Trading The Wyckoff Way

[DbPhoenix 42]

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In reference to this post, here's a little exercise from way back when (forgive the candles and the MA; they aren't pertinent).

 

Is this a retracement in an uptrend or a lower high in a downtrend?

 

 

[Niko 10]

Although there is a LH, DL still intact and LSL still holds so I would say, RET in an uptrend.

[eminiman414 10]

  DbPhoenix said:

I don't know what the extent and duration of each move will be until I open the chart. There may be fits and starts or there may be well-defined waves or there may be parabolic moves. If you want specifics, you'll have to read or re-read what I listed above and watch price move in a great many charts. This may take days or weeks or months. If you're trying to trade, it will take even longer.

 

Makes sense. I watched a 1 tick chart today for the first time and I see what you mean. I liked it but I just feel like I do not see enough of the context that came before where price currently is. This is about all I can see. Is that typical? Sorry if this is the wrong thread for this question.

[DbPhoenix 42]

A. There's some problem with this display. The ticks should fill the space from top to bottom, not trail along in a narrow line.

 

B. What happened before is irrelevant unless you're looking to place a trade. The point of this is to understand the shifts between buying pressure and selling pressure. Worry about placing trades later. Much later.

[blocp 10]

could be either, with out seeing the left hand side of the chart it's hard to tell

[eminiman414 10]

  DbPhoenix said:

A. There's some problem with this display. The ticks should fill the space from top to bottom, not trail along in a narrow line.

 

B. What happened before is irrelevant unless you're looking to place a trade. The point of this is to understand the shifts between buying pressure and selling pressure. Worry about placing trades later. Much later.

 

It did fill the space I just shrunk it dunno why? I understand the objective of detecting the pressures, but can't what happened previously help to detect that? For the purpose of the future or future reference is my screen (minus my shrinking it) showing "enough" from left to right, not that I will be placing trades, but why practice looking at something that won't be efficient to use when it's time to do this for real?

[eminiman414 10]

1. If I had to pick one or the other without regard to s/r I would say retracement as well. Participation does not seem to increase in that down wave, although it does not increase when price begins to move up as well. To me that suggests lack of interest by both parties but price is continuing to move up. Among what Niko said.

 

Could a reversal happen sure, but I don't necessarily see a downtrend.

[DbPhoenix 42]

The task is not to practice at looking at something but to look at it. If you want more information on the left, expand your view. There is an infinite left. But that's not going to help you to determine whether or not the wave that's forming in front of you is stronger or weaker than the wave immediately preceding it. Nor will it help you to evaluate the wave that hasn't formed yet.

[eminiman414 10]

That's sort of what I was asking. That's as far as my view goes.

[DbPhoenix 42]

Then expand the scale so that the movements fill the vertical space and watch it as it scrolls in front of you.

[Bern 10]

I would say that it really depends on the timeframe.

 

To know where is potential support or resistance would help.

 

If I had to choose, given the waves rythm and length, given where was the last swing high in what appears as an uptrend in this timeframe, I would say that this is a retracement.

 

I will not mention anything about volume since this is a chart with a rather small bar interval.

[DaKine 10]

If we make a HH then it was a small timeframe retracement. If it makes a LL and continues below 1492 it was a LH in the downtrend. The 1st LL being a possible entry point for the short.

Edited January 26, 2013 by DaKine

[tupapa 10]

I would say it is likely a reversal rather than a retracement. By looking at the effort and result of buyers and sellers.

 

From 0 to 1, the down-bars are wide to the down-side, showing the sellers are stronger.

 

Then from 1 to 2, the bulls are tired, the bars are narrow and there is little progress to the upside, also check out all those wicks, buyers just can't push prices higher, you can also notice how every high is only marginally higher than the previous one, and that last bar closes below its midpoint and at the same level as the two previous bars. Buyers just can't push prices higher, and I would expect sellers to try again, if they make a LL below 1502, the reversal is confirmed.

 

If 1506 was Resistance and it was part of my plan to short here, I would be entering below 1504

[TradeRunner 10]

it's an obvious buy as price has just crossed above the MA.

 

 

I'll fetch my coat...

[TradeRunner 10]

a more serious answer...

 

I think the trend is intact and this is a RET. Support at 1502 has just been tested. The lack of movement and narrow bars is probably down to the time of day i.e. it is lunchtime.

[eminiman414 10]

How is one to look at all of this price movement? What are you all focusing on? Looking at the bigger range, the smaller ranges within the bigger range, or both? What levels are more "important" to focus on? I know it's just potential support/resistance and we won't know until price gets there, but where are you guys focusing your attention?

[pjohnm 10]

  eminiman414 said:

How is one to look at all of this price movement? What are you all focusing on? Looking at the bigger range, the smaller ranges within the bigger range, or both? What levels are more "important" to focus on? I know it's just potential support/resistance and we won't know until price gets there, but where are you guys focusing your attention?

 

I've found the mid points of the various waves a good indicator of where S/R may next form, so R is at 39/40 and S is at 21 and then 12.

 

Beyond that, S could probably form anywhere below 12 to 00, given that bottom of the range has not been violated. Above 40, we have already broken the 48-50 zone last week, so I would adopt a wait and see approach. If, for example, price breaks above 40, I would look at the reaction from wherever price stalls to the mid point of that upmove and see if something interesting happens there.

[DbPhoenix 42]

  eminiman414 said:

How is one to look at all of this price movement?

 

Depends on your objective. What is it that you're trying to accomplish?

[Perrin 10]

I did consider the lunchtime angle but I don't think that would affect the way I'd play the chart. I'd say the price is about to drop.

 

The price has made a few moves up already. There's no new volume coming in. It's preparing to head back down, not necessarily immediately but that's the feeling I have. I'd think about maybe going short. With a stop above the high. Or if I didn't use actual stops at specific points then I'd be prepared in case something unexpected happens like the price moving higher. If it did that, I would keep an eye on everything and see what happens, if more volume came in for example, what effect that has on the price movement. Or if price started rising higher on low volume, it might limp above the current high and then fall down. I'd try to go with the flow and prepare myself accordingly depending on what the movement told me. I wouldn't go long. If price somehow goes up firmly then I might have to re-think. If the price starts wobbling and tries to go up but can't (which seems to be the current situation) perhaps there's no more buyers coming in, then price may go down.

 

Of course, I may be wrong with my thinking. If I'm wrong and price goes up, then that's great as I think the majority viewpoint is up? So if it goes up then the majority of us make money and I'll still be happy

[Perrin 10]

I'm not sure that I'm writing my thoughts correctly so I apologise in advance as I think I sound weird. Especially with all the if's, or's and maybe's I've used. I've only recently started writing a journal and I'm still only doing it intermittently. I'm hoping that writing it will lead to more improvements in my trading & me (not to mention that I hope it'll aid me in condensing my posts because I would love to write less & say more, ideally without spending loads of time re-writing & editing, as I'm not very good at doing those things).

[Niko 10]

  Perrin said:

I'm not sure that I'm writing my thoughts correctly so I apologise in advance as I think I sound weird. Especially with all the if's, or's and maybe's I've used. I've only recently started writing a journal and I'm still only doing it intermittently. I'm hoping that writing it will lead to more improvements in my trading & me (not to mention that I hope it'll aid me in condensing my posts because I would love to write less & say more, ideally without spending loads of time re-writing & editing, as I'm not very good at doing those things).

 

The more you write, the more you learn, so keep on doing it.

[eminiman414 10]

  DbPhoenix said:

Depends on your objective. What is it that you're trying to accomplish?

 

Right now the objective is trying to choose wisely the levels I focus on so I don't have a bunch of lines drawn all over my chart, plot them and watch how price reacts at those levels. If for exampleyou took the top bottom and midpoints of all those "smaller" ranges you would have quite a few lines drawn. My question was geared more towards a general discussion. I'm trying to think of how to word this because the future is unknown but would the most recent ranges be a better choice then those previous ones, is the main focus on the larger range, or are all to be noted and is it a wait and see kind of thing.

 

I don't believe I am at the setup stage yet but ideally the general trading obdjective would be a reversaloff s/r or a breakout/breakdown of s/r then a test of the broken level.

[PrymeTyme 10]

its a retracement in an uptrend

 

[tomerok 10]

  DbPhoenix said:

-

In reference to this post, here's a little exercise from way back when (forgive the candles and the MA; they aren't pertinent).

 

Is this a retracement in an uptrend or a lower high in a downtrend?

 

 

 

 

Who knows.... and who cares...

one of the biggest lessons i learned in past months is i do not know where is price heading.

i can only craft a plan to attack any direction price will decide to take.

 

I'm assuming this post intention was igniting participant's response and ideas, but without any clear view to the left any answer is valid.

 

 

 

Tomer

[tupapa 10]

  eminiman414 said:

Right now the objective is trying to choose wisely the levels I focus on so I don't have a bunch of lines drawn all over my chart, plot them and watch how price reacts at those levels. If for exampleyou took the top bottom and midpoints of all those "smaller" ranges you would have quite a few lines drawn. My question was geared more towards a general discussion. I'm trying to think of how to word this because the future is unknown but would the most recent ranges be a better choice then those previous ones, is the main focus on the larger range, or are all to be noted and is it a wait and see kind of thing.

 

I don't believe I am at the setup stage yet but ideally the general trading obdjective would be a reversaloff s/r or a breakout/breakdown of s/r then a test of the broken level.

 

Good question, and focusing on S/R is the best thing you could do, it takes some practice, and personally I am nowhere near mastering it, but I hope this example helps.

 

The following is a daily chart of the Bund after Thursdays the 24-1 close. You can see how we are in a range, between 143.65 and 142.44, so although these aren't the more recent levels, they are concertedly relevant, because traders from all time-frames have something to lose (or to win) around them.

 

 

Thursday's bar gives us some valuable information, buyers pushed prices above 143.65, but couldn't hold above as price fell back into the range and close well below the upper limit, at around 143.34.

 

This is a classic Fake-out, and the emotional implications should be evident; all the bulls that bought into the breakout are disappointed or, even a nervous mess (if they didn't get out of their position), some of them are probably waiting for price to come up to the top of the range, to get out at break-even. At the same time the bear trader is confident holding to his position, new bears might be adding shorts, selling into rallies.

 

The daily levels are fine but as a day trader, the most recent ranges are equally important, since it is where the most recent battles are fought. Following the analysis of Thursday's close, you can see, on the 15m chart that there is a range between 143.18 and 143.42, above this there is R at 143.60 and below, there is S at 143.08

 

 

So Friday's open finally comes, and this is how it all unfolds:

 

 

At 7:00 buyers come in at Support and hold price above, taking it all the way to Resistance at 143.42.

 

Here they try once and get rejected, then they try again, it looks like a breakout but sellers come in quickly, hammering price below R, then there is a third attempt that stops exactly at 143.42, the bulls just don't get it, and after 5 minutes of hesitating in a 3 tick range, sellers start hammering the bids, in what turns out to be a trend day, all the way down to the lower limit of the daily range.

 

 

So, as you can see from the example, the limits of the macro range are vital, in order to understand the context that the longer time-frame participants are dealing with (which invariably affects all other participants). But the more recent ranges are equally as important to the day-trader, since it is where the most immediate battles are fought.