Trading The Wyckoff Way

[Niko 10]

We just broke below S and entered a new congestion zone between 07 and 25, given the fact that the market managed to mark a new low yesterday and that the EOD channel still intact i think this congestion is just a resting area before the plunging continues, but then again I could be wrong.

 

 

My levels for the day:

 

In case price manage to open above the current TR MP at 16 the next pauses would be expected at:

 

25

30

37

45-49

 

If prices break below 16 the next levels of interest are:

 

07

589

567

543

Edited November 8, 2012 by Niko
Spell check

[pjohnm 10]

With reference to the daily chart, we are near the bottom of the trend channel which could converge with a potential level of S at 2586 (MP of July TR). Pre mkt has provided S at 2610. Major levels of R at 2626+- (A move above may indicate a willingness to test the top of the trend channel) and 2650/60, levels towards the top of the trend channel.

 

S 2586, 2610

R 2626,38,50/60

[blocp 10]

here is my analysis for today

[pjohnm 10]

The context for the pre mkt today was that price had made its way towards the bottom of the trend channel which meant looking out for opportunities on both the short (prevailing trend) and long side (bounce from the bottom of the channel).

Major R was at 2626 +/-, but buyers were unable to get past the top of the pre mkt TR at 2621+/-.

 

14:44/5/6 Buyers hesitate at the top of the TR (20-22) and the bar at 14:46 was formed slowly (watching in realtime). Put simply, buyers are struggling.

14:50 We get a dt and a LH, followed by LL at 14:53, confirming the weakness. Buyers aren't done though, but the upmove is weak, further hesitation follows and a hinge is formed. Had a HH been created post 14:57, then that could have been interpreted as strength, but this does not happen and it is the buyers that withdraw.

Areas I would consider for entry are marked on the chart.

 

Entry 1 follows the dt at top of pre mkt TR, below the LSL and creation of LH, which allows the sl to be drawn. This fails immediately, but by waiting for the LH, the exit can be made as soon as sl is broken.

Entry 2 The hinge equals indecision and again, by waiting for the LH, an sl can be drawn. My preference here for entry would be for the swing low at 16 to be broken.

 

Exiting a short at the break of the sl at 15:11 gives another chance to re-examine. Sellers hesitate and buyers bring price back to 13, but they can only create a LH.

A break below the LSL at 2608 would be confirmation that the downside isnt finished, and another sl can be drawn to aid the trading decisions. 2610 is my pre drawn S but 08 is where PA is pointing to.

 

We should now be aware of S that can be provided by the big round number approaching.

Noting that we are near the bottom of the trend channel and with a db formed at 2600, a long once the LH is formed with the break of the last swing high would be worth it in my opinion.

15:37 The failure at 08 is obvious and the break of the dl should not be a surprise. Although the exit of the long should be immediate, joining the short side would be difficult as price instantly plunges to 2600.

[Niko 10]

My comments for the day, they are still mainly descriptive, but I am getting more and more information out of PA, I expect the value added will increase in the following weeks.

 

1. Prices opened around the 16 S level, after 2 attempts sellers gave up. Buyers managed to advance price without much trouble, but found sellers at 22, who with some effort managed to take prices down.

2. Prices reached 16 again after falling from 19 with decision, after a small pause the plunge continued until buyers started pressing prices up with a DB at 11.

3. 16 is again a level of interest, this time it was easily penetrated to the upside and immediately became a S level. Prices then managed to keep rising, this time under increased pressure from sellers, who finally managed to take prices down at 23.

4. After a small congestion at 20, prices fell towards 16, where buyers were waiting with enough orders to create a V reversal. This time though, sellers came in earlier at 21 and started pressing sellers, making a LH and a LL

5. Finally at 10:05, sellers managed to cross 16 with no pressure from buyers, finding S at the 12-14 area where prices had reversed at 9:36. After a small RET prices kept on falling until reaching the 07 S area.

6. At 07, a DB was established and this propelled price to the upside, although it is worth to notice that selling pressure was not giving up easily in the up waves and that sellers finally managed to set a LH at the 12-14 area that now became an area of R.

7. Prices broke through S at 7 and managed to get to the S area at 00 (I did not have that area in my interest levels)

8. At 00 a DB was formed and prices managed to get back to 07 that now provided R.

9. After reaching 07, prices moved higher 2 more points where a DT was formed, then a LH confirmed buyer’s weakness before a rapid plunge occurred around 10:40.

10. After overshooting the 00 S area by 3 points, buyers came in and took prices up, once again under sellers pressure.

11. This time the sellers at the 07 R area rejected buyers, but they ran out of conviction at 02 around the congestion area between 10:24 and 10:32.

12. Buyers managed to break above 07, but the TR from 9. Provided too much R to be absorbed. This took prices down after defining a LH

13. Buyers entered early this time at 00 and took prices up with more conviction.

 

[Niko 10]

My levels for tomorrow.

 

26

07

89

67

43

26

 

 

Don´t know if I can make it to the chat, I will try to post more of a pre-market analysis if I have time tomorrow morning.

[pjohnm 10]

No bounce from the mid point of the TR and moving into oversold territory.

Next stop 2520...

[Gringo 10]

After such a drop yes the probability of jump is higher, however, to initiate a trade you would prefer an upward trend continuation. The market hasn't given a signal to go long as we're in the trend channel. Until we exit it it's not likely to show continued upward strength.

 

First, the downward momentum has to slow down and come to a halt.

Second, the demand has to show strength enough that it can push against the supply and push prices up.

 

We haven't even gotten the first condition met so far. For day trading it might be fine but for someone holding say for a few days or a week this is the kind of thing that would get people to lose money if they prematurely attempt longs.

 

The tape’s pointing down and until the price stabilizes and so far it hasn’t, we avoid longs and stay short. The price has dropped below the trend channel and I it might be an oversold condition. Wyckoff probably mentioned something like this somewhere but I am not certain. Whether it is oversold or not is irrelevant as we follow price and when a normal reaction to the upside comes we'll know with the rise in price.

 

The drop itself has been retraced about 70% of its up move from 60 to 70 and that in itself is a sign of weakness. For short term or day trading going long may be fine but other than that it’s a big risk to anticipate. We're not anticipating but only reacting to what's the tape is telling us.

 

Let the price dictate what needs to be done and wait for the first signs of strength to emerge before getting excited. Yes it is a late in the game to be initiating or thinking of more shorting. The danger of a violent reversal is there hence get ready to exit if you've been short all along, but only when price shows strength. Remember, we have our LSL, LSH, SL to alert us when it's time to take some off the table. On top of that we have teh tape reading skill to see price behaviour and recognize developing strength. We're not anticipating but only reacting to what's the tape is telling us. So far it's telling us to stay put and hang onto those shorts.

 

 

 

 

 

Gringo

 

p.s. I friend of mine was so excited yesterday and wanted to go long Q's. This alerted me to the possibility of other traders just seeing price drop and expecting the end of downward move as it has already dropped so much. Yes one may get lucky a few times but over the long term these kinds of things can get ugly and even mess with the psyche.

[Gringo 10]

Price is still in the downward sloping trend channel. We have had a few days of price drop and conditions probably are quite oversold. Sooner or later a rise will come but we don't have much to do as long as price isn't able to show some strength and get out of the trend channel.

 

 

On the daily chart today we glance at the volume for a change. Notice how volume expands on drops and contracts on rises. Each time the intensity of the trading has increased the supply has won out. How do we know that the supply has won out? Simply by observing that the price as a result dropped. Overall, heavy dumping of shares has been the overall theme. We don't need to know the volume to make our trading decisions though. Our trading decisions are based on price, however, having volume adds some extra information. Information that is not useless but is not essential either.

 

 

Looking at the 2 hr chart, price has broken the dotted SL and has retraced a bit. Would this lead to a rise? Perhaps yes, but this is in a smaller interval and the larger trend - the daily trend - is still downwards. Until that dynamic changes we only observe the 2 hr chart. Now when the time comes after price has broken out of the downward trending channel we'll be more than happy to use the smaller interval chart for more precise entries or exits.

 

This is a time for patience, a time for inaction. A time to just smile and let the future unfold.

 

Gringo

Edited November 12, 2012 by Gringo

[Niko 10]

We are still in the channel that started in October 6, after finding S at the May - July TR MP around 78 buyers have had a great deal of difficulty taking prices up.

 

 

There is an area Db pointed out in the chat last week, that is the 93 level (purple dashed line), that is the last low before breaking the May-July TR. That is where prices are now.

 

We are still in the channel so there is no oversold alert, we could see buyers reaching for the upper end of the channel in the following days. There is really not much EOD R between 93 and 43, that will be out of the channel in a few days.

 

Levels of interest:

 

Above price:

643

690

737

 

Below price:

578

514

[Niko 10]

Buyers made a HL at the MP of Nov 9 TR and are currently pushing prices above the last downswing (625 to 556) MP at 91.

 

 

If buyers manage to make a HH above 97, then possibly will find R at :

 

607

616

625

 

If sellers take control and bring prices below 91 again then:

 

584

576

569

556 (Last week low)

[boru 10]

some observations from this morning

[tomerok 10]

Back to posting after a week of absence.

 

Changed a bit my analysis and added a "work plan" for the day noted in RED

I keep these notes to remember my if… then… actions around areas I think will be important.

 

Long term picture, price is in a downtrend, price tested DL but is back in the channel area implying DL is still valid.

 

Areas of interest

2607

2596

2586 - ?

2579

2569

2556

 

 

Tomer.

 

 

 

 

[boru 10]

first post to cws looking forward to advice nq4.jpg

[tomerok 10]

first post to cws looking forward to advice nq4.jpg

 

Hi Boru

I don't know exactly where you are on the "learning curve"

I'll give you the same advice I was given, first just look at price and only price, don't try to guess entry points, go through the forums and read as much as you can, do it for a while don't be too hasty to jump ahead, when you do jump ahead early you'll know it and take a step back again

Believe me things WILL get clearer, It just takes time….

 

Regarding your charts.

Try to note in RT what you think is happening and take a look again after hours in your notes

Also, plotting trend lines, marking S or R, marking trading ranges, helps the process of analyzing PA in RT

Your CWS notes indicate you're on the right path; I would have dropped no 3. Since I see price drifting for a long period of time relative to the down move, I see HH formed and HL, so for me it's a NO for short

You're welcomed to join The Trading Journal/The Trading Log

 

http://www.traderslaboratory.com/forums/wyckoff-forum/13708-trading-journal-trading-log.html

 

 

Tomer

[tomerok 10]

Here's my journal for today

WHITE are RT notes, YELLOW are my post analysis notes

 

 

Tomer

 

 

[boru 10]

Thanks Tomer well articulated much clearer and easier to follow than my chart.

[pat15 10]

Good comment tomerok ... watch the RT action and make notes .. and boru mentioned about chat room? is there a chat room that one can listen to? can someone post a link just to see what sort of trading issues discussed ..

 

Thank you..

 

Pat

[tomerok 10]

Good comment tomerok ... watch the RT action and make notes .. and boru mentioned about chat room? is there a chat room that one can listen to? can someone post a link just to see what sort of trading issues discussed ..

 

Thank you..

 

Pat

 

Hi Pat

 

Contact DB.

He'll send you the link

 

Tomer.

[Gringo 10]

Despite so many days of weakness price is still unable to show upward strength of some note. It's the continuation of what started a few weeks ago and is a good lesson in realizing that once one is in a position all that is required at times is the patience to sit pat.

 

The downward sloping trend channel is our guide and the guide continues to point down. The obsession with being right and catching the bottom would have given grief to those attempting such acts of valour. Catching a falling knife is exciting and the stories can be full of colour, but more likely than not that colour is red for the account and for the psyche.

 

 

 

Gringo

Edited November 13, 2012 by Gringo

[Niko 10]

We are again in a clear downtrend, and have to make use of july levels to define SR as no meaningful congestion is at hand during the last months.

 

At 63, we are near the bottom of Nov 9. During the morning there has been some support at , 60, but is yet to be tested during the following minutes, if 60 does not hold these are my levels of interest:

 

 

 

54

47

38

 

If a HL manages to survive here then I would be looking for:

 

 

68

76

84

07

[tomerok 10]

Long Range trend channel still valid, price again pushing against long range DL, suggesting strong sellers, the test of the LOD at 2557 might give a sign where is price heading

Overall picture in the past weeks is down and still no signs for a REV

 

Areas of interest

2607

2597

2584-mp

2572

2557

2549 - mp from past

2542

 

Tomer

 

 

[Niko 10]

Yesterday analysis. Sorry for the delay.

 

 

1. During the open the S level at 91 was tested, there buyers held the decline and managed to take the price all the way to 97 where sellers provided R (a pre-open high)

2. After various attempts, 97 was finally the end of the ride for buyers after 4 tops

3. Prices declined with smother waves towards 91 and although it held prices twice, the new rally did not manage to go much higher than the MP.

4. Then after a LL, the new RET did not manage to get above the MP of the last downswing.

5. Prices reached S, where buyers came in making a HL, pushing prices near the MP, but there buyers lost their steam.

6. Sellers managed to take prices to S again, but they did not have the strength to break, then after a hard fight (zigzagginess), they were stopped by sellers around the 87 congestion area.

7. This time sellers did not have any interference from buyers and managed to cross S without trouble. It was an easy ride until 80 where some minor S was easily taken out, and prices went all the way to 76 were S was once again awaiting.

[boru 10]

some tif for today comments appreciatted

[pjohnm 10]

Price has been working its way down the trend channel from 2685 on Nov 7th.

The rebound from 2560 on Nov 9th failed to make it to the halfway point of the downmove and a db has formed at 2560 pre mkt.

 

S from Nov 12th at 2571 has become R overnight.