Busy Day Tomorrow

[Sledge 13]

There's 3 charts missing from my last post which should have been included. I guess the server maintenance unseated them?!

 

Anna-Maria-

Would you tell me how you determine the top and bottom of your "Hot Zones?" Does this come from:

Watching the bars form in real-time?

Or is it a range of a bar or bars?

Or maybe possibly opens vs. close vs ???

:confused:

 

Thank you.

Sledge

[cowpip 10]

Sledge, I believe it's just a simple visual study of the playground. Look where there were previous "vibration" zones. These zones very often line up (as you now know - horizontally) across the charts. There's nothing special about it. Just scan across the charts and look for good reaction zones (price reversals during swing-type moves, or consolidation zones followed by a continuation move). You want to enter after price has confirmed a move away from one of those zones.

Edited April 21, 2008 by cowpip

[milliard 10]

She’s a little busy the next couple day’s Aaron, I’ll address your question in her absense.

 

Those area’s she’s tick boxed aren’t exact (to the pip) markers. We don’t work to such rigid parameters. The markets (especially area’s which house stops) can slip & fill anywhere up to quarter cent tolerance if liquidity issues are apparent or large orders are being worked thru the pipes.

 

We look for zones of supply-demand imbalance wherever possible & wait to see how price reacts as it comes back for a second bite. If price got shoved down on decent supply out of the imbalance channel (or consolidation boundary - whatever you fella's call it), then chances are they’ll be more sell orders waiting on the return trip if the flows are in a semi-mature trend.

 

This might repeat until the order books have absorbed sufficient sell activity, re-tested supply, overhauled it & flipped to demand (on pullback tests) before moving away. Then the mirror image takes effect on the reverse trip.

 

Give you a live example here on the Pound-Swiss graph she highlighted at the w/end.

 

That lower channel of supply @ 2.0450 thru 2.0700 just got repelled on it’s first real assault back up the ladder. We’re not in the least bit concerned about cashing out shorts until price begins to tell us it’s done shutting off supply & flipped to demand.

 

First instance of that will be when Sterling advances thru the channel on solid support, printing higher high & higher low steps out of the prev zone of imbalance.

 

Observe the recent haphazard price activity underneath the supply funnel? (4 hour graph). No serious intent or concerted effort from Pound Bulls to mark it up at all.

 

Fast money specs can use the support floor (working off those neutral daily candle prints) to try get a head start on events, but they’re gonna bail pretty damned fast when they see the supply entering the game at that lower level.

 

For now, shorts still hold the value ticket on this pair.

 

 

Take a look at the Euro/Yen around current level now too. Another of her tick boxed zones is coming under scrutiny at the 165. Her longs thru the 160-161.50 range, which successfully flipped the supply bias is now up for careful monitoring as it enters this next step of the journey. She'll adjudge whether she’ll compound further or begin peeling off as this level dictates the flows.

 

These zones merely offer us choices & options. I guess maybe you’re used to working to exact measures on the micro timeframes? That’s not a cross we have or need to bear when working off these big references fortunately. We buy ourselves a little elbow room to push & shove as we see fit.

 

As cowpip mentions, these crossroad area's are there just to afford you choices. The price action will let you know which direction to pitch your risk.

[Sledge 13]

Milliard and Cowpip:

I thank you both for the clarification. Most appreciated.

Sledge

[torero 10]

When playing the lower timeframes, you have to be more accurate with your execution and price demands at the same time be flexible with the zones AM, AM and Andre are talking about. Accurate means noting the high and low of the zone wait for it to be broken (or you range trade it). Be demanding means if the zone is too wide for your stop loss, don't take the trade or reduce the position to accommodate your risk amount.

 

That means you may have to make stop loss outside this area so the noise doesn´t take you out a trade. Personally I wait for the prices to get out of the zone, a breakout and take a small position just to make sure if it runs away quick, I´ll have small profit and not wine about missing it. If it fails then I took that small loss (from small position). The other reason why I take a small position is that the percentage is high that the breakout might be a false breakout. But when the breakout prices pull back and support keeps higher, than I know it's time to push hard and add more positions. This time the percentage is higher than the breakout trade, so I add more. Nothing is guaranteed in writing so confirmation is key.

[Sledge 13]

When playing the lower timeframes, you have to be more accurate with your execution and price demands at the same time be flexible with the zones AM, AM and Andre are talking about. Accurate means noting the high and low of the zone wait for it to be broken (or you range trade it). Be demanding means if the zone is too wide for your stop loss, don't take the trade or reduce the position to accommodate your risk amount.

 

That means you may have to make stop loss outside this area so the noise doesn´t take you out a trade. Personally I wait for the prices to get out of the zone, a breakout and take a small position just to make sure if it runs away quick, I´ll have small profit and not wine about missing it. If it fails then I took that small loss (from small position). The other reason why I take a small position is that the percentage is high that the breakout might be a false breakout. But when the breakout prices pull back and support keeps higher, than I know it's time to push hard and add more positions. This time the percentage is higher than the breakout trade, so I add more. Nothing is guaranteed in writing so confirmation is key.

 

Torero-

Excellent, so do you personally prefer to see a ranging market then as opposed to a potential top or bottom?

 

I think with even more screen time- now that I have been made quite aware of these "vibration areas" "Hot Spots" or "S&R zones" (Not sure we have reached a universal term) that judging a cluster of bars to look to see if it is accumulation or distribution, will lend itself to determining if the market will continue its present direction or fail and move away from the present trend.

 

Sledge

[cowpip 10]

These are all great recommendations and mark good sound money-management. Wise money-management is as crucial as having a good trading plan.

 

For me, watching price action is absolutely key, as Milliard, Art, Anna, et. al. have already indicated. I like to zoom into the smaller time-frames (zooming in even to the 5-min charts) at particularly key levels. When you get enough screen time (for me, it took loads of screen-time), you'll start to pick out entry's without too much trouble based on the candle patterns you see. Entries on the small time-frames at key levels will provide you with an unusually good position when price reverses on the larger time-frames. But it takes nimble fingers with no hesitation.

 

Price action very seldom lies.

 

My point is to emphasize the importance of watching price action (in real-time) and discern the formation of continuation and reversal patterns from it. It's a powerful tool when you finally start to get it, and will allow you to significantly fine-tune your entries at key levels.

[milliard 10]

Wise money-management is as crucial as having a good trading plan.

 

Entries on the small time-frames at key levels will provide you with an unusually good position when price reverses on the larger time-frames. But it takes nimble fingers with no hesitation.

 

Price action very seldom lies.

 

My point is to emphasize the importance of watching price action (in real-time) and discern the formation of continuation and reversal patterns from it. It's a powerful tool when you finally start to get it, and will allow you to significantly fine-tune your entries at key levels.

 

Good post, you make some sensible points, especially regards surfing the waves of the big timeframe flows.

 

Most of the failure attributed to micro timeframe trading usually stems from folks not having a clue regards order flow. Attempting this type of close range trading with no appreciation for support & resistance or trend behaviour is suicide in my view.

 

Folks assume shorter timeframe trading is the easy option, when actually it's the exact opposite.

 

Most migrate to this arena for exactly the wrong reasons (capital availability, misconceptions regards risk management etc) with no real clue as to the inherant risks involved.

 

As you rightly point out; you got to earn your stripes thru experience before attempting to take price on down at the rough & dirty end of the street.

[torero 10]

Yep, I always mark the weekly and monthly chart S/R zones even before viewing the smaller timeframes. These are the most important factors that decide in small timeframes where prices stop and go.

[cowpip 10]

Folks assume shorter timeframe trading is the easy option, when actually it's the exact opposite.

 

Unfortunately, most people who start are so fixated on making a quick buck that they enter the arena without the two most important qualities of a successful trader: patience and discipline. In fact, without these two qualities, failure is almost assured.

 

It's a sad fact that the longer the time-frame you play, the greater your patience and discipline has to be. I suppose this helps explain why most become disillusioned with forex early on. The longer time frames absolutely provide the cleaner signals and the easier paths to profits.

 

Most migrate to this arena for exactly the wrong reasons (capital availability, misconceptions regards risk management etc) with no real clue as to the inherant risks involved.

 

I think you're bang on!

[Sledge 13]

Cowpip, Milliard and Torero:

Excellent discussion and points made by all and exactly correct. I see the new trader liking the "action" of the 1 minute charts- the dinging, the clanging, the slot machine jackpot mentality, the "Action" they get starry eyed at a quick buck, as correctly stated above.

 

I personally also utilize the drill down method as well. I look inward from a Daily and 4 hr chart planning my move, I drop down to a 1 hour bar chart and if set-up looks good, I will also drop to a 1 minute chart to pinpoint entry for maximum pip squeezage.

 

I am starting to see my trading from a much more defined perspective with the insight given here, I no longer see consolidation or sideways action as a market to stay away from- but a market to watch carefully as "something is brewing." Now all I must do is learn to better analyze those "hot zones" of consolidation to be much more accurate in determining what my next move will be.

 

Milliard:

I Love this quote- "As you rightly point out; you got to earn your stripes thru experience before attempting to take price on down at the rough & dirty end of the street."

 

Thanks all for your posts!

Sledge

[cowpip 10]

Now all I must do is learn to better analyze those "hot zones" of consolidation to be much more accurate in determining what my next move will be.

 

And all it takes to more or less master that is time. It would certainly help to have access to some of the tools that Milliard, Anna, Art, Buk and the others have access to for better analyzing the rigidity of the various zones, but we can more or less determine that ourselves through a close examination of the candles that print at those levels, and more particularly how price reacts when it reaches those levels.

 

Here's a good example of a drill-down for an early entry at that zone that Anna-Maria noted back in this thread. It's a near-real-time example of how I've played it today.

 

The trend for the day was up following a big bounce during the European session. When the U.S. came on-line, poor news combined with a dropping dollar and increasing oil prices applied pressure to equities which played out in the euro/yen as a failed attempt of the highs. When price reached the 164.80ish zone, I zoomed in, watched and waited for a signal. Price attempted multiple times to break the high, but ultimately failed. After I saw my signal (the third attempt higher, candle prints gave the go-ahead), I went short at 164.86 with a tight stop above 165.

 

I scaled out at the zone indicated on the 5-min chart (+50 pips) and have now fully paid for this entry in case it retraces back toward the next hot-zone near 161.50. The trend remains up on the hourly, so caution is advised for shorts. A long entry near the scale-out zone certainly doesn't hurt either (and may end up being the wiser action), in case this move is part of a larger break-out play higher. Otherwise, the initial short is in a good position to profit from a move lower.

 

Obviously, the way you'd play this on the longer time-frames might differ from the way I initiated this trade on the shorter frames, but it shows how I utilized the shorter time frames to select focused entries.

[Sledge 13]

And all it takes to more or less master that is time. It would certainly help to have access to some of the tools that Milliard, Anna, Art, Buk and the others have access to for better analyzing the rigidity of the various zones, but we can more or less determine that ourselves through a close examination of the candles that print at those levels, and more particularly how price reacts when it reaches those levels.

 

Here's a good example of a drill-down for an early entry at that zone that Anna-Maria noted back in this thread. It's a near-real-time example of how I've played it today.

 

The trend for the day was up following a big bounce during the European session. When the U.S. came on-line, poor news combined with a dropping dollar and increasing oil prices applied pressure to equities which played out in the euro/yen as a failed attempt of the highs. When price reached the 164.80ish zone, I zoomed in, watched and waited for a signal. Price attempted multiple times to break the high, but ultimately failed. After I saw my signal (the third attempt higher, candle prints gave the go-ahead), I went short at 164.86 with a tight stop above 165.

 

I scaled out at the zone indicated on the 5-min chart (+50 pips) and have now fully paid for this entry in case it retraces back toward the next hot-zone near 161.50. The trend remains up on the hourly, so caution is advised for shorts. A long entry near the scale-out zone certainly doesn't hurt either (and may end up being the wiser action), in case this move is part of a larger break-out play higher. Otherwise, the initial short is in a good position to profit from a move lower.

 

Obviously, the way you'd play this on the longer time-frames might differ from the way I initiated this trade on the shorter frames, but it shows how I utilized the shorter time frames to select focused entries.

 

Cowpip-

Stellar work! Time and dedication to my studies is something I pride myself on. So that is a good thing to note- that with the passing of time and dedication to learning is what it really takes. You figure in less than a year I have graduated from a 1min chart scalper making about 5 pips a day, to a 1 day and 4 hr chartist that got bummed last night because I only took 26 pips on my GBP/USD long. :o

 

If you feel so inclined- would you share more of these "after the trade" situation/outcomes as you trade them as you have here? These "after the fact" trades that give detail on your thought process while you were taking them in real-time will go a long way in assisting me (and others as well) in honing this valuable skill.

 

Nicely done!

Sledge

[torero 10]

We're stuck in a range today last few days. Seems after the big moves, time to take a break.

[Sledge 13]

We're stuck in a range today last few days. Seems after the big moves, time to take a break.

 

Yes GBP/USD is in rangebound hell right now. Took a short last night and closed out with only 6 pips- it is acting very stubborn right now to want to break out!

 

Sledge

[gid 10]

And all it takes to more or less master that is time. It would certainly help to have access to some of the tools that Milliard, Anna, Art, Buk and the others have access to for better analyzing the rigidity of the various zones, but we can more or less determine that ourselves through a close examination of the candles that print at those levels, and more particularly how price reacts when it reaches those levels.

 

Here's a good example of a drill-down for an early entry at that zone that Anna-Maria noted back in this thread. It's a near-real-time example of how I've played it today.

 

The trend for the day was up following a big bounce during the European session. When the U.S. came on-line, poor news combined with a dropping dollar and increasing oil prices applied pressure to equities which played out in the euro/yen as a failed attempt of the highs. When price reached the 164.80ish zone, I zoomed in, watched and waited for a signal. Price attempted multiple times to break the high, but ultimately failed. After I saw my signal (the third attempt higher, candle prints gave the go-ahead), I went short at 164.86 with a tight stop above 165.

 

I scaled out at the zone indicated on the 5-min chart (+50 pips) and have now fully paid for this entry in case it retraces back toward the next hot-zone near 161.50. The trend remains up on the hourly, so caution is advised for shorts. A long entry near the scale-out zone certainly doesn't hurt either (and may end up being the wiser action), in case this move is part of a larger break-out play higher. Otherwise, the initial short is in a good position to profit from a move lower.

 

Obviously, the way you'd play this on the longer time-frames might differ from the way I initiated this trade on the shorter frames, but it shows how I utilized the shorter time frames to select focused entries.

 

Thanks for the detailed explanation of your thought process during the trade! I'm sure this is very helpful to and much appreciated by many.

 

One thing i was not sure of is why you entered after the third rejection? The first 2 attempts also provided an entry after an exhaustion type bar (although yours proved to be far better), do you wait for an RSI divergence for confirmation? Also any reason for having the stop above 165 (round number/option barrier?) instead of above the 3 bar highs around 164.95?

 

I join Sledge in asking for more of these examples if your time permits.

[Sledge 13]

Thanks for the detailed explanation of your thought process during the trade! I'm sure this is very helpful to and much appreciated by many.

 

One thing i was not sure of is why you entered after the third rejection? The first 2 attempts also provided an entry after an exhaustion type bar (although yours proved to be far better), do you wait for an RSI divergence for confirmation? Also any reason for having the stop above 165 (round number/option barrier?) instead of above the 3 bar highs around 164.95?

 

I join Sledge in asking for more of these examples if your time permits.

 

Gid-

Thanks for a chime in to support these as well and welcome to the forum, judging by your post, you appear to have a nice foundation of trading skill already. Hope you can dig some nuggets out of the forum as well!

Sledge

[cowpip 10]

One thing i was not sure of is why you entered after the third rejection? The first 2 attempts also provided an entry after an exhaustion type bar (although yours proved to be far better), do you wait for an RSI divergence for confirmation? Also any reason for having the stop above 165 (round number/option barrier?) instead of above the 3 bar highs around 164.95?

 

I join Sledge in asking for more of these examples if your time permits.

 

Maybe as time permits, I'll throw up a few more.

 

I wouldn't have taken the first opp, as I like to watch price action to see how it reacts at these important levels. It is not likely to reverse quickly on the first attempt. Most reversals have some structure to them, and it takes time to build that structure. PATIENCE is key, even at these small time-frames. If you jump the gun, you'll likely regret it as you sit and watch the structure form into something that would have given you a better opportunity sometime later.

 

A lot of people place their stops tighter - like a few pips above the highs or below the lows, when they really need to be placing them above (or toward) the upper ends of resistance zones or the lower ends of support zones. Those who don't often get taken out on stop-hunts. The euro/yen pair often sees stop-hunts that run about 10 pips higher than the last high. I thrive on those, as they almost always end up as beautiful reversal bars when they close. The longer time frames (hourly to 4 hourly) provide the best signals, of course. Again, it pays to be patient.

 

Why above 165? As Anna-Maria pointed out earlier, that level was the next logical S/R zone (actually anywhere up to about 165.10 or so, I believe?). It's clear if you look at the daily charts back through late 2007. I don't pay any attention to option barriers. Sure, they have a role to play and can assist volatility, but again price action always holds the trump card.

 

Here's a follow-on to the trades I initiated earlier this week. I was looking to build a series of positions that I hoped would end up near 161.50 near the end of the week. That target wasn't met, but it did still provide some nice opps to get short on this train. Note that I am again utilizing the short time frames on an intra-day basis. These are 15-min charts to help show more of the underlying structure. My entries again were based largely on price-action and not much more. Fibs and price action played a role in my third entry.

 

Have a great weekend everyone. Next week looks to be like quite a busy one. Be careful out there! Sentiment can swing on a dime during weeks like this one coming up.

[Sledge 13]

Not sure if Art is around but I wanted to refer back to the charts again that were posted on page #1 of this thread referring to the GBP/USD.

 

Right now the currency pair bounced off the 1.9680 Support and is heading back towards the 1.9960 Resistance level.

 

This is a VERY elementary question as I am very new to utilizing these hard S&R levels, but hopefully after a large laugh you may be able to answer:

Is it reasonable to assume that since the market will not shoot straight from 1.9680 to 1.9960 without hesitation that markets GENERALLY will move towards that next level after it has bounced?

Hopefully articulated a bit better. I took a Long after it tested and retreated from the 1.9680 level. I closed out after 70 pips. There was a huge 4 hour up bar that knocked the market sideways silly in the morning (NY/London overlap) on Friday. Last night (Monday Morning 4/28) in London the boys kept pushing north towards the 1.9960. Long of the short of someone sitting in your shoes is when in doubt, with room to grow towards that 1.9960 target would anyone hesitate to continue to be long on that pair until it got close to the 1.9960 mark?

 

From what I have gathered from all of you folks, it appears that you would have gone long at the bottom test, held, waited for the stall and possibly added in. Your watchful eyes would be focused on the 1.9960 level like a hawk and then would make a decision of what your next move would be as it gets into this "Hot Zone" But as I do not want to assume how your minds work, I was hoping if I was getting this down the correct way or if I am way off base?

 

Much Thanks!

Sledge

[milliard 10]

Right now the currency pair bounced off the 1.9680 Support and is heading back towards the 1.9960 Resistance level.

 

I took a Long after it tested and retreated from the 1.9680 level. I closed out after 70 pips.

 

From what I have gathered from all of you folks, it appears that you would have gone long at the bottom test, held, waited for the stall and possibly added in.

 

Hi Aaron,

 

He’s not around until Wednesday of this week. Anna’s back tomorrow.

 

Neither of them are positioned on the Cable at present. They’re long Sterling via EURGBP & GBPCHF.

 

Cable is mired in the range on the hourlies & they rarely play that game, especially on that instrument.

 

There are far more lucrative (risk) opportunities elsewhere if you’re intent on shuffling Sterling around, hence the positions on those aforementioned crosses.

 

The scenario you describe is logical however. Long off the base range @ 680 is certainly playable on the 2nd attempt (25th), but I don’t see a pare-off @ 9750? Obviously, you’re working your own personal (risk) ticket & if it calls for a peel off or full encashment @ 9750, then so be it.

 

Thing is, if price continues to develop as it currently is, you're flat with no core position. Attempting to leg back in again on a fresh ticket wouldn't be on our radar in this type of market structure. The best risk opp was back at that double bottom pitch of supports.

 

As far as compounding or adding into a (range) leg; we’d simply abide by the normal price guage (higher highs & lows in an upleg – lower highs & lows in a downleg).

 

Straightforward, uncomplicated observation. Let price tell you when & if it's ready to ramp up the size/risk. No need to make life unnecessarily difficult.

[Sledge 13]

The scenario you describe is logical however. Long off the base range @ 680 is certainly playable on the 2nd attempt (25th), but I don’t see a pare-off @ 9750? Obviously, you’re working your own personal (risk) ticket & if it calls for a peel off or full encashment @ 9750, then so be it. .

 

I think I understand- please correct me. In this situation you would not have closed out as you saw the sideways action as a normal pause and not a reason to exit your long?

 

Thing is, if price continues to develop as it currently is, you're flat with no core position. Attempting to leg back in again on a fresh ticket wouldn't be on our radar in this type of market structure. The best risk opp was back at that double bottom pitch of supports.

 

Yes this would be correct, at present I am not in on a position, and it is quite possible that the ship has sailed and I missed the boat. I'm cool with missing the boat as long as I can utilize this missed passage to learn from it and be sure to get on the boat next time it is in port

 

As far as compounding or adding into a (range) leg; we’d simply abide by the normal price guage (higher highs & lows in an upleg – lower highs & lows in a downleg).

Ok I need clarification a bit on this if you can.

If you are in an uptrending market and you have a "pause" or a "hesitation" you would add in and BUY when seeing higher highs and higher lows?

Conversely, you would on a downtrending market on the same "hesitation" you would add in only if their were lower highs and lower lows?

 

Also to clarify, there may be two different types of set-ups that I would like to discuss:

1. Their are "pauses" or "breathers" in the market.

2. Their are Retraces.

 

I am assuming that this strategy you outlines above is for "hesitations" and NOT for a retrace Yes? On a retrace you would have a different strategy to look for testing and buy the bottoms if possible correct?

 

Straightforward, uncomplicated observation. Let price tell you when & if it's ready to ramp up the size/risk. No need to make life unnecessarily difficult.

 

I agree with you completely, Trying hard to make this as "uncomplicated" a process as possible. Sooner than later I'll be able to see through all of it with extreme clarity, because of you and your crew over there, you are assisting the clarity process to come to fruition more and more on a daily basis. Thank you for your replies!

Sledge

[milliard 10]

 

1) I think I understand- please correct me. In this situation you would not have closed out as you saw the sideways action as a normal pause and not a reason to exit your long?

 

2) If you are in an uptrending market and you have a "pause" or a "hesitation" you would add in and BUY when seeing higher highs and higher lows? Conversely, you would on a downtrending market on the same "hesitation" you would add in only if their were lower highs and lower lows?

 

3) Also to clarify, there may be two different types of set-ups that I would like to discuss:

1. Their are "pauses" or "breathers" in the market.

2. Their are Retraces.

 

I am assuming that this strategy you outlines above is for "hesitations" and NOT for a retrace Yes? On a retrace you would have a different strategy to look for testing and buy the bottoms if possible correct?

 

 

1) Correct. There was no reversal activity @ circa 9850, neither is there any apparent at current level: 9900.

 

2) As to what would inspire me/us to compound a leg? Well sure, higher high/low ladder steps via maybe a sub hourly (if we’re working a range) would be one consideration. Chatter or order flow confirmation would be another if we were aware of who & why was also working the range and/or the stops. Specific fundamental flavor of the day/week would most definitely be a third.

 

We rarely commit money (especially range money) exclusively on the back of a technical print or chart reading. But that’s just us.

 

3) I’m not sure what you’re angling at regards point 3? Price is either in demand, whereby players are accumulating as it gathers momentum off support, or they’re unloading either due to a rogue economic print, negative chatter…or stops are dictating the supply, overwhelming the flows.

 

 

We’ll now begin to encounter that specific traffic up here at c9920 (thru the round number). Stops will be layered all the way to 9960 & 2.0030.

 

They’ll be 2 way, & Pound Bulls will want to test the strength of these 1st line stops @ 920 thru 960. You’ll soon see if genuine supply lurks atop here.

 

I doubt there’ll be much serious clout until 2.0030 is threatened.

[Sledge 13]

1) Correct. There was no reversal activity @ circa 9850, neither is there any apparent at current level: 9900.

 

2) As to what would inspire me/us to compound a leg? Well sure, higher high/low ladder steps via maybe a sub hourly (if we’re working a range) would be one consideration. Chatter or order flow confirmation would be another if we were aware of who & why was also working the range and/or the stops. Specific fundamental flavor of the day/week would most definitely be a third.

 

We rarely commit money (especially range money) exclusively on the back of a technical print or chart reading. But that’s just us.

 

Fair enough- any chance that retail traders are able to do this without having access to the tools you have at your disposal? I.E. most information I decipher from chart reading is that if we see a rounding bottom formation it is generally accepted that it is a sign of accumulation and higher prices to come, conversely- if we see a rounding top, we are seeing distribution and an inevidable decline.

 

3) I’m not sure what you’re angling at regards point 3? Price is either in demand, whereby players are accumulating as it gathers momentum off support, or they’re unloading either due to a rogue economic print, negative chatter…or stops are dictating the supply, overwhelming the flows.

 

How is a retail trader able to read this negative chatter? Are we able to surmise this from reading the bars?

 

We’ll now begin to encounter that specific traffic up here at c9920 (thru the round number). Stops will be layered all the way to 9960 & 2.0030.

 

They’ll be 2 way, & Pound Bulls will want to test the strength of these 1st line stops @ 920 thru 960. You’ll soon see if genuine supply lurks atop here.

 

I doubt there’ll be much serious clout until 2.0030 is threatened.

 

Can you explain the "Stops being layered" part of this explination. Does this mean that retail traders have S/L marks layered along that 9960 and 2.0030 path or the bigger players have these stops? Maybe I missed your point completely. Sorry still trying to nail down the jargon. Soon I hope I'll understand the "termage" :o

 

One other thing to add to the mix: When we see a price poke its head above resistance and then duck back down on the next bar or bars, how do we determine if this was a true rejection of price vs a "buyers remorse" or "profit taking?"

 

Thanks for your patience and replies!

Aaron

[milliard 10]

Fair enough- any chance that retail traders are able to do this without having access to the tools you have at your disposal?

 

I guess most folks can gain access to decent info via squawk & wire facilities these day’s if they’re willing to pay for the privilege? I guess if you’re an independent retailer you’d need to be operating a keen PnL book to justify the outlay, but I’m sure the facilities are available.

 

Unless you got contacts at the various Brokerage shops, Banks, Funds etc, then info regards flows & (quality of) participation at varying levels etc won’t be available. But like I said, that type of stuff has always been there for us so we don’t know nothing else. If you don’t got it, then you won’t miss it.

 

if we see a rounding bottom formation it is generally accepted that it is a sign of accumulation & higher prices to come....

 

It doesn't matter a jot what you call a technical set up as long as you can recognize what’s really occurring & more importantly, what you’re going to do bout it. As long as you can justify the risk & you’re able to recognize which aspect of the price cycle you’re in, then you can go to work & pump it.

 

How is a retail trader able to read this negative chatter? Are we able to surmise this from reading the bars?

 

You can read the intent of price via your bars, sure. As to whether it’s necessary to know who is sitting on the bid or offer, countering stop trigger activity at a specific line? Who knows.

 

Personally, if I’m aware certain names are participating at a (prev) high activity level with a decent sized hand, it adds a little spice to the pot. Certain pods or desks will generally only stir at appropriate levels & for very specific purposes. If I can get a run on a level & am aware of upside/downside stop activity to run my positions into, then that’ll do for me.

 

By no means does it guarantee a level or area will play out as intended, but I wouldn’t give it the merits it deserves if it didn’t. Again, it’s simply down to what works for you & what you’ve been reared on. If I didn’t have access to that kind of stuff, it would feel like I was playing with both ears & one eye shut tight.

 

Can you explain the "Stops being layered" part of this explanation. Does this mean that retail traders have S/L marks layered along that 9960 and 2.0030 path or the bigger players have these stops?

 

Critical or key levels usually contain a mixture of stop order traffic. They’ll be profit stops to either pare-off or fully encash a position, which will be a reversal order….the level will also house limit orders to engage a counter trade as well as reverse stops orders which trigger market positions as they fire off.

 

They won’t all be stacked neatly at one specific point on the price map, but layered or staged thru a critical zone which can often stretch out 20-50 pips.

 

As to the priority of players orders? It’ll be a mix of retail (via the broker shops feeding off their suppliers desks) & institutional order flow which get tripped as these levels come into view. After a while you get accustomed to the probable intensity of a level due to it’s vicinity on the technical map. We also obtain feedback from desks to the intensity of certain levels we're particularly interested in pumping for whatever reason, especially if these desks are harbouring high % order book triggers.

 

You know that these top & bottom swing extremes will house counter traffic (stops), especially if price is being warehoused in tight range boundaries. You only need look at the behaviour of price structure (lower high & lows….higher lows & highs etc) from the larger timeframe grids to anticipate that stops will begin building above the outer edges of these range or trend boundaries, & when tripped they’ll string out a little until the flows are balanced out again.

 

If a level such as 9960 represents a lower top & is being contained within the larger range structure, then price will begin to leave footprints via the bar behaviour. Take a look at a 60m or 240m bar printout at that level from late NY early Tokyo. What do you see?

 

You don’t require a masters in technical analysis to decipher that supply exists atop that mast all the way up to next line @ 2.0030. If you need secondary confirmation, then slide your rule across Sterling price flows via Yen/Euro/Swiss & see if it’s unique to Cable or generic to Sterling. It’s been mentioned on here before: always play your strongest v/s weakest to get a run on your competitors. Don’t get mired chasing an instrument back & forth within a moody, violent range when you can leg into a nice, well behaved trend wave!!

 

Your primary objective should be to extract stressless profit from this circus in the easiest way possible, not to show how adept you are at slicing, cutting & scalping micro pips from a pain in the ass instrument such as Cable, or any other pair come to that.

 

 

When we see a price poke its head above resistance and then duck back down on the next bar or bars, how do we determine if this was a true rejection of price vs a "buyers remorse" or "profit taking?"

 

You don’t until it works itself thru the pipe. The thing you gotta do is manage your entry to allow price to tell you what it was. You also need to know what cycle the market is currently in to better establish your method of attack. Is your instrument ranging or trending on your timeframe of choice. And what type of tools are you intending utilizing to get to work on that particular price behaviour trait.

[Anna-Maria 10]

Your primary objective should be to extract stressless profit from this circus in the easiest way possible, not to show how adept you are at slicing, cutting & scalping micro pips from a pain in the ass instrument such as Cable, or any other pair come to that.

 

Bravo! that’s the ticket mister, seek out the value (trendy) trades & step size them up & down the ladder whenever possible.

 

Focus on the aspects of your game plan that you can actually control & affect outcomes from Mr Sledge. Don’t chase rainbows or waste another minute on clueless systems, indicators, faddy & complicated price aids or other such nonsense.

 

 

ps: Arty will be sub contracting you out to this joint if you go compiling many more chapters of War & Peace :o

 

I hope Mr Soultrader can pay the going rates?!?! :\