Trading The Wyckoff Way

[eminiman414 10]

I agree. I watch it w a 1min chart as well. I've tried it in the past, watching the 1 tick, and then going back to increasing my interval a little to a 5sec or 15 sec chart, but honestly I don't like using them. I like seeing that continuous flow. I am a very active person and don't like sitting around maybe that's why I just like seeing that continuous movement. I was always drawn to the time and sale but the 1 tick gives me a much better visual just the limited view is the only real drawback.

[DbPhoenix 42]

[quark 10]

I had understood that when price goes above the upper trend-line then it was a sign of overbought, regardless if the channel is up or down. be careful though, channels can change after yo first draw them so if the trend channel is based on early moves, the apparent over bought may just be the channel was too narrow or the slope slightly wrong and the channel needs adjusting.

 

Channels are easy to see after the event, not so easy in real time.

cheers

 

Not to split hairs here, but according to Wyckoff a stock is over bought if the price breaches the upper channel line (in an uptrending stock) & oversold if it breaches the bottom channel line (in a down trending stock). He uses these to describe when a stock is in a technically weak or strong position. For example, if a stock in an uptrend is overbought it is in a technically weak position. However, if a stock in a downtrend breaks the upper line (known as the supply line), this is considered a bullish indication (AKA potential trend reversal).

 

These are just one of many ways indications & should not be used alone.

 

Hope this helps.

[quark 10]

how i know the background ( Selling climax or buying climax ) is valid?

 

because sometimes after see Selling climax or buying climax the price continue in the same way

 

Describe what you are seeing as the climax (meaning give us a chart example). You may not be seeing a climax. Also, some can be minor climaxes & other major. Remember, according to Wyckoff, climaxes can be like snowflakes. You may never see an identical one.

[Niko 10]

Some observations for the morning:

 

[Niko 10]

Oil Analysis:

 

After testing the 98,20 area and defining a DT prices have retreated rapidly to the bottom of the TR around 96.90 where buyers have provided S during the last few days and are again fighting to keep prices up.

 

The fact that a second DL is in danger and has been poked is a signal of weakness that accompanied with the DT, reinforces the weakness bias.

 

Now prices could find S at 96.90 and go back inside the current TR or break below 96.90 and plunge inside the previous TR that goes all the way to 94,94. If the former, buying a REV (DB, HL, Hinge Upside BO or SB Upside BO), if the latter, Selling the RET from a BO.

 

 

Levels (+-2 USD)

 

[Niko 10]

NQ levels:

 

Back in the TR.

 

[PrymeTyme 10]

how i know the background ( Selling climax or buying climax ) is valid?

 

because sometimes after see Selling climax or buying climax the price continue in the

same way

 

well the funny thing is , u only know it in hindsight! funny isnt it ! but thats how it is

 

u may know that a potential selling climax is forming and therefore u may lay out a plan

how to trade such a scenario ... as a selling climax only is one after it has been retested

and it held.. same for buying climax...

 

 

an example.. on HLF herbal life Daily TF... we have evidence of a potential selling climax

here .. and we are on the way to test the lows of it.. but it looks like we may .. find a

higher low atm.. where at least for my trading plans.. a Long setup would be justified on

the break of the actual bar .. whereas .. i even would consider a reverse if the long play

wouldnt play out (long1) .. cause we have not ,much interrest as seen on the volume ie.

activity... yes we closed on the highs .. but u want to see more bullish activity the more

the better if ya play the SC to soon.. .. ie not near the lows of the SC.. therefore .. u

should be ready .., to even reverse the long position and take a short ,, playing the Retest

of the lows Of the pot. SC.. (short1 rev.) ..

 

as u can see u have to lay a plan ahead before jumping in... especially that soon...

 

from then on other scenarios .. come into play aswell.. if PA dictates o fcourse..

 

as on Short 2 a range may develope .. wheras the Long 2 may be the Succesfull retest of the SC and would justify,.. a long .. etc..

 

u have to play the markets how they develope. and judge its behaviour.. at any time..

 

Ie. u gotta be prepared

 

cheers

Edited February 4, 2013 by PrymeTyme

[Niko 10]

After hitting the MP of the current TR area, prices bounced rapidly towards the top of the TR:

 

 

 

And for levels:

 

 

For those still interested in the chat :

 

http://stinto.net/en/chat.htm;jsessionid=471AE45D2F4D4F86613F6D4D3FD56067?refId=sn6x5#

Edited February 5, 2013 by Niko

[Niko 10]

Sellers held their ground around the top of the TR and after pushing through S at the M are on their way to the bottom at 95, lets see if they can make it.

 

 

As for levels we already broke below the PDL:

 

[DbPhoenix 42]

 

 

 

[DbPhoenix 42]

[Niko 10]

Hi DB,

 

Is the last red bar highlighted to point out that buyers started pushing up again at 95?. I guess that the green point is a possible long (stop buy), in case buyers keep pushing prices higher tomorrow. Am I getting at least part of the message???

 

Great "hearing" from you.

 

You got it.

Edited February 7, 2013 by DbPhoenix

[TheDude 10]

I've added a couple of my own magic lines.

 

My magic lines are in RED.

 

OK there isnt any volume analysis with them, but if you look at them, they would have seemed to have made sense when back in time when the end of my magic lines were at the hard RHS of the chart.

 

1 or 2 had some 'impact' on the market, the others didnt - despite making perfect sense at the time.

 

Did they really have any impact in the market?

 

Did the market react because a bunch of other traders had the same lines drawn on their charts?

 

Perhaps I'm missing something?

 

 

:helloooo:

Edited February 7, 2013 by TheDude

[Niko 10]

I've added a couple of my own magic lines.

 

Did they really have any impact in the market?

 

Did the market react because a bunch of other traders had the same lines drawn on their charts?

 

Perhaps I'm missing something?

 

 

:helloooo:

 

You are missing S/R, the market reacted where it did because it hit either support or resistance, the fact that "your lines" cross through those same levels does not mean that they are explaining the movement.

 

The lines are in your head, one could trace thousands of other lines in this and other time intervals, what matters is what price does and at which points buyers overpower sellers and viceversa.

 

My 2 cents.

[MightyMouse 12]

 

The lines are in your head, one could trace thousands of other lines in this and other time intervals, what matters is what price does and at which points buyers overpower sellers and viceversa.

 

My 2 cents.

 

It seems like you understand his point of view.

[Gringo 10]

Did they really have any impact in the market?

 

You are right. The lines don't dictate what the price is going to do. Their use is mainly to better visualize what currently is happening with the price, hence, the lines generally speaking don't have an impact on the market or price.

 

Did the market react because a bunch of other traders had the same lines drawn on their charts?

 

No. Having lines by a bunch of traders has no meaning.

 

Perhaps I'm missing something?

 

The general technical analysis does seem to incorrectly imply as if the lines dictate where the support and resistance are going to manifest and as a result the price is going to either halt around there and reverse because of the lines or will need a powerful breakout of some sort.

 

Here at the Wyckoff forum the lines are used only as a means to staying alert at certain levels where previously price had struggled. If there is no indication by price that a certain level is important then well and good, it isn't.

 

The above talk was about support and resistance lines. Some of your magic lines are demand/supply lines or trend lines. I won't go into the difference but treat them as lines that are showing the direction in which price is moving. One doesn't need lines to know the direction of price but having a trend line is a reminder to stay true to the trend and not swim against the tide of current market direction.

 

Now, you may ask and rightly so, if lines don't have any impact on price what good are they? Isn't it a bit crazy to have something on a price chart that doesn't really have an impact on price? And you'd be right. Lines of any sort have no impact on price, nonetheless they still have an important function for the user. Lines clarify in the mind areas where a potential struggle between supply and demand might take place. All it does is allow one a possible heads up and a chance to enter with a reduced risk. Risk in the sense that the stop could be placed relatively closer in case of an adverse price move.

 

A combination of trend lines and support/resistance lines simply increases the odds of success. The increase might be slight but trading is a probabilities game isn't it?

 

For those who believe markets are efficient and random and human psychology has no impact on prices won't believe a word I have written. For the rest, magic lines if not over done simply lend a helping hand.

 

Gringo

Edited February 7, 2013 by Gringo

[tupapa 10]

Is this a base?

 

Yes or no because you expect price to spend more time around 24?

[PrymeTyme 10]

Is this a base?

 

Yes or no because you expect price to spend more time around 24?

 

 

For now Yes , 24 acts as support , but the rallies wich occure after we hit support look rather weak so , with the stronger selling waves in the background , this could just be a resting place for the time beeing ,, till we move lower

 

 

what do we have in front of us ?

 

well we have a downchannel with stronger selling waves then buying waves

 

we found support at 24.

 

we left the supply channel

 

 

we have actually less interrest at support (volume) and reactions afterwoulds (rallies)

 

we do have still weaker rallies and stronger (steeper) selling waves..

 

 

so i would rather be carefull buying support and if so manage it tight

 

but i would wait for example and see if the next rallie cant get past the 50-60 percent mark

of the actual selling wave (correction) .. wich would add to weakness ..

 

so one could play a breakdown .. wich would be aggressive but in lieu with current action

 

or u wait till we break + retest the level of 24 and enter a short from there

 

OTOH

 

if we see strenght returning and buying waves getting stronger u aswell could buy a higher low at supportish level...

 

just wait .. as there is a current tug of war .. or indecision

but slightly in the favour of the bears thou.. as the bulls are in charge,

 

keep in mind selling support is a risky buiz and u need to know what to do ie. your plan

 

 

cheers

[Niko 10]

G, is great to have you back in the W forum.

[Niko 10]

After a poke that stopped at 97.18 sellers started pushing prices back inside the TR, so far we are back in the chop.

 

 

Short term levels:

 

[Niko 10]

For those enthusiast about the current rally in stocks, a little bit of context, just in case things might turn sour.

 

[tupapa 10]

Great stuff Pryme Tyme, I agree with most of what you've written.

 

The reason I asked the question was because I believe the function of the base is to allow, one side (in this case the bulls), to accumulate a large number of contracts, at the lows possible price.

 

In this case, price didn't spend much time around 24s (which is longer time frame support), so I am not to sure if it can be called a base, maybe Db has something to say..

 

FWIW, this is how it resolved itself.

 

Sellers poked below 24, and buyers came in, there was a strong upwave and a HL that found S at 24, entry could be at the HL, anticipating a trend reversal.

 

Before this, there is a bounce 12:25, but no HL, would you've taken this? Or do you want to see a stronger upwave on the bounce?

[PrymeTyme 10]

Great stuff Pryme Tyme, I agree with most of what you've written.

 

The reason I asked the question was because I believe the function of the base is to allow, one side (in this case the bulls), to accumulate a large number of contracts, at the lows possible price.

 

In this case, price didn't spend much time around 24s (which is longer time frame support), so I am not to sure if it can be called a base, maybe Db has something to say..

 

FWIW, this is how it resolved itself.

 

Sellers poked below 24, and buyers came in, there was a strong upwave and a HL that found S at 24, entry could be at the HL, anticipating a trend reversal.

 

Before this, there is a bounce 12:25, but no HL, would you've taken this? Or do you want to see a stronger upwave on the bounce?

 

 

well , first i probably would have taken a short at the retest of broken support (24) , as we

have a nice selling wave accompanied by increaseing vol. , then on the retest we see that

vol actually drops off! , so i would have taken a short there ,

 

but as u see it would have been a loss ,

 

 

and no i wouldnt have taken a long where u did , as to me

its not enough signs of strenght till this PA ,

for example look at the rather low vol. break back above 24..

wich by now is rather an obsolete level , as price didnt really respect

it like it did before ... and the HL u drew.. well for me its way to

clustered and small.. just like price sitting there going nowehere.. just tumbeling along

 

i dont like to take such unclear Retests or Pullback as entrys..

i want them to be clean...

 

 

and well , now in hindsight , its hard to tell any unbiased story

but iam not sure if i would have taken a long position on this chart

 

and if i did, i would much likely be at the.53 pullback.. as till this

level. we have much more clear signs of strenght .. ie. strong rallies, and weak reactions

and taken out some levels along the way ..

 

 

and no i wouldnt have taken the bounce .. as yes i want to see bulls coming in..

and see strenght returning ..

 

hope this helps

 

 

cheers

[tupapa 10]

IS the MP of the daily range a valid S/R? or does the fact that we are back in the daily range invalidate it?