL (lower high lower low confirmation)

[zeon 10]

Yes, he would, if his conditions for a short were met. If his conditions were met and he were stopped out anyway, then his conditions are incorrect.

 

So if a trade goes wrong, this automatically means the trader that has read the market incorrectly? It sounds like you are advocating than you can get every trade right, if you are skillful enough to read the market

 

And what are my rules?

 

 

Sorry if I mistakenly assumed something about your rules. But given the posts in your blog I considered - depending on how much confirmation you want - that either (a) a break of the trendline or (b) a break below the last swing low or high would be a clear exit signal.

[zeon 10]

No double top, my bad not defining terms. DT warning LH LL (lower high lower low confirmation)

 

 

Now I see a lower high, but no lower low...